contemporary policy and practice in hospitality management

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Contemporary policy and practice in

hospitality management

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EXECUTIVE SUMMARYDifferent types of hotels including boutique hotels are availing the

service of 3rd party companies because of several reasons. The purpose ofthis research report is to evaluate the impact of third party online hotelbooking websites on the hospitality and tourism industry. It states how hotelorganizations can exploit and compete with the widespread growth of thesewebsites. The study has been developed in order to create an in-depthanalysis of the topic and various factors affecting its growth anddevelopment within the market. The study has been done on the basis ofsecondary research analysis.

ABC is a finest 4 star boutique hotels located in Liverpool. The boutiquedelivers an exciting and vibrant guest experience to the local community.The hotel also takes the service of 3rd party booking websites such asExpedia and hotel.com. The study focuses on analysing the factors whichmotivates the businesses to develop third party portals for business growth.The stated company has been taken as the base for the research andfindings. The report helped in analysing the advantage of third party portalsto the company and consumers as well. It also focuses on the challengesfaced by the companies in terms of technological factors etc.

The report helped in analysing discounting strategies and its impact onthe present business. Models such as PESTEL analysis has been used to findout the organizational position and threats associated with it. Th final part ofhe report discusses about clients and their needs. Hence, the study helped indeveloping a clear and effective analysis of third party portal for the statedbusiness. It could be concluded that ABC has developed an effective brandimage within the market using the stated measure. However, theorganization still has effective scope for development.



TABLE OF CONTENTSIntroduction ............................................................................................................................... 3

Popularity of 3rd party booking websites .................................................................. 3

Critical analysis of use of internal IT systems to market and promote thebusiness ..................................................................................................................................5

Critical analysis of discounting strategies ................................................................. 7

Pestle analysis of ABC boutique .................................................................................... 8

Critically analyse change management issues with competing with thirdparty players .......................................................................................................................10

Critically discuss the client groups .............................................................................10

Conclusion ............................................................................................................................... 11

REFERENCES ...........................................................................................................................12



INTRODUCTIONAt present, in the hotel industry, 3rd party booking websites have

gained so much popularity. Different types of hotels including boutiquehotels are availing the service of 3rd party companies because of severalreasons. The purpose of this research report is to evaluate the impact ofthird party online hotel booking websites on the hospitality and tourismindustry. It states how hotel organizations can exploit and compete with thewidespread growth of these websites. At last the report will end in analysingsome of the change management issues associated with the services.

Popularity of 3rd party booking websitesABC is a finest 4 star boutique hotel located in Liverpool. The boutique

delivers an exciting and vibrant guest experience to the local community.The hotel also takes the service of 3rd party booking websites such asExpedia and hotel.com. These are the bodies which assists the customers indoing reservation for them on behalf of the hotels. Customers can compareprices of different types of hotels on these platforms (Acton, 2012). Therecould be many reasons why hotels make use of these services.

Increasing customers – One of the best advantage derived fromtaking the services of these websites is the ability to gain morecustomers. By taking the services the boutique can reach to morenumber of customers which can increase its occupancy rates. Moreoccupancy means more profits for the hotel (Anheiser, 2011). It canincrease the reputation of the organization in the local community.Hence in this manner ABC will be able to reach the target customers.Ease of use – Consumers tries to make comparisons between severalhotels before taking a particular decision. The busy consumer isexpected to pull up comparable hotels in one browser window despiteof searching six different hotel brands. Third party sites facilitates theease of price comparison for them. It will encourage loyalty in the



customers who are looking for ease of reservation process (Cazcarro,Hoekstra and Chóliz, 2014).Price – Another reason why boutiques approach to third party servicesis the price. Consumers usually get low prices on these websites. Theprices are often less expensive as compared to the listed price on thehotel website. However it is not a profit making situation for thecompany but at least they are getting customers for the business.Promotion – Through the third party channels, these boutiques getthe chance to promote their services among the masses. Thecustomers can see each and every information about the boutique onthe websites (Falk, 2011). They promote the name and services of thecompany and it came into notice for the customers.

