Strategic Management in Hospitality and Tourism Kemal Birdir, Ph.D. Mersin University Turizm Faculty

DEFINING THE HOSPITALITY AND TOURISM CONTEXT Services are becoming increasingly an important part of the global economy. It is estimated that on average 70 percent of the gross domestic product (GDP) of the Organization for Economic Co-Operation and Development (OECD) (2007) countries come from service industries. It produces over 11 percent of the world’s gross domestic product and employs over 10 percent of the global workforce (UNWTO, 2003).

DEFINING THE HOSPITALITY AND TOURISM CONTEXT Kandampully (2007) notes that hospitality organizations operate within a network of service organizations. To a large extent, they are interrelated and interdependent, and include the following: – Tour operators, travel agents, and tourism organizations – Travel and transport operators – Leisure, recreation, and entertainment venue – Restaurants, bars, clubs, and cafes – Hotels, resorts, motels, camping grounds, bed & breakfast (B&B) establishments, and hostels Butler and Jones (2001) use tourism as an all-encompassing term that covers all aspects of people being away from their home and hospitality as a specific part of providing accommodations and meals for tourists. They note that the one difficulty in their definitions is that the hospitality industry also serves many people who are not tourists, such as local residents

DEFINING THE HOSPITALITY AND TOURISM CONTEXT In this book, to get a broader view and include all of the different types and sizes of organizations in the field, we use the terms hospitality and tourism interchangeably. Thus, these terms encompass travel, accommodations, food services, clubs, gaming, theme parks, attractions, entertainment, recreation, conventions, and nonprofit tourism organizations such as national tourism offices, destination management, and marketing offices. It is clear that the H&T industry is a composite of a number of distinct industries that are closely interrelated and interdependent. These industries operate within a global network.

TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS In terms of their primary services, organizations can be categorized as follows: – 1. Travel and transport – 2. Accommodations (lodging) – 3. Food and beverages – 4. Entertainment and recreation – 5. Tourism offices or destination management organizations – 6. Nongovernmental tourism organizations each can be further broken into several subgroupings. For example, under accommodations, there are hotels, motels, guest houses, hostels, villas, and time- shares. Some of these organizations can be further grouped depending on their service level, such as luxury hotels, boutique hotels, midmarket hotels, and budget hotels, or according to their star ratings, such as five-star (diamond), four-star, and three-star hotels. A further grouping of the H&T organizations can be made based on their size such as small, medium, and large. Independent and flexible small and medium-sized enterprises (SMEs) dominate the tourism market worldwide. Another classification of H&T organizations can be made according to profit motive. Finally, H&T organizations can be further grouped based on their geographical coverage. These include local, regional, and global firms. Local organizations operate in only one city or country, whereas regional organizations operate in only a geographical region such as Europe, the Middle East, or North America.

CHARACTERISTICS OF HOSPITALITY AND TOURISM ORGANIZATIONS 1. Inseparability—customer participation in the service process 2. Simultaneity 3. Perishability 4. Intangibility (the tangible–intangible continuum) 5. Heterogeneity 6. Cost structure 7. Labor intensive

Table 2.1 Areas Where the Industry Characteristics Impact on Managing H&T Firms 1. Analyzing the internal and external environment as an ongoing process 2. Making decisions in the areas of service delivery, pricing, and marketing 3. Strategic planning practices 4. Developing a sustainable competitive advantage 5. Achieving and evaluating intended outcomes 6. Managing capacity to maximize revenue 7. Managing the cost structure of the company 8. Allocating available financial and human resources for future strategies 9. Evaluating and improving the service delivery process 10. Interacting and satisfying customers 11. Training, developing, and motivating employees and managers (our internal guests) 12. Designing and decorating facilities

THE CASE FOR STRATEGIC MANAGEMENT IN H&T ORGANIZATIONS Table 2.2 Areas Where Strategic Management Can Help H&T Organizations Providing a holistic view for the entire H&T organization Providing a sharper focus on what is strategically important Providing a link between the external environment and the internal environment Analyzing a complex and rapidly changing external environment Analyzing an organization’s strategic resources Giving a clear sense of strategic vision and direction Defining organizational purposes Developing measurable goals and objectives Identifying key resources and investing in core competencies Formulating decisions and making them happen Managing change Coordinating organizational activities and allocating resources Understanding the complexities of decision making and the structuring of an organization Understanding the role and importance of the organizational structure and culture on the strategy process Reducing and managing uncertainty inside the organization Measuring intended and unintended outcomes of the strategy process