Contemporary policy and practice in hospitality management

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Contemporary policy and practice in
hospitality management

EXECUTIVE SUMMARY
Different types of hotels including boutique hotels are availing the
service of 3rd party companies because of several reasons. The purpose of
this research report is to evaluate the impact of third party online hotel
booking websites on the hospitality and tourism industry. It states how hotel
organizations can exploit and compete with the widespread growth of these
websites. The study has been developed in order to create an in-depth
analysis of the topic and various factors affecting its growth and
development within the market. The study has been done on the basis of
secondary research analysis.
ABC is a finest 4 star boutique hotels 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 as
Expedia and hotel.com. The study focuses on analysing the factors which
motivates the businesses to develop third party portals for business growth.
The stated company has been taken as the base for the research and
findings. The report helped in analysing the advantage of third party portals
to the company and consumers as well. It also focuses on the challenges
faced by the companies in terms of technological factors etc.
The report helped in analysing discounting strategies and its impact on
the present business. Models such as PESTEL analysis has been used to find
out the organizational position and threats associated with it. Th final part of
he report discusses about clients and their needs. Hence, the study helped in
developing a clear and effective analysis of third party portal for the stated
business. It could be concluded that ABC has developed an effective brand
image within the market using the stated measure. However, the
organization still has effective scope for development.

TABLE OF CONTENTS
Introduction ............................................................................................................................... 3
Popularity of 3rd party booking websites .................................................................. 3
Critical analysis of use of internal IT systems to market and promote the
business .................................................................................................................................. 5
Critical analysis of discounting strategies ................................................................. 7
Pestle analysis of ABC boutique .................................................................................... 8
Critically analyse change management issues with competing with third
party players .......................................................................................................................10
Critically discuss the client groups .............................................................................10
Conclusion ............................................................................................................................... 11
REFERENCES ...........................................................................................................................12

INTRODUCTION
At present, in the hotel industry, 3rd party booking websites have
gained so much popularity. Different types of hotels including boutique
hotels are availing the service of 3rd party companies because of several
reasons. The purpose of this research report is to evaluate the impact of
third party online hotel booking websites on the hospitality and tourism
industry. It states how hotel organizations can exploit and compete with the
widespread growth of these websites. At last the report will end in analysing
some of the change management issues associated with the services.
Popularity of 3rd party booking websites
ABC 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 as
Expedia and hotel.com. These are the bodies which assists the customers in
doing reservation for them on behalf of the hotels. Customers can compare
prices of different types of hotels on these platforms (Acton, 2012). There
could be many reasons why hotels make use of these services.
Increasing customers – One of the best advantage derived from
taking the services of these websites is the ability to gain more
customers. By taking the services the boutique can reach to more
number of customers which can increase its occupancy rates. More
occupancy means more profits for the hotel (Anheiser, 2011). It can
increase 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 several
hotels before taking a particular decision. The busy consumer is
expected to pull up comparable hotels in one browser window despite
of searching six different hotel brands. Third party sites facilitates the
ease 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 services
is the price. Consumers usually get low prices on these websites. The
prices are often less expensive as compared to the listed price on the
hotel website. However it is not a profit making situation for the
company but at least they are getting customers for the business.
Promotion – Through the third party channels, these boutiques get
the chance to promote their services among the masses. The
customers can see each and every information about the boutique on
the websites (Falk, 2011). They promote the name and services of the
company and it came into notice for the customers.
Quick payment – Online booking systems requires customers to make
prepayment for the activities and rentals. In this way company can put
the money into its pockets quickly and there is no need to make a
request a deposit or wait for payment on the day of the transaction.
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Advantages for the consumers
There 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 prices
placed on the sites are comparatively less expensive than the listed
price on hotel websites. It is evident that price is the biggest
influencing factor for every customer (Fons, Fierro and y Patiño, 2011).
They will definitely drive towards hotels which are offering them better
prices. They can also easily compare the prices between different
options and then take a sound decision
A faster booking process – These platforms also offer a faster booking
process. It offers ease and comfort to the customers. They can easily
book their accommodation. The process becomes even faster in case if
the individual is a repeat customers and the website is already having
all the details about them.
Infrastructure – The infrastructure behind sites like Expedia, hotel.com
etc, is rock solid. It means booking and payment process can be seen
very reliable (Future trends in the tourism industry. 2012). These
things attracts the customers and make them go towards adopting the
services.
Range of options – Another benefit derived by the customers is the
availability 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 process
more sound and effective.
Easy availability and accessibility – The third party website services are
opened for 24 hours a day (Blanke and Chiesa, 2013). Customers can
access 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 the
business
Apart 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 very
expensive as they tend to be custom made. The website must contain
the user friendly features which can offer comfort and relaxation to the
customers (Cuccia and Rizzo, 2011). The installation is not easy as lot
of research and development work is needed on it. For a small
boutique it may be difficult to adopt the IT systems into the business.
Need of internet access – If the boutique is running its operations in
the remote areas where there is no availability of the internet, then it
may create many disturbances. There is a need of reliable internet
access so that reservation status can be checked. Till date there are
many areas where internet is not available for the local communities. It
is also evident that without internet life is considered dead for the
humans (Hall, 2011). It may create lack of knowledge and information
for the customers. Hence this may restrict the marketing and
promotion activities of the company. So constant access to the internet
is needed in case of third party booking services.
High commission charges – The boutique can also face high
commission charges on use of third party website services. It can be a
big drawback as it may affect the financial position of the hotel. These
days the websites charge different types of expenditures for giving the
services (Liu, Tzeng and Lee, 2012). It can be difficult for the hotels to
meet up those expenses. Hence hotels will have to look for websites
which charges appropriate prices and delivers quality services.
Technical errors – Sometimes technology also comes with many
flaws and errors. These errors can negatively impact the functioning of