Quick payment – Online booking systems requires customers to makeprepayment for the activities and rentals. In this way company can putthe money into its pockets quickly and there is no need to make arequest a deposit or wait for payment on the day of the transaction.

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Advantages for the consumersThere could be different reasons behind the popularity of third party

websites among the customers. These can be discussed as follows:Price - The first and the most obvious benefit is the price. The pricesplaced on the sites are comparatively less expensive than the listedprice on hotel websites. It is evident that price is the biggestinfluencing factor for every customer (Fons, Fierro and y Patiño, 2011).They will definitely drive towards hotels which are offering them betterprices. They can also easily compare the prices between differentoptions and then take a sound decisionA faster booking process – These platforms also offer a faster bookingprocess. It offers ease and comfort to the customers. They can easilybook their accommodation. The process becomes even faster in case ifthe individual is a repeat customers and the website is already havingall the details about them.Infrastructure – The infrastructure behind sites like Expedia, hotel.cometc, is rock solid. It means booking and payment process can be seenvery reliable (Future trends in the tourism industry. 2012). Thesethings attracts the customers and make them go towards adopting theservices.Range of options – Another benefit derived by the customers is theavailability of wide range of products and services. On these websites,they can do various types of comparison on the basis of price, reviews,facilities, food etc. It helps in making their decision making processmore sound and effective.Easy availability and accessibility – The third party website services areopened for 24 hours a day (Blanke and Chiesa, 2013). Customers canaccess at any point of time and it is very useful in case of emergencies.They do not have to wait to book a tour or boutique.



Critical analysis of use of internal IT systems to market and promote thebusinessApart from having many advantages from the use of IT systems, the

boutique also suffers from many drawbacks. These are as follows:Expensive installation – The installation of IT system can be veryexpensive as they tend to be custom made. The website must containthe user friendly features which can offer comfort and relaxation to thecustomers (Cuccia and Rizzo, 2011). The installation is not easy as lotof research and development work is needed on it. For a smallboutique it may be difficult to adopt the IT systems into the business.Need of internet access – If the boutique is running its operations inthe remote areas where there is no availability of the internet, then itmay create many disturbances. There is a need of reliable internetaccess so that reservation status can be checked. Till date there aremany areas where internet is not available for the local communities. Itis also evident that without internet life is considered dead for thehumans (Hall, 2011). It may create lack of knowledge and informationfor the customers. Hence this may restrict the marketing andpromotion activities of the company. So constant access to the internetis needed in case of third party booking services.High commission charges – The boutique can also face highcommission charges on use of third party website services. It can be abig drawback as it may affect the financial position of the hotel. Thesedays the websites charge different types of expenditures for giving theservices (Liu, Tzeng and Lee, 2012). It can be difficult for the hotels tomeet up those expenses. Hence hotels will have to look for websiteswhich charges appropriate prices and delivers quality services.Technical errors – Sometimes technology also comes with manyflaws and errors. These errors can negatively impact the functioning of



the websites. The systems are to be highly reliable. In case if thesystems breaks down, then a lot of business can be lost for thecompany (Sundbo, Orfila-Sintes and Sørensen, 2007). The technicalerrors can occur at any point of time without any estimation. Theconsequences of the errors can be very painful and devastating for thebusiness. Apart from that it will also affect the reputation of theboutique within the market. Hence the systems are to be free fromerrors and must be capable of handling the issues. In case if anythinghappens, appropriate measures are to be adopted at immediate pointof time.Skilled workforce – In order to operate the IT systems for thepurpose of promotion and marketing, there is a requirement of highlyskilled and talented manpower. These people must be skilled enoughto fight with the issues which occur during the functioning of websites(Willis, 2011). However affording such IT guys can be difficult for theboutique because generally these people are paid high salaries. Thismay disturb the financial budget of the business and also act asfinancial burden. Employees are the assets of the company andadequate value should be given to them for the contribution theymake towards the business.Lack of consistency – Another point of concern for the users is thelack of consistency in the services. It has been seen that due totechnical errors the IT systems loses their consistency in the deliveryof the services. Due to inconsistency customers faces manyinconvenience and discomfort (Tourism today. 2014). It also damagesthe reputation in the local community. Hence there is a need to haveconsistency in what has been offered as this helps in promotingcustomer loyalty.



