Tourism and Hospitality

Business Strategy
 Tourism and Hospitality Business Strategy

• The services offered by the tourism and hospitality sectors

are much different from any manufacturing products.
Hence, it requires different management and concepts.
• The tourism and hospitality industry is comprised of
organizations that offer services to guests in the areas
of food, drink, lodging, theme parks, airlines, gaming
centers, cruise ships, trade shows, fairs, meeting planning,
and convention organizations.
• The challenge for all organizations in this industry is to
ensure that their personnel always provide at least the
level of service that their guests want and expect—
every time, perfectly.
• Service quality and service value are defined NOT by
managers, auditors, or rating organizations but by
Customers/Guests.
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 Tourism and Hospitality Business Strategy

• All employees must treat customers like

guests and manage the organization from
the guest’s point of view.
• It increases guest’s satisfaction, which leads
to more repeat business, which in turn
drives revenues up.
• The goal is to create and sustain an
organization that can effectively meet the
customer’s expectations and still makes a
profit.
• Three aspects of the guest experience
namely:
• service product
• service setting (also called service
environment or servicescape)
• service delivery

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 Tourism and Hospitality Business Strategy

1. Meeting Customer Expectations

- Customers are the most important in practicing
guestology.
- external customers (guests) and internal
customers (employees).
- Main goal: ensure the delight of the guests be it
first time guests (with general expectations) or
returning guests (with more specific
expectations).
- Smart hospitality organizations know that their
employees must get the same care and
consideration that they want their employees to
extend to their guests.

2. Meeting Increased Competition

- The competition for guest loyalty is intense and
will only grow more so in the future with New 4
hospitality organizations spring up every day.
- If they don’t provide the experience their guests
expect, someone else will.
Tourism and Hospitality Business Strategy

“It all starts with the guest”

• The meaning of service is UNIQUE Services can be provided:

to each customer. Sometimes it • directly to the customer (e.g. a spa
means being EXTRA FAST or being treatment, a haircut, and medical
EXTRA FRIENDLY. procedures)
• The intangible part of a • for the customer (e.g., finding and
transaction relationship that purchasing tickets to a show, lawn care,
creates value between a provider and car repair).
organization and its customer, • by a person (e.g., by a service associate
client, or guest. in a restaurant or by a travel agent) or
via technology (e.g., by booking a ticket
• Something that is done for us.
online or using an ATM). Some of these
• Another, perhaps even more relationships are
common, meaning of service refers • as a combination of these
to the entire bundle of tangibles characteristics
and intangibles in a transaction 5

with a significant service

component (Service Product).
Tourism and Hospitality Business Strategy

• The need to understand the guest is essential.

• The first step: understand the guests that are in their target market,
to whatever extent possible.
• Ideally, this understanding would include:
• the traditional demographic breakdowns of age, race, gender, and guests’
home locations;
• the psychographic breakdowns of how they feel, what their attitudes,
beliefs, and values are, and what kind of experience they need, want, and
expect the hospitality organization to deliver; and
• the capabilities (their knowledge, skills, and abilities [KSAs]) to coproduce
the experience.
• Meeting the expectations of a customer who arrives needing but not
really wanting the service and angry at the service provider, perhaps
even at the world itself, is difficult. In such situations, ensuring the
quality of the service experience is even more crucial because of the
circumstances leading to the need for the services.
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Tourism and Hospitality Business Strategy

• The sum-total of the experiences that the guest

has with the service provider on a given occasion
or set of occasions
• Tourism and hospitality organizations use their
strategy, staff, and systems to provide each
guest with a seamless three-part guest
experience—service product, service setting,
and service delivery—each part of which will at
least meet the guest’s expectations and the sum
total of which ideally will make the guest say, or
at least think, “wow!”
• Service Delivery System includes:
• inanimate technology part (including
organization and information systems and
process techniques)
• people part—most importantly, the frontline
server who delivers, or presents the service,
or co-produces it with the guest.
• Guest experience = service product + service
setting + service delivery system 7
1. Service Product
- sometimes called the service package or service/product mix, is why the customer,
client, or guest comes to the organization in the first place.
- Most service products have both tangible and intangible elements and can range
from mostly product with little service to mostly service with little if any product.
2.Service Setting
- the setting or environment in which the experience takes place.
- The term servicescape has been used to describe the physical aspects of the setting
that contribute to the guest’s overall physical feel of the experience.