the websites. The systems are to be highly reliable. In case if the
systems breaks down, then a lot of business can be lost for the
company (Sundbo, Orfila-Sintes and Sørensen, 2007). The technical
errors can occur at any point of time without any estimation. The
consequences of the errors can be very painful and devastating for the
business. Apart from that it will also affect the reputation of the
boutique within the market. Hence the systems are to be free from
errors and must be capable of handling the issues. In case if anything
happens, appropriate measures are to be adopted at immediate point
of time.
Skilled workforce – In order to operate the IT systems for the
purpose of promotion and marketing, there is a requirement of highly
skilled and talented manpower. These people must be skilled enough
to fight with the issues which occur during the functioning of websites
(Willis, 2011). However affording such IT guys can be difficult for the
boutique because generally these people are paid high salaries. This
may disturb the financial budget of the business and also act as
financial burden. Employees are the assets of the company and
adequate value should be given to them for the contribution they
make towards the business.
Lack of consistency – Another point of concern for the users is the
lack of consistency in the services. It has been seen that due to
technical errors the IT systems loses their consistency in the delivery
of the services. Due to inconsistency customers faces many
inconvenience and discomfort (Tourism today. 2014). It also damages
the reputation in the local community. Hence there is a need to have
consistency in what has been offered as this helps in promoting
customer loyalty.

Dependency – In case of third party services, the boutique will have
to remain dependent on the website for the business. This dependency
may create many chaos. High dependence may also lead to loss of
clients from the other sales channels. It may also affect the quality of
the services creating lot of inconvenience for the customers (Impacts
of Tourism. 2014).
Selection of wrong channel – It is believed that not all the online
booking systems are equal. The use of IT systems can be frustrating if
it offers poor customer service or few features. Hence in this case it is
important to do the homework first and select a system which is long
lasting and effective. It must be capable enough to provide great
amount 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 loyalty
programs. It is a loss for the consumers as well as the boutique (Janta,
2011). It is decreasing the loyalty rate for the business. Another perk
for consumer booking direct is the online booking systems that the
hotel brands offer. Consumers are able to establish an account and
save their preferences. It makes the reservation process easy every
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time. Hence the boutique is required to advertise this perk as a
method to attract more direct reservations.
Poor customer service – It has been noticed that more third party
website outsourced their customer service departments. It is a
drawback for the hotel itself. In case of third party online booking, the
website acts on the behalf of the hotel, so whatever the wrong
happens will reflect on the image of the hotel (Novelli, 2008). In case
one bad service experience, next time the customer will hesitate to
use the service.
Critical analysis of discounting strategies
There can be many discounting strategies used by the companies. These are
as follows:
Improving the cash flow – Giving discount is an effective approach
to give the buyers an incentive to pay the company early. For example,
if the company has 60 days terms for invoices, then it might consider
offering a two percent discount for the payments received within 30
days (Rihova, 2010). This gives customers a meaningful financial
benefit and it also improves the revenue management by accelerating
the payments.
Solving issues – Different types of issues can be solved by giving the
customers the needed discount. For instance if customers calls in with
a complain, for refund etc, then discounting may be an effective
method to resolve the issues and retain a valuable customers
Reducing excess products - Company should focus on avoiding
steep discounts. It may be more advantageous to sell of the stock
than to keep the prices high (Falk, 2011). In case if the company is
dealing with seasonal products or perishable items having limited
shelf life, then adopting discounting approach can be effective.