Dependency – In case of third party services, the boutique will haveto remain dependent on the website for the business. This dependencymay create many chaos. High dependence may also lead to loss ofclients from the other sales channels. It may also affect the quality ofthe services creating lot of inconvenience for the customers (Impactsof Tourism. 2014).Selection of wrong channel – It is believed that not all the onlinebooking systems are equal. The use of IT systems can be frustrating ifit offers poor customer service or few features. Hence in this case it isimportant to do the homework first and select a system which is longlasting and effective. It must be capable enough to provide greatamount of support (Anheiser, 2011).

No perks available – When customer book through third party sites,they are not liable to earn points through the company’s loyaltyprograms. It is a loss for the consumers as well as the boutique (Janta,2011). It is decreasing the loyalty rate for the business. Another perkfor consumer booking direct is the online booking systems that thehotel brands offer. Consumers are able to establish an account andsave their preferences. It makes the reservation process easy every








time. Hence the boutique is required to advertise this perk as amethod to attract more direct reservations.Poor customer service – It has been noticed that more third partywebsite outsourced their customer service departments. It is adrawback for the hotel itself. In case of third party online booking, thewebsite acts on the behalf of the hotel, so whatever the wronghappens will reflect on the image of the hotel (Novelli, 2008). In caseone bad service experience, next time the customer will hesitate touse the service.

Critical analysis of discounting strategiesThere can be many discounting strategies used by the companies. These areas follows:

Improving the cash flow – Giving discount is an effective approachto give the buyers an incentive to pay the company early. For example,if the company has 60 days terms for invoices, then it might consideroffering a two percent discount for the payments received within 30days (Rihova, 2010). This gives customers a meaningful financialbenefit and it also improves the revenue management by acceleratingthe payments.Solving issues – Different types of issues can be solved by giving thecustomers the needed discount. For instance if customers calls in witha complain, for refund etc, then discounting may be an effectivemethod to resolve the issues and retain a valuable customersReducing excess products - Company should focus on avoidingsteep discounts. It may be more advantageous to sell of the stockthan to keep the prices high (Falk, 2011). In case if the company isdealing with seasonal products or perishable items having limitedshelf life, then adopting discounting approach can be effective.



Breaking into new markets and creating loyalty - When boutiqueexpands into new market, discounting method offer ways to generateinterest and encourage buyers to try out the new product. Discountsare very useful in building the customer loyalty in the target markets.Time sensitive discounts - Offering time sensitive discounts canalso help in speeding up the sales. For instance discounts can beoffered at any point of time (Huang, 2009).Driving volume – A very common strategy in the business to businessmarket place is to extend the financial opportunities across thecustomer various business units. Offering a large volume of discount isuseful in case if the business has a large customer segment. Thisapproach can fill capacity and increase the purchasing power with thesuppliers.Addressing a competitive threat - Firms operating in the B2B spacemake efforts to avoid discounting. However it creates a possible entrypoint for the competitors (Stronza, 2009). In case if other companiesare using the approach of lower prices in order to increase the marketshare, then organization needs to consider making strategic discounts.It helps in customer retention and keep the barriers to entry high.Hence it is also an effective discounting strategy for the business.

Pestle analysis of ABC boutiquePolitical – The business of ABC is affected by political factors. Thetourism authorities such as CTH (The Confederation of Tourism andHospitality), Visit England etc affects the business practices of ABCboutique. There are some standards and provisions set by these bodieswhich are needed to be fulfilled by the companies operating in theindustry (Acton, 2012). It is done to make sure that no inconvenienceis caused to the tourists coming in UK.



