Economic Recession & Hotel Industry

Table of Contents


Overview of Hotel Industry…………………………………………………………………6

Influence of Economic Recession on Hotel Industry………………………………………10

Management Practices of Hotels……………………………………………………………14

Marketing Strategy………………………………………………………………………….15

Human Resource Strategy……………………………………………………………………24

Financial Strategy……………………………………………………………………………30

Customer Service Strategy……………………………………………………………………33

Hotel Strategy in Present Scenario…………………………………………………………..38





Hotel industry is a part of the hospitality industry mainly oriented towards the provision of recreation, amusement and accommodation. It maintains the facilities for the potential customers that are tourists and local people. The most important segment for the success of this industry is the number of customers seeking their services. The cost and the quality of services in the hotel industry vary on the basis of the range of services opted by the customers. This industry requires intense concentration on the facilities offered to the customers, so as to develop a good image in the competitive market (Rutherford & O’Fallon 2006).

The hotel industry has formed a well defined system of the services based on the internationally established standards. The luxuries and quality of services avails the hotels with the competitive advantage, which is essential for being successful in the intense competition within the industry. Therefore, the hotel industry is getting equipped with innovative information technology based systems for the management of the operations and facilitating the customers to seek their services (Loannides & Debbage 1998).

The current business scenario accompanied by the economic recession has drastically affected the operations and business status of different industries. The hotel industry has also got affected by the economic recession. The efficiency and profitability of many companies got reduced significantly, which intended the companies towards cutting the cost and reducing the labor force. In spite of the drastic conditions imposed by the economic recession, the hotel industry managed to survive in the market.

The hotel industry is directly influenced by the tourism industry. It is due to the reason that with a decrease in the number of tourists, the arrival of customers at the hotels gets reduced, which directly affects the profitability of the hotels (Raymond 2001). For the analysis of the industry, it is necessary to assess the competence level and current players operating in the industry. Therefore, it is essential for the operators in the hotel industry to focus on the encouragement of the characteristics among the employees to establish direct contact with the customers (Rutherford & O’Fallon 2006).

The major advantage for the hotels comes from the maintenance of the facilities and the respective luxuries accordingly. The themes of the hotels are managed and promoted through the marketing activities, which creates a positive image of the theme in the market. It is essential for the hotels to focus on the genuineness and professional behavior for the customers accompanied by the positive concern and well being of the customers. It is essential to represent the positive image of the hotel in the market and being successful through the competitive advantage provided by the strategy (Seaton & Bennett 1996).

In concern to this, the hotel industry has managed to survive during the economic recession effectively. The hotel industry has growth opportunities in the current business environment due to the promotion of the hotels significantly at the international level. In order to recover from the influence of economic recession, the group of hotels mainly focused on making optimal investment on the marketing of services. The strategic planning and operations are mainly developed by the hotel managements on the basis of the survival in the industry (Peters & Pikkemaat 2006).

The hotels are positioning themselves for attaining sustainability in the operations and transforming the recession based status to the growing status. The price and revenues were managed by the hotels through the involvement of new and more refined facilities within their portfolio, so that the potential customers can be attracted significantly. The main aim of the hotels is intended towards the enhancement of the occupancy rates, which is attainable through the integration of tourism related resources with the operations. It will aid in the prioritization of the sector based objectives in order to enhance the market competitiveness (Pizam & Ellis 1999).

The human resource strategy of the hotels is also necessary to be developed in accordance with the goal of achieving the expected occupancy rate and maximum benefits from the determined market share. The main challenge for the human resource is related to the fulfillment of the requirements of the customers effectively, so that the customers will have a good experience of the services. Highly trained and motivated work force is essential for the hotels for the survival in the industry and facing the challenges from the market environment. Therefore, business conventions are required to be considered by the hotel industry in a proper manner (Hoque 1999).

In order to analyze the overall status of the hotel industry, it is essential to assess the management practices adopted by the hotels for effective survival during the last economic downturn. The paper will mainly focus on the description of the strategy of hotels for managing their survival during the recession period. It will assist in analyzing the management practices of the hotels for successfully overcoming the threats posed by the economic downturn conditions. It will also facilitate in understanding the strategy of the hotels for becoming competitive in the adverse economic conditions (Zhang, Pine & Lam 2005).

The description of human resource, marketing, finance and customer service strategies will be helpful in gaining an insight of the core areas of the hotel industry. The elaboration of the marketing strategy will include the marketing tactics and policies adopted by the hotels for maintaining their positive image in the competitive market place. The budgeting and cash flow management strategy will aid in assessing the optimum allocation of money for the promotion of the services of the hotels. The paper will be helpful in the evaluation of the business strategy of the hotels, which enabled them to survive in the adverse economic situations and sustaining the operational efficiency from the future business aspects in the market (Rutherford & O’Fallon 2006).

Overview of Hotel Industry

Hotel industry is one of the most important segments of hospitality industry, which offers accommodation, amusement and recreation facilities to the potential customers. The main aim of the hotel industry operators is to provide quality services, maintaining the adjustable facilities and directing the lodging related operations for the customers. The hotel industry provides different kinds of facilities, such as restaurants, entertainment, bars, organization of social functions, accessibility to internet, etc. The hotel rooms are also equipped with varying facilities on the basis of the level and standard of accommodation (Medlik & Ingram 2000).

The major contributor to the product line of hotels involves the hotel rooms for accommodation, sale of food products, soft drinks, alcohols and commodities. The major contribution in revenues is obtained by the hotels from the hotel room’s fee. The fundamental operations of hotels comprise of the room availability for stay, upkeep, personal services and housework. Along with this, the hotel operations also include meeting rooms, business based services and holiday resort based services, such as golf, fitness centers, tennis, swimming pools, etc (Rutherford & O’Fallon 2006).

