Hotel Management: Strategic Concepts and Perspectives in Hospitality

Luiss Libera Università Internazionale degli Studi Sociali Guido Carli

Hotel Management STRATEGIC CONCEPTS AND PERSPECTIVES IN THE HOSPITALITY AND TOURISM INDUSTRY

LUISS ABSTRACT

Definitions

Strategic management in the H&T industry 3 levels of strategy: Corporate strategy Business strategy Functional strategy

2 different perspective for strategy development in the tourism industry:

• Strategic positioning
• School resources
• Aer Lingus example

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Traditional Perspective of Strategic Management

2The traditional perspective of strategic management . the 1960s-70s - Strategic Management emerged, borrowing mainly from the economic field. . Main studies were developed mainly around the competitiveness of industries, industry concentration, diversification of products and services, and market power. . But all these studies focused on industries, and individual companies' differences did not matter. · Only, a decade later, a new general principle, driven by empirical evidences in the field of strategic management, suggest that the ability to align the skills and other resources of the corporation to the market needs represents a source of competitive advantage and the foundation of a strategy.

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Definitions of Strategy

3Definitions · Strategy: setting priorities and goals, determining actions to reach goals, and mobilizing assets to execute the activities. · Strategy: defines the goals achieved by the resources. · Whittington (2001) - "as the way by which a firm fulfills its mission and attains its objectives" "pattern of resource allocation that enables firms to maintain or improve their performances." · Black (1994) - " A good strategy neutralizes threats, exploits opportunities, capitalizes on strengths, and or fixes weaknesses."

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Porter (1996) - "What Is Strategy?"

4Porter (1996) - "What Is Strategy?" Strategy as: · the creation of a unique and valuable position involving different sets of activities; · making trade-offs in competing - the essence of strategy lies in creating favorable asymmetries between a firm and its rivals; · creating fit among a company's activities. · Competitive strategy (1980) - "a company can outperform rivals only if it can establish a difference that it can preserve." · No strategy can exist without resources. No resources exist without a strategy. · Resource allocation is a requisite for strategy formulation, planning, and implementation

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Resource Allocation and Strategy

5· White (2004) - a set of intentions and a plan for using resources (economic and human) to achieve goals. Resource allocation is the most critical activity that allows the design and execution of a strategy · White (2004) - nothing is more detrimental than for resources to be allocated in a way that is not consistent with priorities indicated by annual objectives · Grant (2002) - strategy can be thought of in 2 ways: 1. As a pattern that emerges in a sequence of decisions over time or 2. as an organizational plan of action intended to move a company toward the achievement of its shorter-term goals and, ultimately, its fundamental purposes. · Also, in rapidly changing environments and small businesses, strategies are not planned, and the manager seizes opportunities following guidelines defined by the firm strategic direction or mission. In this case, the strategy reflects the manager's intuitions, and it became clear over time as a pattern in a stream of decisions.

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Example 1: Boutique Hotel in Tuscan Countryside

Context and Initial Strategy

6Example 1 Context: A small boutique hotel located in the Tuscan countryside opened a new restaurant service at the start of the summer season, offering lunch and dinner to guests and walk-in visitors. The original idea was to enhance the guest experience and attract outside clientele during the day. Initial Strategy: Planned food service from 12:30 to 14:30 (lunch) and 19:00 to 22:00 (dinner), requiring a full kitchen and dining staff on both shifts.

Observation Over Time

Observation Over Time: By mid-season, the hotel manager noticed a consistent pattern: . Lunch service had very few guests, as most tourists spent that time visiting nearby towns, wineries, or attractions. · Guests returned to the hotel mid-to-late afternoon, looking for a light snack or refreshment before dinner.

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Emergent Strategy Decision and Outcome

7Example 1 Emergent Strategy Decision: . The manager decided to close the restaurant at lunch. · Instead, they introduced an afternoon "merenda" service (typical Italian tea- time), offering local pastries, cold drinks, and small plates from 16:00 to 18:30. . This required fewer staff and lower kitchen intensity, reducing operational costs. . The new service aligned with guest behavior and was positively received, especially by families and international tourists unfamiliar with the Italian concept of "merenda." Outcome: · Cost savings on personnel and food prep. . Increased guest satisfaction and online reviews highlighting the unique afternoon service. · Higher average spend per guest during afternoon hours.

