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Internal audit

Discuss about the Strategic Management for Hospitality Industry.

Strategic management in hospitality industry requires creating and implementing the goals which are focused on this particular industry to improve the status of an organization. The strategies are created by the management board on behalf of the owners after considering the available resources in the organization. While creating the strategies for an organization, the management has to keep in mind the competitors’ strategies. Strategic management provides the ways of using the available resources efficiently to ensure low cost and an efficient production process for the company. Strategic management is an inconstant process where any change in the environment where the organization is operating will result in a change in the strategies of the organization. Strategic management works on the business model of an organization to create competitive advantage in the industry.

In the year 2005, the Langham Hospitality Group acquired the property in Queensland, New Zealand, where the hotel stands now. It had focused on the Victorian grand tradition and elegance while refurbishing the rooms. The company faces competition from strong Internet brands like Wotif.com and others. There are also traditional hotels present in the same area, but the excellence in providing service is what keeps the organization ahead of its competitors. Customer satisfaction, one of the main requirements in this industry is properly adjusted in every strategic management sessions in The Langham Auckland. The fundamental purpose of the hotel is to provide accommodation to the clients. It also provides other services like a fitness center, restaurant, spa, entertainment, conference facilities, and spa. This report shows the internal and external situations of the organization. It points out the scopes of improvement with proper measurements. It incorporates the strategies which can help the organization in improving the quality of their services (Langham, 2016).

To understand the internal situation of The Langham Auckland a SWOT analysis is required which will reveal the organization's strengths, weaknesses, opportunities, and threats in the hospitality industry.

Strengths

·         Excellent service

·         Experienced employees

·         Heritage of Victorian grand tradition

·         Variety of products and services

·         Huge investment capacity

·         Reputation

·         Wifi enabled buildings

·         More than four hundred rooms

Weaknesses

·         Old strategies for the market

·         Lack of new skillful employees

·         Rising labor cost and another cost of production

·         Low-profit margins.'

·         Lack of sales channels

·         Huge maintenance cost

·         Less appealing to the young generation

·         Government intervention

·         Low-level security

Opportunities

·         Rapid growth in the tourism sector

·         Increasing demand for hotels due to sports events

·         Destination preference of European tourists changed for New Zealand

·         Increased rate of travel for business

·         Unavailability of top quality hotels

·         Technological improvements

·         Diversity in related services

·         Vintage decorations and other added values to the services being provided

·         Extending booking options

·         Free use of social media

Threats

·         Harmful contents being posted in social media

·         Increasing number of cheap hotels

·         Young generation avoiding vintage decorations

·         Old strategies to encounter present day issues

·         Poaching staffs

·         Increasing competition

·         Change in government policies

·         Emerging online hotel industry

PESTEL analysis is used by the strategic management officials to analyze the external market environment. As stated by Yüksel, (2012), it highlights the factors which affect the organization. The factors are broadly incorporated under the categories Political, Economic, Social, Technological, Environmental, and Legal. The Langham Auckland is currently operating in Auckland, New Zealand (Auckland, 2016). The following PESTEL analysis will show the environment where the hotel is operating.

SWOT analysis

As stated by Becken et al., (2013), the political scenario of New Zealand is more or less stable. It gives the hospitality industry in the country an extra boost. The corruption level in the politics of the country is low due to transparency and the small size of the country.  , Kate Simcock, the Greenpeace Climate and Energy Campaigner said, “despite being one of the first countries in the world to ratify the agreement, the New Zealand Government doesn’t yet have a plan for how it will curb climate emissions domestically.” This puts the otherwise stable political country New Zealand in a tough situation. The regulation and taxation policies by the government have the potential to make the business environment-friendly to The Langham Auckland.

The country has steered out of the depression which was caused by the Global Financial Crisis of 2007. The country is facing boom now, which means the scope of the hotel in the industry is high. According to Yusof and Amalina, (2014), the impact of globalization has been positive on the country’s economy. It brings more tourists from the international market. The labor cost or the wage is reasonable in the country, and it holds promise for more employment in the future as the economy move towards the boom. The factors of production in this country come at a reasonable price. Due to the global operations of the organization, it has a great parameter of comparing input prices of New Zealand.