In the hotel industry, the expenses on the management of labor force are also significant and come under the operating expenses. It is essential to be employed for the management of the key human resource in an efficient manner. The performance and profitability of the hotel industry are measured in terms of the occupancy rates, retail sales, average price of rooms and the respective revenue attained as per the availability of the rooms. In order to manage the business operations of the hotels, some companies provide their hotels to the different owners on franchise and lease.

Most of the hotels implement information technology based systems and provide the online reservation facility to the potential customers. For the management of online business operations, hotels have their own websites, which play an important role in the marketing and promotion of the services offered by the hotels. The reservation system provides the facility of online check-in and check-out, charges for the different rooms, availability of rooms, etc., which makes the communication process between the customers and the hotel management effectively recognizable (Rus & Toader 2008).

The hotels also provide the facility of internet accessibility to the customers due to the involvement of large number of business travelers and tourists as the customers. The accommodation in the hotels also differs on the basis of the customer’s requirements. The services offered in the hotel are also different for the customers with respect to their stay and purpose for coming to the hotel. Therefore, the services are categorized to be full service and limited service. Full service includes the room service, food and beverages service, retail shopping and accompanying additional services (Zhang, Pine & Lam 2005).

Large hotels also provide the facility of banquet hall, ballrooms, conference halls, garden areas for conducting social gatherings and other recreational facilities. These services are considered to be full service properties. Limited service includes the arrangement for vending machines, accessibility to internet, breakfasts, unattended gaming rooms and swimming pools accompanied by the regular housework service. These kinds of limited service does not comprise of the on-site restaurant and amenities services. Along with this, the limited services are less costly and sustainable than the full services.

There are different types of hotels, which are differentiated on the basis of the standardized services offered by them. Some of the types of hotels are resort hotels, conference hotels, casino hotels, garden hotels, all-suite hotels, extended-stay hotels and holiday inns. These different kinds of hotels provide different types of services to the customers and meet their requirements effectively for earning optimal benefits out of the services offered. Through this, the hotels have developed competence in terms of the stipulation of theme based facilities, which is becoming successful these days.

In the present competitive environment, the hotel industry is widely dominated by the large group of hotel chains. It facilitates the development of the well-known chain of hotels, which is recognized by the customers and tourists for their reliable and quality based services at the expected rates. The management of large hotels is aware about the significance of brand dependability for the customers, so they have diversified their business operations from full service to limited service under different name including the chain of hotels (Seaton & Bennett 1996).

The establishment of franchise agreements and management based contacts has facilitated the chain of hotels for managing the independent operations. It provides the independent chain of hotels to become a part of the strategy of the large enterprise, so that the services of the hotels can be internationalized in a similar manner. In order to personalize the service and provide distinctive experience to the potential customers, the concept of boutique hotels is becoming popular in the urban regions with effective supporting services and decorations (Westergard-Nielsen 2008).

Currently, the accommodating industry is widely transforming towards the adoption of limited services in the regions of suburbs, commercial, residential localities accompanied by the hotels within the vicinity of the popular restaurants. The hotels in the urban business sector are focusing on the provision of wide range of services to the customers by inter-mixing their services and the lodging alternatives. It facilitates the hotels in establishing long term business operations and arrangements by considering the food service, restaurant service and other lodging services (Medlik & Ingram 2000).

The marketing strategy of the hotels is highly oriented towards the management of promotional activities and availability of lodging facilities through the websites. The employment opportunities in the industry are high involving the operational based job positions, which can be related to finance, services, operations, administration, management, etc. Therefore, the hotel industry appears to be full of employment opportunities for the people in diversified segments. The work force of the hotels mainly focuses on the maintenance of effective interface solutions for the customers and supplying adjustable package arrangements with defined characteristics, which is highly significant in concern to the growth and development of the industry (Dibb & Simkin 1994).

There exist intense growth opportunities in this industry due to the consistent expansion of hotels in the suburban regions. The customers require leisure, lavishness based facilities and heritage lodging options, which is prominently considered by the management. Along with this, the expansion in the travel industry has stimulated growth opportunities for the hotels to furnish standardized lodging facility at the identified and key destinations of the travelers. Currently, package based traveling plans are increasing, which are configured by the hotels and the travel industry. Due to this, it is essential for the hotels to change the facilities in accordance with the market trends and comply with the innovative means of supplying facilities in a more effective way (Rutherford & O’Fallon 2006).

Influence of Economic Recession on Hotel Industry

Economic recession impose severe challenges for all kinds of industries. The challenges are related to the financial and economical aspects of the market. Hotel industry has faced adverse conditions due to the reduction in the occupancy rate and tourism industry, which has resulted into the reduction in the revenues of the hotels. In the hotel industry, demand is derived from the business, as well as, tourist based travelers, whose spending is highly influenced by the economic strength. Therefore, the profitability of the hotels is highly dependent on the efficient business operations. It is due to the reason that the expenses of the hotels are fixed on specific facilities (Heyer 2008).

The hotel industry is equipped with large amount of fixed costs, which includes wages of the work force, bills of different utilities, sustenance of different facilities, etc. Large hotel operators take competitive advantage from the economies of scale involved in their operations and can effectively put forward desired capital for the nourishment of their name in the market (Hatch 2004). Small hotel operators also become competitive in the market by offering specialized services and facilities, so that the distinctiveness in the service portfolio can be established. For that reason, in the recession period, the hotels have to implement intense management practices (Lee & Barth).

The confidence of the potential customers gets influenced by accommodation charges due to the cautious behavior of customers, as well as, tourists on spending money for the accommodation. When the occupancy rate will be adversely affected, the revenue statement of the hotels also gets influenced by this. It has a major influence on the other sections of the hotel industry also. The decline in the occupancy rate is followed by the decline in the revenues for the other facilities of the hotels. Therefore, it is essential for the management of hotels to focus on the employment of innovative practices for their survival and making steady progress (Mandelbaum 2009).