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Example 2: Boutique Hotel in Lisbon

Context and Situation

8Example 2: Context: A small boutique hotel in Lisbon opened in 2019, focusing on sustainable tourism and local experiences. The owners had a general mission: "to promote authentic, eco-conscious travel in Portugal." Situation: When COVID-19 hit in 2020, the hotel couldn't rely on international tourists. Instead of following a pre-planned strategy (which would have failed), the manager started: · offering long-term stays for remote workers, · partnering with local restaurants to deliver meals, · creating outdoor, private "workation" packages.

Outcome of Emergent Strategy

· Outcome: There was no detailed plan - just actions aligned with the hotel's mission. Over time, these intuitive decisions formed a new strategic direction that allowed the business not only to survive but to thrive with a new niche clientele.

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Shifts in Business Plans and Strategy Suitability

9. Both the examples point out how the shifts introduced by the GM were not part of the original business plan. · The managers adapted their offers based on observed behavior - using intuition and alignment with the hotel's mission to enhance guest experience. . Over time, can happen that the new approaches become part of the hotel's realized strategy. . Do you think this kind of strategy is suitable for all types of businesses, or is it more typical of companies with certain characteristics?

Why?

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Relevance of Strategy for Management

10Why is strategy relevant for the management? . It improves the quality of decision-making, creates consistency and unity · Josh Gareth (2002): 1. Strategy improves the quality of decision-making. 2. Strategy acts as a communication and coordination tool. Strategy creates consistency and unity among business functions 3. Strategy acts as an organizational set of targets thus, it improves performance by setting high aspirations within the organization

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Strategic Management in the H&T Industry

11Is strategic management useful in the H&T industry? In the fundamental roles of strategic management: . Decision-making: strategic management improves decision processes in the H&T industry but does not give answers. Thus, managers should conduct an independent analysis of the formulated decisions. Strategic analysis requires critical thinking and assessment supported by facts · Strategic analysis: strategic management helps identify and understand the main issues in the H&T industry. It is required to allocate resources properly · Management of complexity: complexity arises when the number of products, markets, but mainly geographical locations arise. Strategic management support the company to manage complexity in the H&T industry.

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Decision Making in H&T

12Decision making · Example: . A hotel chain evaluating whether to adopt a new contactless check-in technology. The strategic management team provides a framework to evaluate the pros and cons, benchmarking competitors, analyzing guest expectations, and estimating ROI. However, the final decision rests with the general manager of each location, who must independently assess whether the infrastructure, staff training, and guest demographics make the investment worthwhile. · Key point: Strategy informs the decision - but doesn't dictate it. Managers must adapt decisions to their specific context.

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Strategic Analysis in H&T

13Strategic Analysis · Example: . A resort in Bali experiencing a drop in bookings during the rainy season. Through strategic analysis, management identifies that: . Most competitors offer off-season packages or indoor wellness activities. · The resort lacks weather-proof amenities and rainy-season marketing. . Using this analysis, the hotel allocates budget to develop a spa area and launches a "Rain & Relax" package targeting wellness-focused travelers. · Key point: Strategic analysis highlights problems and opportunities that support informed resource allocation.

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Management of Complexity in H&T

14Management of Complexity · Example: · A global hotel brand operating in 25 countries across multiple market segments. The brand manages luxury, business, and economy hotels, each requiring different strategies. Furthermore, operating in different regions involves diverse legal systems, guest expectations, and staffing challenges. Strategic management supports the coordination between corporate-level strategy (brand consistency and growth), business-level needs (local competition, pricing), and functional-level execution (HR, marketing). · Key point: Strategy helps simplify and synchronize decision-making across diverse units and geographies.

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LEVELS OF STRATEGY

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CORPORATE STRATEGY

16CORPORATE STRATEGY . "In which market should we serve and compete? · developed by the top management · Objective: growth · Broad-level strategy where the company is viewed as a whole, as a portfolio of business units. . The business units' strategies have to be in alignment with the objective of the corporation . Each SBU needs resource allocation, and to ensure synergy, coordination among the units is required. . In large companies, the corporate strategy is related to various forms of diversification and vertical integration

LUISS Hotel Management - Strategic Management