Population growth in New Zealand is increasing at a constant rate. The political leaders with the help of the citizen have reduced gender and ethnic diversity. This promises a better workplace environment in the country. Health situation is improving rapidly in the country with an increasing literacy rate. This phenomenon incorporates all the cultures present in the country. As stated by Campbell and Ma, (2015), the digital disparity in the society is yet to overcome the high hurdles. More literacy rate, especially in the tribal areas, will ensure more skilled labors. According to the tourism and travel board of the country, there has been a significant increase in city tours. It presents an enormous scope for The Langham Auckland in New Zealand’s market. This will increase social welfare and reduce economic disparity in the country.   

As stated by Tse, (2014), the research and development activity in the country has increased since the nation came out of the Global Financial Crisis. The Multi-National Corporations operating in the markets of New Zealand has contributed significantly in this regard. The government has also taken significant steps to increase the research and development activity in the country. The impact of emerging technologies might hold a rough patch for The Langham Auckland, but the technology transfer by the Langham Hospitality Group can help the grand hotel in adopting the market challenges present in the economy.

PESTEL analysis

According to Brunton et al., (2015), the climate change issues are considered as a threat in the country. New rules and regulations in the country are created to protect the environment. Those businesses are getting a license which will follow the emission regulations. This will decrease the impact on the environmental health of New Zealand. According to Rachet, (2014), the general health will get better due to this giving the organizations operating in the country a healthy workers’ domain. The pollution control board gives guidelines to the organizations’ production process and products and services. The Langham Hospitality Group has spent a lot of environmental issues which put the organization in an advantageous position the industry.

The consumer law in the country helps The Langham Auckland to create its ethical guidelines. The employee law creates a better working environment for the employees. Both of these together help the staffs to serve better. As stated by Bargiela and Nickerson, (2014), the health and safety law is there to ensure a better service. The regulatory board of the hospitality industry determines the service quality of the organizations. It also determines the degree of competition in the market. The legal environment in New Zealand is favorable for the grand hotels like The Langham Auckland.

According to Williamson et al., (2012), the purpose of a Gap analysis is to see the difference between the things an organization has achieved using some resources and the things that it should have achieved using the same resources. It shows the gap between actual performance and potential performance of a country. If the actual performance is lower than the possible performance, it will show the inefficiency in the organization's production process. The gaps considered in the case of The Langham Auckland are given as follows:

Gap 1: It shows the general incompatibility between the organization’s management and its clients. It happens for not understanding the real expectations of the visitors. According to Buhalis and Crotts, (2013), due to wrong interpretation of clients’ expectation, this gap gets created. The customer’s complaints and failure in understanding them by various levels of organizational management are responsible for this gap.

Gap 2: As stated by Choudhury and McIntosh, (2013), this gap gets created in the process of realization. The Langham Auckland, even knowing the clients’ demands failing to satisfy them creates this gap. The proper reasons behind this kind of gap are as follows:

Gap analysis of The Langham Auckland

Bad service design:

  • Unclear service design
  • Bad and faulty service design
  • New service developed unsystematically

Lacking the standard that clients want:

  • Failure in defining the level of service according to clients’ wish
  • Procedural management lacking the focus on the demands of clients
  • Goals of service quality not being met by the management

Lacking good quality service ambiance:

  • Failure in creating values according to the needs of the clients
  • Failure of the service ambiance to meet the demands of the clients
  • Lack of innovation in creating the ambiance

Gap 3: According to Lam, Ho and Law, (2015), this kind of gap arises when the available resources are not enough to meet the clients’ demands. The management over sighting the needs of the clients causes this gap. The reasons can be pointed out as:

  • Creation of bad reputation
  • Friction in the clients’ and management’s interests
  • Weak method of evaluating customers' preferences
  • Deficiency in high quality teamwork

Inadequate interaction between the management and customers:

  • Clients failing to recognize their role and engagement in the service process
  • Clients creating negative reputation among themselves

Difficulties with servicing representatives:

  • Frictions regarding objects and accomplishments
  • Quality and consistency controlling problems
  • Frictions regarding administration and authorities

Poorly accorded presentation and demand:

  • Failing to modify the demanding limits
  • Weak selection of clients
  • Disproportionately relying upon the price while adjusting the demand

Gap 4: Miscommunication between the management and the staffs due to various reasons might result in earning a bad name in the industry. The reason behind this gap are:

  • Customizing every outer transmission independently
  • Not keeping interactive marketing in the plan of communication
  • Lacking a developed program of internal marketing

Ineffective administration of clients’ anticipations:

  • Failing to manage client anticipations through all communication forms
  • Clients are not instructed sufficiently
  • Absurd agreements in marketing pursuits for personal benefits

Low horizontal communication level:

  • Miscommunication between people handling campaigns and people handling the operation
  • Inadequate communication between people accountable for retail and people engaged in operations
  • A same organizations’ different branches having different beliefs

According to Hall and Rusher, (2013), any one of these four gaps or all of them might occur in the organization, which will lead to the 5th gap (Gap 5) which is also known as the "gap of clients." It results in creating a difference between the expectations of the customers and the service they were provided. From the Gap analysis done above for The Langham Auckland, several options can be developed to make a strategic change in the organization, the major one being concerned with miscommunication.  