Since, the consumer behavior gets focused towards seeking affordable accommodation for the stay, so the hotels require considering the preferences of the customers effectively during the recession period. Some hotels included cost cutting within their strategy through the provision of no frills bedclothes, but it is the basic requirement of the customers to attain clean and comfortable bedding sheets for taking rest. Some hotels implemented aggressive promotional programs based on attracting the customers for obtaining comfortable and affordable services in the situation of economic crisis (Verret 2009).

With the assistance of aggressive promotional strategy, the hotels could only face the challenges when they will provide quality services and facilities to the customers as per their requirements. The hotels have enhanced the internet marketing and basic facilities involved in their portfolio for the survival in the market. The market penetration and positioning strategy of the hotels got transformed and the business decisions were changed by the management for the sustenance of the current profitability and efficiency (Shin 2003).

Due to the decline in the economy of the global business environment and the exchange rate fluctuations, the visitors to the hotels got reduced. It also reduced the revenues of the hotels, which squeezed down the profits and the revenues attained by the hotel industry from the tourism industry. The amount of bank credit available for the hotels for the management of their services in the recession period also declined, which insisted the hotel managers to focus on the cutting their expenses (Hatch 2004).

Accompanying to this, the decline in the occupancy rate also reduced the spending of the hotels to lower price levels. Due to this, the accommodation charges and luxurious suite charges also got reduced. Social networking was considered by the hotels for increasing the sales process and servings within their segments. The business prospects of hotels regarding the expansion and development of new ventures were restrained for the time being, so as to manage the critical situations of economic crisis effectively. The thought of representing the hotels to be emerging was avoided by the management, so that the current business practices can be handled properly and the market image can be sustained (Curan 2009).

The competition in the hotel industry becomes intense and leads to the increase in the layoffs of the employees with an aim to cut the cost. The cost cutting policy also includes the reduction in the facilities and the room charges (Moberg 2001). The activities of the hotels are mainly based on the market segments, which are business travelers, domestic travelers and tourists from the domestic and international markets. These market segments reduced their expenses on the tourism industry, which directly has affected the operations of the hotel industry. Regarding this, the demand for the luxurious facilities in the hotel industry got reduced, but the low cost facilities grow significantly, which counterbalanced the situation (Profits and Occupancy Down as Recession Takes its Toll 2009).

For instance, the influence of recession on the hotel industry of United Kingdom can be analyzed. The hotel industry of UK is also severely influenced by the economic recession, which reduced international events to be organized by the country and the currency value of sterling also reduced. The occupancy rate of the country came down by 2.5% to 73.9% from the year 2007 to 2008 and the average availability of room’s rates were enlarged by 2.3% to £104.33. This implies that the occupancy rate decreased to a significant extent and influenced the operations of the hotels in the country (UK hotel industry feels effects of global economic downturn 2009).

Due to recession, the products and services purchasing from the hotels also got reduced, which is of great concern for the industry operators. The lag in the business performance occurred due to the late response of the corporate clients from the tourism policies. The performance of the hotels got changed with the widening of the economic variations. Due to this, the profitability of the hotels lowered significantly and the supply-demand pattern for the hotels got drastically altered. Many of the hotels faced the problem of lack of capital and it affected the credit availability for the hotels in the market. The availability of funds in the market was affected due to the collapse of banks and financial institutions (Zhou, Brown, Dev & Agarwal 2007).

The hoteliers were unable in estimating the rebound effect in the financial markets, so that the performance of the hotels can be anticipated to get improved and adequate amount of funds can be acquired from the market. It stimulated the hotels towards managing the marketing and procurement strategies for maintaining the efficiency and effectiveness in the competitive market place. The revenues of the hotels from the tourist market sources reduced, which deviated the hotel management towards sustaining the current market share and creating demand for their services in the market through proposing differentiated services from that of the competitors (Tobin 2009).

But, the hotel industry has managed to survive in economic downturn successfully. The industry managed to face the challenges posed by the recession with the assistance of the effective business strategies and management practices. Large business houses in the hotel industry survived due to the availability of requisite amount of capital and competitive human resource. But, the small business houses faced problems and they cut down their expenses and increased lay offs to survive in the industry (Collins 2009). The revenues from the luxury services got reduced significantly and the demand for the low cost facilities increased during recession, which was optimally managed by the hotels (Moberg 2001).

Therefore, the hotels also focused on prioritizing the opportunities available in the market and re-energizing their operations for sustaining their future survival in the market. The small ventures in the hotel industry restructured their business operations and considered the urban development as an opportunity for retaining their market share. It has enabled the overall hotel industry in regaining their momentum and managing their operations appropriately, which has played an important role in the sustenance of the hotels after facing critical challenges of economic recession (Rutherford & O’Fallon 2006).

Management Practices of Hotels

Management practices are the basic policies and procedures of the business industries, which develops the business framework for the operators. The management practices form the base for the management of the business operations and making remedial alterations according to the business needs. Therefore, in the current business scenario, the organizations consider the different approaches for managing the business operations effectively in the crisis situations. These approaches are based on risk management, total quality management, crisis management and management by objectives. It is helpful in increasing the productivity and efficiency of the business organizations significantly (Joyce & Woods 2001).

The management practices of the hotels provide the complete overview of the business operations. It is helpful in the analysis of the different managerial aspects of the hotels and the strategic planning approach adopted by the management. In the hotel industry, the management practices are diversified among different segments in order to fulfill the business requirements of the industry. The corporate performance of the hotels is optimally manageable with the assistance of the well defined and planned management practices. Moreover, it is significant in the strategic management of the hotels (Thompson & Martin 2005).