3.Service Delivery
- includes the human components (like the restaurant server who places the meal on
the table or the sound engineer at a concert) and the physical production processes
(like the kitchen facilities in the restaurant or the concert’s sophisticated
amplification system) plus the organizational and information systems and
techniques that help deliver the service to the customer.

Tourism and Hospitality Business Strategy

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• is often used to refer to the
person-to-person interaction or
series of interactions between the
customer and the person delivering
the service
• Is considered as the heart of the
service
• is where most customers judge the
quality of service
• An encounter is the period (of time)
during which the organization and
the guest interact.
• they can make or break the entire
guest experience 9

Tourism and Hospitality Business Strategy

 Tourism and Hospitality Business Strategy

• Guests arrive with a set of expectations

• what the chosen hotel or restaurant can and should do
• how it should do it
• how the people providing the service should behave
• how the physical setting should appear
• how the guests should perform their roles or
responsibilities in coproducing the experience
• how the guest should dress and act
• what the cost and value of the successfully delivered
service should be
• The organizational responsibility for
bringing new or infrequent guests to the
organization usually lies with the
marketing department’s ability to make
promises about what expectations will be
met.
• People’s past experiences with an
organization provide the primary basis for
their expectations regarding future
experiences.
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 COST OF
Tourism and Hospitality Business Strategy

VALUE QUALITY
QUALITY
• The value of the guest
• is often used as a
experience is equal to
the quality of the reminder not of
experience as how much it costs
“calculated” divided by the organization
all the costs incurred to provide service
• independent of by the guest to obtain quality at a high
cost or value the experience level but of how
• Organizations add
• difference value to their guests’
little it costs
between the experiences by compared to the
providing additional cost of not
quality that features and amenities providing quality.
the guest without increasing the
expects and cost to guests.

the quality
that the guest 11

gets.
 Tourism and Hospitality Business Strategy

• Coined by Walt Disney, it refers to everyone and everything Creating the “show”
that interfaces with guests.
• It reflects Disney’s belief that a theme park should make
guests feel like they are immersed in a living motion picture,
where everything the guest sees, feels, and senses is part of
the story being told.
• Many companies use a theme to create a feeling that guests
are somehow immersed in another place and time to
provide guests with extraordinary experiences.
• Successful hospitality organizations have learned that a
great show is well worth spending considerable time and
effort.
• When a company uses the physical environment and other
visual cues to create a show as part of its service
experience, it is trying to transport its guests into a fantasy
world (strategy can be used for an amusement park, a
restaurant, a hotel, a cruise ship, or any place where the
hospitality experience would be enhanced by adding some 12

fantasy)
 Tourism and Hospitality Business Strategy

• It influences guest expectations

• It creates and maintains the mood
• It has positive effects on employees.
• It serves several functional purposes as
part of the service itself.

Hospitality Organizations should know that

environments are key parts of the service
product and they must carefully plan their
service settings to ensure that each component
adds to the theme that ties the whole experience
together.
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Tourism and Hospitality Business Strategy

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 Tourism and Hospitality Business Strategy

Creating the “show”

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 Tourism and Hospitality Business Strategy

• To give guests what they expect

requires research to determine exactly
what those expectations are.
• Translating those expectations into a
service product that aligns or fits the
organization’s mission and values
takes detailed planning, forecasting,
and sound intuitive judgment.
• Guests will return only if their
experiences meet, if not exceed, their
expectations hence the use of or the
need to come up with a service
strategy.
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 Tourism and Hospitality Business Strategy

