The report presents the analysis of the decisions taken by the management of StayTogrther, which is a combined group of ten different hotel chains. The management has decided to have a merger of their business so that they can be saved from the intense market competition prevailing in the hospitality industry. There are hotels that are very low priced and are giving tough competition to these hotel groups. Thus this working together in a group is a strategic move of the hotel chains to sustain the competition. There are majorly four management decisions the report will focus upon for achieving the desired goals i.e. attracting new customers, brand loyalty, brand patronage and new business opportunities. These are the goals which the hotels are planning to achieve by this merger. Finally, the report will offer few recommendations guiding the way of utilizing ICT for attaining high competitive benefits by the hotel chains against the several market competitors.
In the hospitality industry, the competition is rising across the world. There are numerous new market entrants who are fetching the attention of the potential customers by offering them services at very squat prices. This is ruining the business of the set and established hotels who charge high prices because of the quality and value services. To overcome these issues, the group of ten hotel chains have planned to merge their business. The merger of the businesses can offer them several; advantages such as having increased customer base, reduced threat of competitive rivalry, innovations and technological integration. By this merger, the hotels want to achieve some of the specific desired goals such as attracting new customers which means that fetching the attention of the customers of the competitors. The other goals are increasing the brand loyalty, continued patronage by the means of synergy and accessing new business opportunities which can arise as a result of the merger (Cunill, 2006).
The management has focused upon four major decisions for achieving the above mentioned goal statements. The management decisions are starting up of a Loyalty scheme under which the customers will b de offered additional services like free nights, car parking on site and airport transfers. The loyalty schemes are the planned marketing approaches which are designed by the organisations for fascinating the customers nod encouraging them to continue their association with the business organisation and the relative products and services (Uncles, Dowling and Hammond, 2003). These schemes offer additional advantages to the loyal customers who have remained reliable to the services of a particular brand in spite of the various choices available. Therefore some rewards points are offered to those customers so that they can maintain their association in a similar way (Bolton, Kannan and Bramlett, 2000). To achieve the planned goals, loyalty schemes is a great strategic idea as it will help in gathering the attention of the competitors’ customer who are not receiving such additional benefits and will become the potential customers of StayTogether.
The second management decision is to establish a standard restaurant and a kitchen on site which will be offering free of cost dinner, breakfast and buffet to the customers. These services will be a complementary offer with the hotel rooms reserved by the customers. The restaurant which come under the exclusive category will be charged a b it extra. The primary aim of this managerial decision is to add to the dollar value which is earned per guest. The decision of offering free buffet, breakfast and dinner can be analysed as a fine strategy for the hotel chains as it will be gathering increased attention of the customers by offering them those additional services which are essential and required and acts as a necessary expenditure by the travellers or the customers (Taylor, 2012). It will also help in increasing the brand loyalty as the customers fell pledged that they are provided with such services which are exceptional and are not offered by other low price hotels. The major point of fascination is that it saves huge costs of the customers as mainly in the overseas regions, the food prices are much high (Suh, Tanford and Singh, 2012). Therefore, this decision of the management is considered as a good move for sustaining the competition.
The third management decision is to offer rebates to the customers if they are travelled by some specific airlines. The rebate will be in the form of credit for free of cist meals or free nights. Rebate is a kind of sales promotion which is offered by the marketers as the supplements or incentives with the purchase of any other product or service. It is one of the highly used strategies for advertising sales (Guo, et al., 2014). It offers advantages to the customers that are made to be grabbed instantly or later on. This helps in attracting the customers to make a purchase in consideration for these additional benefits offered as rebates. Rebates can be in the form of payback, discounts on other production, additional services, etc. The management decision of offering rebates supports the accomplishment of the goals set to be achieved after the merger (Lo, Lynch and Staelin, 2007). Rebates are one of the beasty ways which attracts the customers as there are potential customers who are much fascinated by the offers, discounts and re bates rather than less prices. Thus, this will help in fetching the attention of the new and potential customers as well as also offer new business opportunity by having tie ups with other companies as providing services and products of their companies in the rebates schemes (Guo, et al., 2013).