The management practices of the hotel industry are based on the effective coordination and implementation of the business strategy comprising of the marketing activities, human resource activities, financial management and customer relationship management. It is due to the reason that these factors contribute towards the attainment of the competitive advantage in the market. With the assistance of effective management practices, the hotel industry is able to gain span of control and chain of command over the operations followed by the optimum resource application (Kusluvan 2003).

These factors are significant in the enhancement of the productivity and efficiency of the hotel industry. The dominance and sustenance of the business operations in the competitive market place with compliance to the legal regulations can be obtained by the hotels through the effective management practices. Along with this, the management practices represent the hotels persistent driving forces, which are important for the administration and execution of the operations in order to judge the economic performance. This implies that the hotels having well defined management practices are able in organizing and sustaining their businesses in the adverse market environment (Rutherford & O’Fallon 2006).

Marketing Strategy

Marketing strategy play a vital role in the organization of the business operations of the hotel industry. It is helpful in assessing the performance and business viability of the hotels. It should be based on the stimulation of positive customer satisfaction for increasing the overall revenue and accomplishing a competitive advantage. It yields better results in favor of the hotels successful accomplishment of the business goals and objectives. Marketing strategic framework is also helpful in the recognition of the advantages from the potential customer sales and its contribution in the development of long term competence of the hotels (Dibb & Simkin 1994).

Therefore, the marketing strategy of the hotels should be based on the objective of establishing an effective communication network, so that the distinctive and quality oriented services can be recognized by the customers. The customer can realize the quality and value of the charges for the accommodation and recreation. It is helpful in communicating the brand value to the potential customers. In addition to this, it also facilitates the hotels to form effective relationships with the customers and potential service suppliers. The hotels should establish differentiated strategy focused on growth perspective (Seaton & Bennett 1996).

The hotels can attain significant growth in the market by targeting the business operations in the urban and suburban regions within the domestic and foreign communities. The value proposition of the hotels should be based on distinguishing the services and facilities in a personalized manner for the travelers and tourists. The involvement of customer requirements in the service portfolio caters positive image and brand name of the hotel in the market. Regarding this, the marketing strategy of the hotels is required to be contingent on the different aspects, such as branding, promotion, target marketing, marketing mix, market segmentation, advertising, marketing media, etc (Brotherton 2003).


The branding strategy of the hotels should develop a positive brand image in the market. The hotel branding should be done on the basis of the convenience provided by the hotel in accordance with the standardized criteria. The service properties and the availability of luxury differentiate the hotel brand from that of the competitors. The locations of the hotels in the regions of the key destinations also add value to its branding. The availability of the personal service and luxurious backgrounds with an aim of stimulating the comprehensive range of quality oriented services for the customers (Dibb & Simkin 1994).

The target market based messaging is required to be different from the perspective of the different market segments, which forms the basis for the branding options for the hotels. The brand name can be effectively recognized by the customer in the market through the distinctive facilities and experience from the hotels, so the outlook of the hotels should comprise of the elaboration of the key attributes and facilities. It enables the customers in gaining effective experience and benefits from the high quality services, which transforms their future preference for the hotel. Therefore, the branding strategy of the hotels should rely on the quality and growth oriented aspects of the services offered at the hotel, which adds value to the competence of the hotel and maintains the productivity (Hockessin 2008).

Target Marketing

The target marketing strategy defines the target market of the hotels. The major target market for the hotels is the domestic and international travelers, which are divided as business travelers, tourists and banqueting. On the basis of the requirements of the different target markets, the customer requirements are analyzed and adequate services are provided by the hotels. It is beneficial in attracting the diversified customer base from the market and enhancing the desirable service portfolio for the customers. The well defined target marketing plan will be helpful for the hotels in differentiating the business approach of the hotel from that of the potential rivals (Abrams & Kleiner 2003).

The target marketing strategy of the hotels in the present business scenario should focus on the professional visitors of the domestic and international regions belonging to the industries, which are travel, automotive, IT, etc. by forming corporate contracts on the annual basis. With respect to the arrivals at the hotels and the utility of the lodging facility for the visitors, the alternatives of the room services should be provided to them. It is helpful in the expansion of the market and identification of the innovative services within the facilities of the hotels. In order to employ the target market strategy, the management practices of the hotels are required to be flexible and adjustable, so that the adequate competent level in the market can be established and respective performance can be sustained in the adverse market circumstances (El-Ansary 2006).

Market Segmentation

The market for the hotels is segmented on the grounds of the diverse lodging facilities offered to the potential customers. The lodging facilities are differentiated with respect to the luxury, leisure, number of rooms and recreational services included at the place. The room charges are also segmented on the basis of the facilities included in the rooms. The additional facilities that play a significant role in the market segmentation include the food and bar services, entertainment, meeting, banquet halls, etc (Thompson & Martin 2005).

In order to manage the different market segments, hotels follow the standardized rules for different levels of services. On the basis of the international rating system, the hotels are classified to be five stars, three stars, one star by considering the respective niche, domestic and international market segments, as well as, the requirements of the prospective customers. It distinguishes the levels of the hotel facilities within the overall corporate business sector by not creating intense competition for the different segmented levels.

Marketing Mix for the Hotels

The marketing mix plays an important role in the success or failure of the marketing mix. It comprises of the four major P’s, which are product, price, place and promotion. It covers the main segment of the marketing strategy, which is based on the tactical practices of hotels. The integrated marketing mix contingent on the four factors is helpful for the marketing professionals of the hotels in concentrating in the potential customers present in the target market, so that the positive response and value for the hotel services can be stimulated significantly. These factors are effectively controllable by the market professionals for enhancing the satisfaction level of the customers (Joyce & Woods 2001).