Miscommunication is the 4th gap. According to Mok, Sparks and Kadampully, (2013), it has more potential of ruining an organization. The first three gaps are easier to overcome than the gap of miscommunication. Hence, it is a must for the organization to create a better communication system. The desired outcomes of creating a better communication are as follows:

A better communication process has the potential of removing Gap 1, Gap 2, and Gap 3 alone, which are related to serving the customers. As stated by Thill, Bovée and Chatterjee, (2013), with better communication system within the staffs of The Langham Auckland the differences between the services promised and provided will decrease. As all the employees of the organization will have a clear picture of what they are providing the clients, they will be able to put their effort in the right way. Communication with the clients will also get better because of this improvement in communication. The issues which were created by miscommunication between the management and clients will reduce due to this measurement, creating a better place for the clients.

According to Kernbach, Eppler and Bresciani, (2015), with a clear communication system the direction coming from the authorities will be thoroughly carried by the staff members. The plans created by the upper managements will properly executed by all employees with the help of a better communication system. The betterment of communication is needed in both ways. There are several issues that can be observed by the staff members which are not noticeable for the senior management. With a clear communication system which works both ways, these issues can be addressed properly. This will add to the value of the service being provided by The Langham Auckland.

To achieve a better communication system and implementing the required changes the management has to take some actions. This will require some resources which will allow the actions to improve the communication in The Langham Auckland.

The organization has to use multiple channels for communication. Using only one channel might result in failure in successfully reaching a message as different employees respond to different channels. According to Argenti, (2015), the management has to determine which person requires which channel of communication. The message has to be delivered in a consistent way; otherwise it will get distorted on the way to the receiver of the message. Thus, the need for consistent communications is very important. The organization has to make sure that every employee of The Langham Auckland goes through a training process where identifying different situations and reporting them is being discussed thoroughly. Creating a regular horizontal communication chain is required. It will make the staffs familiar with the “do’s and don’ts” in the communication system. According to Poulston and Jenkins, (2013), a feedback process is required with the communication system. Feedbacks will help the organization's communication process get more accurate and efficient. 

  • Developing communication strategies: Developing communication strategies will help the organization reach its communication goals.
  • Using better technologies: the existing technology being used for communication can either be updated or replaced by new technology to get a better quality of communication.
  • The Human Resource Management can include more skilled personnel who can improve the quality of the communication process prevailing in The Langham Auckland.
  • Regular training with improving technologies is required in order to ensure a better handling of the communication system.
  • The resources needed for creating a better communication in the organization; the organization has to hire personnel who are specialized in this domain. According to Markey and Knudsen, (2014), this will ensure high quality of information mobility.

Activity

Week 1-2

Week 3-4

Week 5-6

Week 7-8

Week 9-10

Identifying the effective communication processes

Choosing the appropriate communication process for The Langham Auckland

Selecting personnel fitting the chosen communication process

Acquiring required technology using the resources available

Installing the communication system

Regular training for a specific period to create top quality information mobility

Table 1: Gantt-chart for creating a better communication system.

Source: As created by the author.

The figure above shows the milestones that the organization has to cover in order to create a better communication system in The Langham Auckland.

To measure the success of implementing better communication system, this following table has to be followed by The Langham Auckland (Lacey, 2013).

Goals

Measure of success

Dialogue creation

Clear business communication between the sender and the receiver of the message.

Teamwork and communication

Effective communication is achieved by the team. No one is lagging behind.

Credibility of the information

The information gathered by internal and external communication are trustworthy and reflects positivity.

Quick delivery of emergency information

In the cases of urgency, messages are delivered and received quickly as required.

Table 2: Measures of success for The Langham Auckland’s better communication.

Source: As created by the author.