The fourth and the last management decision is that there will be launched a corporate social responsibility programme under which the customers will be nominating or selecting a charity where they will wish the hotel chain to donate a total of one percent of the total i.e. the billable amount of the customer (Bohdanowicz and Zientara, 2008). This is one of the highly social and responsible managerial decisions of the hotel chains. The primary benefit of this decision will on the enhancement of the brand loyalty. The social program like charity donations increase the brand visibility and brand recognition of an organisation as well as also improve the image of business organisation in the eyes of the customers. The individuals usually want to attach themselves from those organisations which are high in performing corporate social responsibility (Green and Peloza, 2011). A socially responsible business also have several opportunities of getting huge support from the legal authorities and Governments as they are having involvement in social development of the masses and the societies (Lee and Park, 2009).
Al these management decisions and the merger of the hotel chains offer numerous advantages to the hotels involved in the merger process. With the merger, there is integration of the technologies and strengths of all these hotel chains that offer the benefits of synergy to these hotel chains. With the impact of synergy, the hotel chains gain increased and continued patronage which was not possible by working on an individual basis. There is requirement of high investments, technologies, labours, etc. when there will be the merger of the hotel chains, there will be combine patronage which will boost the development of the hotel chains and attract customers in an effective manner. These managerial decisions and merger will effectively help the hotel chains in successfully competing with sites like booking.com and hotels.com.
With such a big merger, there is a vital role of Information System (IS) and Information Technology (IT). Information technology and information systems are two different aspects which have their diverse meaning and use and approach. Information system can be explained as a set of coordinated network of components that works together in a combined form for the purpose of processing, distribution and generation of information. The information systems are primarily in the form of management support systems and operations support systems in an organisation (Arvidsson, Holmström and Lyytinen, 2014). On the other hand, information technology can be explained as an integration of the telecommunication equipment with the computer for the purpose of storage, manipulating, retrieving and storing the data. The use of information technology helps in increasing the organisational performance as it offers edge in resolving several social issues and it also make the information system user friendly and affordable (Bilbao-Osorio, Dutta and Lanvin, 2013).
There are several IS and IT related issues which the hotel chains will face because of the merger and integration of technologies. There are numerous issues such as user interface issues, employment issues, legal issues, sustainability issues, data conversion issues, technology compatibility issues, scalability issues, etc. With more technological development due to merger, there is increase use of machines and improved technologies rather than the people. This affects the customer choice as well as the brand loyalty from the employees’ side (Borgia, 2014). The newly developed user interface is not necessary to friendly and easily functional by all set of customer groups. There are wide range of customer groups which are deprived of the knowledge of taking sue of such high-tech systems and technologies. Therefore, such customers prefer other hotel groups which offer easily accessible service to them without much effort. Replacing people with machines also impacts the employees in a negative manner as the most of the work and operations are now automated therefore the employees resigned because of less area for development and incompetence to work on improved and high0tech systems (Stair and Reynolds, 2015).
The next major issue which impacts the planned goals of the hotel chains is the data conversion issues and user interface issues. Because of the merger of the business, there is integration of all the data of the different hotel chains. There is an extensive that the hotel chains must have appropriate technology for the data conversion. The customers can get highly confused because of presence of enormous amount of data on a single website for thousands of hotels. Thus, it becomes very difficult for user interface point top use such services. Thus, it is essential to solve this issue of information system. This highly affects the customer choice as there are several groups of customers that wants a puzzle-free and direct information which acne hemp them in faster access to the services (Galliers and Leidner, 2014). The issues of data conversion may result in switching of those customers on other hotel sites which can offer them direct mode of booking and other associated services. The other issues such as technology compatibility scalability issue also impacts the continued patronage and access to new opportunities as it not necessary that all the hotels chains access similar software or systems and possess the most competent technologies and systems. Thus, it raise concerns for the hotel chains to have access to new business opportunities and continued patronage because of barricades arise because of some of the hotel chains that are less technologically developed (Helander, 2014).