The hotels can develop positive brand image in the target market segment through the effective inter-mixing of the four factors of market mix. It is essential for the marketing professionals of the hotels to focus on the optimal marketing mix that will aid in generating better outcomes for the real business. The requisites of the marketing strategy can be effectively fulfilled by the well defined marketing mix. The different components of the marketing mix are described below, which should be considered by the hotels in an optimal manner (The Marketing Mix Revisited: Towards the 21st Century Marketing 2006).

Product: The product marketing strategy for the hotels is required to be based on the furnishing of high quality services. The lodging facilities and services of the hotels should be accompanied by the commendable personal services, so that the significance of the hotel within the market can be enhanced. The product quality is of great significance for the hotels in order to become competitive in the market. It is also helpful for the hotels in the establishment of a unique and differentiated status in the market (Forrester 2008).

The product marketing approach of the hotels should also comply with the features of the branding strategy. It has proved to be beneficial for the hotels in differentiating its product and services from that of the competitors on the grounds of quality. It will facilitate the repeated levels of business for the hotel industry. In compliance with the standards of hotel industry, the product marketing approach should be well coordinated with the branding strategy, so that the adequate amount of revenues can be generated and quality services can be furnished to the potential customers (Hockessin 2008).

Price: The pricing strategy of the hotels is required to be consistent with an aim of differentiating the services and lodging facility significantly. It should comply with the standardized pricing policies for establishing differentiation within the services. Along with this, the creation of value by providing the lodging facility at the reasonable and affordable prices will be helpful in creating value for the products and services. Competent pricing policy accompanied by the quality and beneficiary facilities is helpful for the hotels in the attainment of the competitive position in the market and gaining advantage from it in the adverse market conditions (Payne 2009).

The pricing policy should distinguish the rates of the rooms as per the taxes and service requirements, on the basis of stay and preference for the additional services. The discounting and flexibility in pricing policy should be well defined for acquiring more customers in the unfavorable market circumstances. The room rates should also be defined in accordance with the seasonal variations in the number of customers, so that the overall profitability can be sustained optimally. With the assistance of this, the pricing strategy adds value to the provision of the appropriate products and services for meeting the requirements of the customers effectively, which enhances their experience (Thompson & Martin 2005).

Place: The component place of the marketing mix denotes the distribution strategy adopted by the hotels. In concern to this, the hotels adopt the strategy of promoting and availing the products and services through the personal selling, internet selling, advertising and direct marketing approach. These approaches are distributed in the market through different channels, which facilitates the development of an effective network. It is helpful in allocating and making available the provisions of the lodging facilities at the key destinations as per the requirements of the target group of customers (Goi 2009).

The major channels of distribution and delivery used by the hotels include the information technology based reservation systems, travel agents and direct booking systems. These distribution facilities are easily accessible to the customers and promote the provisions of the hotels effectively in the market. Regarding this, it is essential for the hotels to develop a well established channel of the distributors, so that the lodging facilities can be entertained by maximum number of customers. With the assistance of this, the hotels become able in accomplishing the necessary competence level, which raises the productivity and efficiency of the hotels (Peters & Pikkemaat 2006).

Promotion: The promotional strategy of the hotels comprise of the well planned promotional tools and techniques, which are highly significant for the hotel industry and play a significant role in the accomplishment of competitive advantage. The main focus of the promotional tools is oriented towards the implementation of mass communication approach, which involves the promotion of the hotels through the print ads over the internet networks and different trade publications (Belch 2003).

The promotional campaigning strategy of the hotels is focused towards attracting the regular customer base and the expected customers from different regions, which proves to be a cost effective mode of establishing campaigns in the target markets successfully. The promotional campaigns are also based on the different approaches, which are described below. With the assistance of these approaches, the overall promotional plan of the hotels can be allocated and defined in a proper manner. These approaches facilitate the brand image and creates well known name in the market, which is essential for the successful operations of the hotels (Seaton & Bennett 1996).

  • Personal selling: Personal selling approach is effective for the promotion of the hotels in the domestic target market. It is a significant approach with respect to the development of long term relation in the domestic market place. It is also helpful in the establishment of increased level of corporate activities within the domestic locations, which facilitates the hotels with an increased attention of the local travelers towards the lodging facilities of the hotel. This approach is helpful for the hotels in the development of local brand image in the market (Payne 2009).
  • Public relations: The public relations approach involves the promotion of the hotels services through the demonstration of the hotel as an effective and collaborative member within the local community. The involvement of the hotel management in the events and functions held at the domestic regions is helpful in the formation of significant public relations. It also facilitates the spreading of positive word of mouth regarding the services and lodging facilities at the hotels (Pizam & Ellis 1999).
  • Direct marketing: The direct marketing approach is adopted by the hotels through the channel of PR agencies and travel agencies. The PR agencies and travel agencies directly establishes contacts with the big corporate houses and provides the brochures of the hotel in order to form lodging contracts with their business persons and organizing their meetings. The matters related to direct marketing are handled by the PR and travel agencies. Along with this, the package tours organized by the travel agencies are also a part of this approach, which significantly promotes the corporate relations and customer relations of the hotels (Ingold, Yeoman & McMahon-Beattie 2000).
  • Advertising: The advertising approach of the promotional strategy involves the print media based advertisements and internet advertisements. The major attributes and features of the lodging facilities and accompanying services are integrated properly, so as to create good image of hotel in the minds of the potential customers. It is highly significant in representing the attributes of the hotel in a more specified and unique manner in order to attract more customers and gain benefits from it (Altstiel & Grow 2006).
  • Website based marketing: The website based marketing approach of the hotels is a prominent approach in establishing an interactive relation with the prospective customers. The website of the hotel should provide complete information about the quality based services and luxury based accommodation facility. In addition to this, it should also provide the facility of online reservation and check-out facility accompanied by the printable brochure facility (Forrester 2008). The main aim of this approach is to deliver the message of the hotel services in a proper way. The website of the hotel should be listed on the major websites of travel agencies, so that the customers can properly allocate the hotel. It facilitates the customers in finding out the options of hotels at the key destinations as per their requirements (El-Ansary 2006).