1. A lower price
- It tries to design and provide pretty much the same
service that the competition sells, but at a lower
price.
- The focus is on maximizing operational or
production efficiencies to minimize the
organization’s costs.
2. A differentiated price
- Offering a service product—the guest experience
itself—that is different in ways their customers find
favorable.
- Differentiating one’s product in the marketplace
results from creating in the customer’s mind
desirable differences, either real or driven by
marketing and advertising, between that product
and others available at about the same price.
The strategies are not mutually exclusive. An
3. A special niche organization can seek to differentiate its product
- The focus is on a specific part of the total market from all others in the market (Strategy 2) by 17
by offering a special appeal—like quality, value, positioning the product in people’s minds as the best
location, or exceptional service—to attract value for the lowest cost (Strategy 1).
customers in that market segment.
Tourism and Hospitality Business Strategy

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Tourism and Hospitality Business Strategy

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 Tourism and Hospitality Business Strategy

• Getting everyone in the organization

committed to high levels of guest service is a
daunting challenge.
• Leaders need to spend their personal time and
energy necessary to create and sustain the
organizational culture that still defines the
corporate values for which their organizations
are famous.
• They knew that, as leaders, they are
responsible for defining the culture.
• They should have a strong commitment to
excellent service and communicate it— 20
through their words and deeds—clearly and
consistently to those inside and outside the
organization.
Tourism and Hospitality Business Strategy

• Strategy is no more than a

piece of paper without a
supporting culture.
• The organization’s strategy
must be connected to its
culture.
• No matter how brilliant and
well thought out a strategy is,
it will fail if it doesn’t fit with
the organization’s cultural
values and beliefs.
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 Tourism and Hospitality Business Strategy

• Beliefs form the ideological core of the

culture. It defines the relationships
between causes and effects for the
organizational members. It is how people
in organization make sense of their
relationships with the external world and
its influence on the internal organization.
• Values are preferences for certain
behaviors or certain outcomes over
others. It defines what is right and wrong,
preferred and not preferred, desirable
behavior and undesirable behavior.
• Norms are standards of behavior that
define how people are expected to act
while part of the organization.

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 Tourism and Hospitality Business Strategy
• The organization’s culture, then, represents a
shared learning process that continues over time as
the people inside the organization change, grow,
and develop while responding to a world that does
the same.
• The world external to the organization (consisting
of the physical, technological, and cultural
environment) defines the activities and patterns of
interactions for the organization’s members who
must deal with that external world.

• The world changes and the people inside the

organization change.
• The culture must also evolve to help members
cope with the new realities that the
organization faces.
• No matter how good a job the founder did in
defining the culture and getting everyone into
it, the next generation of managers must work,
perhaps even harder, to sustain those cultural
values
• The communication tools of symbols, legends,
language, stories, heroes, and rituals need 23
constant attention to sustain the cultural
values in the face of changing circumstances.
Tourism and Hospitality Business Strategy

• Leaders define the culture (or redefine it if necessary), teach

it, and sustain it. Doing so may be their biggest
responsibility in the organization.
• An organizational culture that emphasizes interpersonal
relationships is uniformly more attractive to professionals
than a culture that focuses on work tasks.
• Strong cultures are worth building; they can provide
employee guidance in uncertain situations, when company
policies or procedures are unavailable or unwritten.
• Subcultures will form in larger organizations. A strong
culture will increase the likelihood of keeping the
subcultures consistent with the overall culture values in
important areas.
• Sustaining the culture requires constant attention to the
means of communicating it so that they all consistently
reinforce and teach the organization’s beliefs, values, and
norms of behavior to all employees.
• Excellent hospitality organizations hire and retain employees
who fit their culture and get rid of those who do not. The fit
between the individual and the culture is strongly related to 24
turnover, commitment, and satisfaction