In present scenario, facing and sustaining the market competition is one of the toughest jobs for the business organisation and primarily in the hospitality industry which is rapidly developing as well as extending. Because of numerous new entries in the market, it has become a challenge for the large hotel group to decrease their prices and attract the customers. From this report, it can be concluded that merger is a highly potential strategic move for sustaining the market competition. But after having critical analysis of all the managerial decisions and goals, it is recommended to the hotel chains that they must also have several other strategies and approaches for attracting the new and competitors’ customers. There can be use of effective customer relationship management practices for fetching the attention of the customers. Offering special packages discount and after sales service to the customers are highly vital in present competitive markets. The hotel chains must also provide additional benefits like special offers on weekends and in peak seasons so that the hotel chains can become the first choice of the potential customers. There can also have access to new business opportunities by the integration of the technologies such as offering the customers with personalised automated tour guide, internet and other technological services to be offered to the customers on site, etc. As well as it is also essential that the management must have its primary focus on resolving the issues related to information system and information technology for achieving increased customer base.
Arvidsson, V., Holmström, J., & Lyytinen, K. (2014). Information systems use as strategy practice: A multi-dimensional view of strategic information system implementation and use. The Journal of Strategic Information Systems, 23(1), 45-61.
Bilbao-Osorio, B., Dutta, S., & Lanvin, B. (2013, April). The global information technology report 2013. In World Economic Forum (pp. 1-383).s
Bohdanowicz, P., & Zientara, P. (2008). Corporate social responsibility in hospitality: Issues and implications. A case study of Scandic. Scandinavian Journal of Hospitality and Tourism, 8(4), 271-293.
Bolton, R. N., Kannan, P. K., & Bramlett, M. D. (2000). Implications of loyalty program membership and service experiences for customer retention and value. Journal of the academy of marketing science, 28(1), 95-108.
Borgia, E. (2014). The Internet of Things vision: Key features, applications and open issues. Computer Communications, 54, 1-31.
Cunill, O. M. (2006). The growth strategies of hotel chains: Best business practices by leading companies. Routledge.
Galliers, R. D., & Leidner, D. E. (2014). Strategic information management: challenges and strategies in managing information systems. Routledge.
Green, T., & Peloza, J. (2011). How does corporate social responsibility create value for consumers?. Journal of Consumer Marketing, 28(1), 48-56.
Guo, X., Ling, L., Dong, Y., & Liang, L. (2013). Cooperation contract in tourism supply chains: The optimal pricing strategy of hotels for cooperative third party strategic websites. Annals of Tourism Research, 41, 20-41.
Guo, X., Zheng, X., Ling, L., & Yang, C. (2014). Online coopetition between hotels and online travel agencies: From the perspective of cash back after stay. Tourism Management Perspectives, 12, 104-112.
Helander, M. G. (Ed.). (2014). Handbook of human-computer interaction. Elsevier.
Lee, S., & Park, S. Y. (2009). Do socially responsible activities help hotels and casinos achieve their financial goals?. International Journal of Hospitality Management, 28(1), 105-112.
Lo, A. K., Lynch Jr, J. G., & Staelin, R. (2007). How to attract customers by giving them the short end of the stick. Journal of Marketing Research, 44(1), 128-141.
Stair, R., & Reynolds, G. (2015). Fundamentals of information systems. Cengage Learning.
Suh, E., Tanford, S., & Singh, A. (2012). The indirect gaming contributions of cash and comped casino dining: does providing complimentary meals pay off at the slots?. International Journal of Hospitality Management, 31(4), 1303-1310.
Taylor, D. (2012). Hospitality sales and promotion. Routledge.
Uncles, M. D., Dowling, G. R., & Hammond, K. (2003). Customer loyalty and customer loyalty programs. Journal of consumer marketing, 20(4), 294-316.
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