It can be inferred from the different strategies and approaches included in the marketing mix for the hotels that the integrated framework of all the components is essential to be followed by hotel management in order to establish a good image and brand name in the market. Flexible and adjustable marketing mix as per the requirements of the market conditions provides assistance to the hotels in managing and sustaining the business operations significantly. In accordance with the present market overview, the consideration website based marketing approach is effective and prominent due to easy accessibility to the prospective customers from the domestic and international market.

Human Resource Strategy

The human resource strategy is of great importance for the development and progress of the hotels in the competitive market place. It integrates the key employees for performing their best performance in favor of the organization. Properly defined HR strategy is helpful for the hotels in confirming and supporting the personal, as well as, professional orientation of the employees and retaining the key employees over a long period of time. In order to sustain better performance in terms of financial and market image, the hotels offer competitive salary structure to the employees, which is helpful in increasing the satisfaction level of the employees with the job (Hoque 1999).

The HR strategy of the hotels should be based on the goal of promoting the equal rights at the work place, furnish career growth opportunities to the employees accompanied by adequate income, creating effective work environment and developing social networking with the employees, so that the employees can be retained and secure job positions can be acquired by them. It should infer towards the development of participative work environment and properly defined HR framework, which should be equally communicated to the employees for developing mutual trust and relation among the management and the key employees (D’Annunzio-Green, Maxwell & Watson 2004).

It is essential for the hotels to include the different HR policies appropriately within the HR strategy. It is due to the reason that this industry provides employment to the vast majority of people in the form of job positions in different divisions, such as food and restaurant, bar, lodging facilities, administration, marketing, operations, IT system, etc. Therefore, the HR strategy of the hotels should comprise of effective recruitment and selection policy, training and orientation programs, performance appraisal system, compensation policy, etc. With the assistance of these policies, the hotels can attain competitive work force for the management of the operations in a proper manner (Kusluvan 2003).

Recruitment and Selection Policy

The recruitment and selection policy of the hotels should be conducted through different ways including the directly conducting the recruitment in the expert hotel management and catering institutions, personal suggestions from the existing employees, recruitment agencies and conducting recruitment drives by giving advertisements in the newspaper, job websites and magazines. The adoption of any of the methods provides substantial employees to the hotels, who are skilled, and talented (Mabey, Skinner & Clark 1998).

In order to become successful in the recruitment drives, the hotels elaborate the job requirements and other subsequent amenities before hiring the potential candidates for the different job positions and also elaborate the overall HR policy for future concern. The selection process is widely based on the interview methods, so that the communication skills and interpersonal skills can be judged appropriately. On the basis of the establishment of the contracts, the selected candidates are hired by the hotel management, so that the employees can be at least retained for the contract period. Recruitment and selection policy forms the basis of the HR strategy in concern to the hiring of skilled work force and meeting the job requirements of the hotels for managing the human resource (Kearns 2003).

Training and Orientation Programs

The training and orientation policy involves the general orientation of the employees with the HR policies of the hotels. It is initiated in accordance with the well defined operational and processing based training and development programs. Its main aim is to strategically develop the service quality among the employees for generating better performance of the hotels. Generally, internal managers conduct the training sessions of the new recruitments. In case of developing new skills among the employees, which are prevailing in the market, the hotels take the services of external consultants, so that the competent work force can be developed (D’Annunzio-Green, Maxwell & Watson 2004).

On the job training is mainly organized for the new recruitments, so that the adequate skills can be acquired by them in an effective way. The training sessions are conducted by implementing discussions, simulations, coaching through role playing, instructions, etc. With the assistance of these methods, the problem solving skills can be developed among the employees and their understanding about the management of service quality can be developed in a pragmatic manner. Along with the new employees, regular training sessions for the existing employees should also be conducted at regular interval of times for the development of competitive skills and reforming the latent talent of the work force. Training for managing the emergency situations is also provided to the employees on a weekly basis, so that they can handle the drastic conditions effectively (Mabey, Skinner & Clark 1998).

Therefore, the overall workforce should be divided in different groups, so that the internal, as well as, external training of the employees at different levels can be conducted and requisite skills can be developed to become competitive. The external training programs are selected with great care, so that the training can be managed within the allocated budget. It enhances the employee branding approach of the hotels in order to develop internal communication and create service quality oriented work force. The employees can effectively coordinate themselves with the hotels through proper orientation, which makes them competitive and beneficial for the hotels.

Performance Appraisal System

The performance appraisal system of the hotels mainly concentrates on the professional and personal advancement of the key employees. The process is based on the assessment of the performance of the employees on a regular basis and furnishing feedback by describing the areas for improvement and rewards for the respective performance. For establishing an effective performance appraisal system, the hotels should integrate it with the organizational culture (Woods, Sciarini & Breiter 1998). The performance appraisal process is based on the following steps:

  • Selection stage: At this stage, the managers and employees define the required competencies in the form of objectives, which have to be achieved by them. The major objectives should be related to the identification of the areas that require improvement, assessment of the present job performance, provision of adequate performance supportive rewards.
  • Appraisal and assessment stage: At this stage, the managers give rating to the employees with respect to the defined objectives and competencies. In addition to this, the employees and managers of the hotels should perform the performance evaluation work by implementing methods of performance appraisal, which are self-assessment, behaviorally anchored rating scales (BARS), 360-degree appraisal and assessment centers. With the assistance of these methods, the overall performance of the employees, managers, peers and sub-ordinates can be successfully evaluated (Woods, Sciarini & Breiter 1998).
  • Development scheduling stage: At this stage, the performance ratings of the employees and managers are compared. On the basis of the comparison of performance, the requirement of future training and rewards are defined for the work force. It is effective in evaluating the potential capabilities of the employees and communicating feedback, so that the employees can be tended towards the accomplishment of organizational goals and objectives in an optimal way.