Economic – Factors such as interest rates, inflation, recession etccreates an impact on the business activities of the company. Atpresent the economic position of UK is stable and gradually it hasrecovered from the 2008 recession storm (Cazcarro, Hoekstra andChóliz, 2014). The slowdown in the economy is causing the travellersto abandon the expensive hotels chains to save money. It sound goodopportunity for boutique hotels like ABC.Social - The increasing role of social media also affects the businesspractices of the company. The taste and preferences of the customerchanges from time to time. Factors like shifting values in society,changes in family patters etc also affects the business activities.Technological – Increasing integration of internet into various aspectsof life can be seen. Presence of advance booking functionalities put animpact on the existing services. Use of Information technology systemshas become essential because customers have also become techno-friendly (Fons, Fierro and y Patiño, 2011). The third party bookingwebsites creates many change management issues for the company.Environmental – There is an impact of changes in the weatherconditions also on the ABC boutique. Customers would not like to visita destination where the environment is not good. Things like naturalcalamities, environment pollution highly affects the business practicesof the ABC. There is a potential damage to the reputation due toenvironment pollution (Future trends in the tourism industry. 2012).Legal - Any changes in the UK rules and regulations related to thehotel industry can affect the company. The Food Safety Act andConsumer Protection Act make influence on the functioning.



Critically analyse change management issues with competing with thirdparty playersChange management is a process of resisting and dealing with the

change. There are many issues related to the change which can be faced bythe company while competing with third party players:

Market dominance – It is evident that at present the market is filledwith the presence of many third party service companies. This hascreated high level of competition for the boutiques. Players likeExpedia, hotel.com and many others are showing high level of marketdominance. They are regulating the market conditions not giving toomuch space for the hotels (Cuccia and Rizzo, 2011). High level ofeffectiveness of the third party firms are shown on the customers.Dominance shown by one player is encouraging other players also tocome forward and join the race of competition. These things areestablishing many challenges for the hotels and boutiques. They arenot been able to reflect their presence within the market.

Diversion of customers - Due to easy accessibility of services,customers are also taking the help of third party websites. There aremany advantages available to them such better price, faster booking








process, better infrastructure, range of options, user friendly featuresetc. Hence customers are preferring to do reservation from the thirdparty despite of going to the hotel website (Liu, Tzeng and Lee, 2012).This has diverted the customer traffic for the companies. It is costingthem in form of loss of customers.Government support – In the present context, for the benefit of thecustomers, government is encouraging the emergence of differenttypes of third party websites. It is strengthening their position andgiving them high amount of support (Huang, 2009). However it can bea de-motivating situation for the hotels as it is increasing the level ofcompetition for them.

Critically discuss the client groupsMillenniums - These are the demographic cohort following generationX. It refers to the generation having the birth years ranging from theearly 1980s to the early 2000s (Falk, 2011). The third party servicesare likely to be less availed by this generation because the economicprospectus for millennials have been declined largely from manyauthorities.Baby boomers - These are the people born during the demographicpost world war II. These lie between the age range of 51 and 70. Thethird party service are likely to be less availed by this generationbecause this kind of people are more of traditional values and beliefs.

XY generation – This is more referred to the young generation. It isbelieved that third party services are more likely to be used by thisgeneration because they are more techno-friendly (Rihova, 2010).



CONCLUSIONFrom the above study it can be concluded that third party website

players have the potential to show dominance in the market. Gradually theirpresence in establishing in the market. Through the third party channels, theboutiques get the chance to promote their services among the masses. Theprices placed on the sites are relatively less expensive than the listed priceon hotel websites. The installation of IT system can be very expensive asthey tend to be custom made. Apart from many advantage there are manydisadvantages also in the services of third party. It is expected that mostlythe services will be used by XY generation in the future.








REFERENCESBooks and journals● Acton, Q. A., 2012. Issues in Hospitality, Travel, and Tourism: 2011

Edition. Scholarly Edition.

● Anheiser, H., 2011. Cultures and Globalization: Heritage, Memory andIdentity. SAGE

● Blanke, J. and Chiesa, T., 2013. The Travel & Tourism CompetitivenessReport 2013. In The World Economic Forum.

● Cazcarro, I., Hoekstra, A. Y. and Chóliz, J. S., 2014. The water footprint oftourism in Spain. Tourism management.

● Cuccia, T. and Rizzo, I., 2011. Tourism seasonality in cultural destinations:Empirical evidence from Sicily. Tourism Management.

● Falk, J. 2011. Visitors’ learning for environmental sustainability: Testingshort-and long-term impacts of wildlife tourism experiences usingstructural equation modeling. Tourism Management.


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