Conclusion:

The Langham Auckland is dealing with that part of the industry which has been revolutionized by the internet facilities. The services provided by the restaurant are no more unique as the competition in the market is rising rapidly. The quality of the services is differentiating The Langham Auckland from its rivals. There are several places where the hotel can add more value to the services provided to the customer. The report shows that The Langham Auckland can improve the five gaps in order to improve the quality of their services. The gap which demands priority is communication. The communication process of the hotel can be changed into a better and updated process. It will make the workers more efficient and ease conversations with the customers.

It will take The Langham Auckland ten weeks to complete the whole transformation process. This transformation in the system also requires training for the employees to get used to. The technology which will be adopted by the hotel can come from the research and development wing of The Langham hospitality group. Using social media properly to address the young generation will also increase the market demand for the services provided by The Langham Auckland.

References:

Argenti, P. A. (2015). Corporate communication. McGraw-Hill Higher Education.

Bargiela-Chiappini, F., & Nickerson, C. R. (2014). Writing business: Genres, media and discourses. Routledge.

Becken, S., Rajan, R., Moore, S., Watt, M., & McLennan, C. L. (2013). White paper on tourism and water.

Brunton, M., Kankaanranta, A., Louhiala-Salminen, L., & Jeffrey, L. (2015). Are Strategic Communication Management Competencies and Personal Attributes Global? A Case Study of Practice in Finland and New Zealand. International Journal of Business Communication, 2329488415608846.

Buhalis, D., & Crotts, J. (2013). Global alliances in tourism and hospitality management. Routledge.

Campbell, C., & Ma, J. J. (Eds.). (2015). Looking Forward, Looking Back: Drawing on the Past to Shape the Future of Marketing: Proceedings of the 2013 World Marketing Congress. Springer.

Choudhury, N., & McIntosh, A. (2013). Retaining students as employees: Owner operated small hospitality businesses in a university town in New Zealand. International Journal of Hospitality Management, 32, 261-269.

Hall, C. M., & Rusher, K. (2013). Risky lifestyles? Entrepreneurial characteristics of the New Zealand bed and breakfast sector. Small Firms in Tourism, 83.

Kernbach, S., Eppler, M. J., & Bresciani, S. (2015). The Use of Visualization in the Communication of Business Strategies An Experimental Evaluation. International Journal of Business Communication, 52(2), 164-187.

Lacey, C. A. (2013). Barbara Leigh Smith Bodichon and the Langham Place Group. Routledge.

Lam, C., Ho, G. K., & Law, R. (2015). How can Asian hotel companies remain internationally competitive?. International Journal of Contemporary Hospitality Management, 27(5), 827-852.

Langham Hospitality Group, (2016). Langham Hospitality Group | Luxury Hotels and Resorts Worldwide. Langhamhospitalitygroup.com. Retrieved 5 November 2016, from https://www.langhamhospitalitygroup.com/

Markey, R., & Knudsen, H. (2014). Employee participation and quality of work environment: Denmark and New Zealand. International Journal of Comparative Labour Law and Industrial Relations, 30(1), 105-126.

Mok, C., Sparks, B., & Kadampully, J. (2013). Service quality management in hospitality, tourism, and leisure. Routledge.

Poulston, J., & Jenkins, A. (2013). The persistent paradigm: Older worker stereotypes in the New Zealand hotel industry. Journal of Human Resources in Hospitality & Tourism, 12(1), 1-25.

Rachet, B. (2014). PESTEL analysis and Porters Five Forces For Innocent Drinks Company. Docs. school Publications.

The Langham, Auckland,. (2016). Auckland Luxury Hotel | The Langham, Auckland. Langhamhotels.com. Retrieved 5 November 2016, from https://www.langhamhotels.com/en/the-langham/auckland/

Thill, J. V., Bovée, C. L., & Chatterjee, R. B. (2013). Excellence in business communication. K. Subramanian (Ed.). Pearson.

Tse, T. (2014). The making of an international hotel brand: a case study of the Langham. Journal of hospitality & tourism cases.

Williamson, D., Harris, C., Matthews, S., & Parker, J. (2012, March). Golden opportunities? A decade of exit interviews and turnover in the New Zealand hotel industry. In CAUTHE 2012: The new golden age of tourism and hospitality; Book 2; Proceedings of the 22nd Annual Conference (p. 675). La Trobe University.

Yüksel, I. (2012). Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), 52.

Yusof, M., & Amalina, N. (2014). Customers' expectations of hotel green marketing: a New Zealand quantitative study.

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