Through the implementation of this process, hotels can effectively satisfy the employees and retain them within the organization. The self-assessment and 360-degree appraisal method are effective in the overall appraisal of the employee performance. These methods facilitate the performance appraisal of the key work force in a more specified form and identification of the key skills, so that the employees can be positioned at the different job positions and required performance level can be attained optimally (Hoque 1999).

Compensation Policy

The compensation policy of the hotels is the main segment of HR framework, which is considered as the management’s concern for the employees. It should be based on the fairness and equality determinants, so that the employees can be motivated and retained for the hotels. The compensation policy of the hotels is followed through the job evaluation process, which is helpful in defining the appropriate wage structure and incentives for the different job positions. The significance of wage structure is defined over the organizational hierarchy, which is helpful for the hotel managements in the retention of the key work force (D’Annunzio-Green, Maxwell & Watson 2004).

The salaries of the employees is divided into three components, which are basic salary (fixed), performance based incentives and rewards (variable). The performance based incentives of the hotel employees are supplied on the basis of the assessment of the performance. Incentives are provided to the employees in compliance with the short and long term incentive plans of the hotels. Additional rewards are based on the job position of the employees and the turnover of the hotels. Properly defined compensation system is helpful in the retention of the employees and developing highly motivated work force.

The rewards and incentives are also furnished to the employees through non-monetary modes, such as free gifts, additional responsibility, career advancement, appraising the employee performance, stock provisions, etc. The hotels also provide free lunches, medical facility, insurance benefits, transportation facility, paid holidays, club membership, recreational facilities, etc. to the employees, which is helpful in increasing their job satisfaction level and creating a social work environment for them (Kearns 2003).

Motivation and Organization Culture

The employees are motivated through the effective work environment, justified performance appraisal system, well defined salary structure, effective reward system and fair employee-employer relationship in the hotel industry. Highly motivated work force contributes towards the success of the hotel and in establishing the brand name in the competitive market place. Properly defined job responsibilities and participative work environment integrate the employees with the organizational goals in an effective manner. The employees get highly committed towards the hotels and incorporate quality services to the customers, which encourages their performance, as well as, the profitability of the hotel (Mabey, Skinner & Clark 1998).

The organizational culture of the hotels is mainly oriented towards the customers and secondly on the key work force. It is due to the reason that the customers are the worth-making and profitability generating facility for their business and the employees act as the base that generates positive image of the hotel through effective customer service. Without the key human resource, the hotel industry cannot survive and manage the business operations in the competitive market place. Therefore, an integrated organizational culture that promotes the participative work environment is beneficial for the hotels, which also provides assistance in the creation of motivated and quality service oriented work force (D’Annunzio-Green, Maxwell & Watson 2004).

This implies that the HR strategy of the hotels is helpful in managing the adverse market conditions. Properly defined and structured HR framework establishes coordination among the employees and the hotel management, which stimulates the desired performance. With the assistance of the HR policies described above, the hotels can effectively develop competitive work force, which is helpful in the accomplishment of the competitive edge in the market (Hoque 1999).

Financial Strategy

Effective financial strategy is helpful for the hotels in the management of the financial requirements in an optimal way. It provides the overview of the financial performance and the different aspects related to the management and allocation of funds to the different business segments. Hotels require focusing on the adoption of adequate financial strategy in order to fulfill the requirement of funds in the different market conditions. It is helpful in the allocation of the funds to the different divisions of the hotels, which includes wages, utility billings, marketing, resource procurement, HR policies, etc (Fabozzi 2002).

Mainly, the financial strategy of the hotels includes the budgeting and cash flow management related aspects. Accordingly, the financial arrangements of the hotels can be defined for meeting the requirements of the varying market environment. It also focuses on the transparent financial system, which is clearly defined for the establishment of transparent relation with the key stakeholders (Peters & Pikkemaat 2006). The consideration of key stakeholders is essential for the hotels due to the influence of the business operations of the hotels on them. Along with this, the financial strategy of the hotels should also consider the financial, as well as, the non-financial aspects of the capital management, so that the profitability and the revenues for the customer service operations can be assessed effectively (Ingold, Yeoman & McMahon-Beattie 2000).

The financial strategy of the hotels should consider the different business aspects in an appropriate way, so that the financial information can be generated properly and it can be allocated accordingly. The financial strategy integrates the transactions structuring, capital restructuring, equity financing, tax obligations and government regulations. The major aspects that are considered by the hotel management for the integration of the financial prospects in order become successful in managing the financial requirements for gaining competitive edge are budgeting, cash flow management, working capital management, etc (Medlik & Ingram 2000). These aspects are described below:

Budgeting in Hotel Industry

Budgeting plays an important role in improving the financial effectiveness of an organization. In the current environment, several hotels in hotel industry are loosing a huge part of their revenue due to unorganized virtual sales procedures in the current economic down turn. To reduce the impact of current economic downturn, the hotel industry should analyze and organize its sales procedure and by giving proper training to its sales staff. In order to meet the aspiration of its owners and employees, the hotel industry should use sustained profitability. The sales, profit and cost of the hotel should be estimated in advance (Ingold, Yeoman & McMahon-Beattie 2000).

For the effective budgeting system in the hotel industry all the objectives, plans and strategies should be translated in the budgeting and budgetary control process as it would help to keep the hotel industry in course. The operating budget, which includes all the income and expenditures, in the hotel industry, should be prepared on the basis of individual departments and activities and should be consolidated in the projected profit and loss account. The capital budget of the hotel industry should be incorporated in the budgeted balance sheet as it would be beneficial to formulate effective budgeting system in the hotel industry, which would help to face the impact of current economic downturn (Fabozzi 2002).