Breaking into new markets and creating loyalty - When boutique
expands into new market, discounting method offer ways to generate
interest and encourage buyers to try out the new product. Discounts
are very useful in building the customer loyalty in the target markets.
Time sensitive discounts - Offering time sensitive discounts can
also help in speeding up the sales. For instance discounts can be
offered at any point of time (Huang, 2009).
Driving volume – A very common strategy in the business to business
market place is to extend the financial opportunities across the
customer various business units. Offering a large volume of discount is
useful in case if the business has a large customer segment. This
approach can fill capacity and increase the purchasing power with the
suppliers.
Addressing a competitive threat - Firms operating in the B2B space
make efforts to avoid discounting. However it creates a possible entry
point for the competitors (Stronza, 2009). In case if other companies
are using the approach of lower prices in order to increase the market
share, 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 boutique
Political – The business of ABC is affected by political factors. The
tourism authorities such as CTH (The Confederation of Tourism and
Hospitality), Visit England etc affects the business practices of ABC
boutique. There are some standards and provisions set by these bodies
which are needed to be fulfilled by the companies operating in the
industry (Acton, 2012). It is done to make sure that no inconvenience
is caused to the tourists coming in UK.

Economic – Factors such as interest rates, inflation, recession etc
creates an impact on the business activities of the company. At
present the economic position of UK is stable and gradually it has
recovered from the 2008 recession storm (Cazcarro, Hoekstra and
Chóliz, 2014). The slowdown in the economy is causing the travellers
to abandon the expensive hotels chains to save money. It sound good
opportunity for boutique hotels like ABC.
Social - The increasing role of social media also affects the business
practices of the company. The taste and preferences of the customer
changes 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 aspects
of life can be seen. Presence of advance booking functionalities put an
impact on the existing services. Use of Information technology systems
has become essential because customers have also become techno-
friendly (Fons, Fierro and y Patiño, 2011). The third party booking
websites creates many change management issues for the company.
Environmental – There is an impact of changes in the weather
conditions also on the ABC boutique. Customers would not like to visit
a destination where the environment is not good. Things like natural
calamities, environment pollution highly affects the business practices
of the ABC. There is a potential damage to the reputation due to
environment pollution (Future trends in the tourism industry. 2012).
Legal - Any changes in the UK rules and regulations related to the
hotel industry can affect the company. The Food Safety Act and
Consumer Protection Act make influence on the functioning.

Critically analyse change management issues with competing with third
party players
Change management is a process of resisting and dealing with the
change. There are many issues related to the change which can be faced by
the company while competing with third party players:
Market dominance – It is evident that at present the market is filled
with the presence of many third party service companies. This has
created high level of competition for the boutiques. Players like
Expedia, hotel.com and many others are showing high level of market
dominance. They are regulating the market conditions not giving too
much space for the hotels (Cuccia and Rizzo, 2011). High level of
effectiveness of the third party firms are shown on the customers.
Dominance shown by one player is encouraging other players also to
come forward and join the race of competition. These things are
establishing many challenges for the hotels and boutiques. They are
not 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 are
many advantages available to them such better price, faster booking
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process, better infrastructure, range of options, user friendly features
etc. Hence customers are preferring to do reservation from the third
party despite of going to the hotel website (Liu, Tzeng and Lee, 2012).
This has diverted the customer traffic for the companies. It is costing
them in form of loss of customers.
Government support – In the present context, for the benefit of the
customers, government is encouraging the emergence of different
types of third party websites. It is strengthening their position and
giving them high amount of support (Huang, 2009). However it can be
a de-motivating situation for the hotels as it is increasing the level of
competition for them.
Critically discuss the client groups
Millenniums - These are the demographic cohort following generation
X. It refers to the generation having the birth years ranging from the
early 1980s to the early 2000s (Falk, 2011). The third party services
are likely to be less availed by this generation because the economic
prospectus for millennials have been declined largely from many
authorities.
Baby boomers - These are the people born during the demographic
post world war II. These lie between the age range of 51 and 70. The
third party service are likely to be less availed by this generation
because this kind of people are more of traditional values and beliefs.
XY generation – This is more referred to the young generation. It is
believed that third party services are more likely to be used by this
generation because they are more techno-friendly (Rihova, 2010).

CONCLUSION
From the above study it can be concluded that third party website
players have the potential to show dominance in the market. Gradually their
presence in establishing in the market. Through the third party channels, the
boutiques get the chance to promote their services among the masses. The
prices placed on the sites are relatively less expensive than the listed price
on hotel websites. The installation of IT system can be very expensive as
they tend to be custom made. Apart from many advantage there are many
disadvantages also in the services of third party. It is expected that mostly
the services will be used by XY generation in the future.
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REFERENCES
Books and journals
● Acton, Q. A., 2012. Issues in Hospitality, Travel, and Tourism: 2011
Edition. Scholarly Edition.
● Anheiser, H., 2011. Cultures and Globalization: Heritage, Memory and
Identity. SAGE
● Blanke, J. and Chiesa, T., 2013. The Travel & Tourism Competitiveness
Report 2013. In The World Economic Forum.
● Cazcarro, I., Hoekstra, A. Y. and Chóliz, J. S., 2014. The water footprint of
tourism 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: Testing
short-and long-term impacts of wildlife tourism experiences using
structural equation modeling. Tourism Management.

Contemporary policy and practice in hospitality management

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