In order to increase the budgeting effectives, the actual result and the budgeted result should be compared on the regular basis as it would be beneficial to make the appropriate strategies for the effective and accurate budgeting system. The comparison would also help to take the corrective actions for the revision. The performance of the hotel should also be confined with the performance of individual as it will improve the accuracy in the budgeting system of hotel industry. It will also help to achieve the financial targets and objective of the companies in the industry.

Working Capital Management

The working capital management is an important component to maintain a proper cash flow within the organization. The current economic downturn also affects the working capital management of the hotel industry. In order to improve the working capital management, the financial management of the hotels should review the adequacy of its financing and banking agreements, the appropriateness of the financial agreements should also be reviewed. The performance of the hotel should be evaluated in context of financial perspectives, as it would be profitable to improve the working capital management (Ingold, Yeoman & McMahon-Beattie 2000).

The proper review of the discretionary and non-discretionary expenses would also help to enhance the cash level, which would also improve the working capital availability in the business. The improvement in the financial transparency, aggressive policies for the working capital management is some other strategies, which should be adopted by the hotel industry in order to improve the working capital management.

Cash flow Management

The management of cash flow is most important task for the hotel industry in the current economic downturn. In order to manage the cash flow system, the emphasis of the hotels should be on the improvement of operational performance. It should also focus on the elimination of unnecessary cost to derive larger amount of profits. The hotel industry should also eliminate or reduced the activities, which are not adding value for its customers. It will be beneficial to reduce the unnecessary costs and would improve the organizational profits. It should also provide some special facilities to its customers at lower cost to achieve competitive advantages. The change in the end business process would also help to improve the cash flow management. The improvement in the cost control environment and facilitation of cost culture would also help to improve the cash flow management. The main focus of the management should be on the reducing the cost and to improve the profits from its business operation (Medlik & Ingram 2000).

Customer Service Strategy

The approach of customer service strategy is necessary to be considered appropriately by the hotels for being successful in the global business environment. It is the main component of the overall business operations, which develops positive image and credibility of the hotels in the market. It is considered as a parameter that describes the customer satisfaction and different aspects related to the customer service provided by the hotels. Hotel industry requires well defined customer service strategy focused towards the provision of quality services, so that the customers can recognize the brand and the goodwill of the hotel in the market can be established (Nash 2002).

Mainly, customer service strategy involves the values for the customers and creating the work force accordingly. The service level provided by the hotels should conform to the standards of customer service for fulfilling the requirements of the customers effectively. For the successful implementation of the customer service strategy, it is necessary for the hotels to align it with the vision and goals of the organization. Moreover, the strategy should be defined by the management in cooperation with the employees, so that it is easily conveyed to the overall work force. It should be redefined on a regular basis, so that the requirements of the customers can be successfully executed (Rigsby & Greco 2002).

The customer service strategy for the hotels is required to be based on a well defined slogan that provide assistance in motivating the employees regarding generating better service outcomes. The values that should be included in this strategy and are required to be followed by the employees are communication, loyalty, respect, responsiveness, commitment, participation, cooperation, sense of humor, etc. It is due to the reason that the internal values of the hotels are directly related to the levels of external customer service (Lake & Hickey 2002).

The customer service should initiate with a warm welcome, anticipation of their needs and a fond word of farewell at the departure from the hotel. The customer service strategy of the hotels that should be structured in an optimal manner for the attainment of competitive edge over the competitors is described below:

Discernment of customer value obligation

The hotels require integrating the information obtained from the customers in order to develop electronic data base. It is also helpful in gaining information about the consumer behavior and enabling the hotel work force about the requirements of the customers, so that best and personalized services can be supplied to the clientele. More specific and precise information about the consumer behavior and preferences can be obtained by the hotel staff working at the different divisions, such as lodging managers, food and beverages section, recreational facilities, etc (Zhang 2008).

Along with this, the customers’ complaints should also handled by the personnel at the reception of the hotels. The process of conducting customer surveys while their stay at the hotel provides the information about the customer satisfaction level, follow-up facility & customer handling and feedback aspects. This information is helpful in discerning value to the potential customers and crediting the status of the hotel in the market, so that effective customer relations can be sustained and brand image can be developed (Favilla 2004).

Furnishing value-imparted service to customers

The customers from different target market have different requirements and they take on their experience with the hotels to the next visit. They carry further the value and satisfaction attained from the hotels. Therefore, it is essential for the hotels to offer value-imparted services to the customers, which are far beyond their outlook. It transforms the customer satisfaction level to the customer loyalty and commitment. Along with the compliance to the international standards and regulations, the hotels should give consideration to the stimulation of personalized and superior quality, as well as, value-imparted services for the customers (Nash 2002).

With the assistance of this approach, the hotels can effectively meet the requirements of the customers and the customer service can be made more superior than the customers’ expectations. It is also helpful for the hotel management and the employees in analyzing the customer preferences and developing skills for becoming proactive in handling their requirements. This strategy is also helpful in promoting the level of customer service and establishing an effective bonding with them. Due to this, the service consciousness of the key work force of the hotels gets elaborated and provides competitive performance in the crisis situations (Lake & Hickey 2002).

Constitute service brand

The strategy of constituting the service brand is helpful for the hotels in developing brand recognition value among the customers. Effective brand recognition assures for the service quality, which is an essential component for the development of the customer’s reliance and confidence in the products and services of the hotels. The popularity of the hotels in the market can be enhanced through this customer service strategy (Pizam & Ellis 1999). This strategy reduces the aspects intending risks related to the customer’s social network and security, which is highly significant from the perspective of strengthening the customer value for the hotels. Through this, the hotels can establish themselves as the well- recognized brand in the market (Rigsby & Greco 2002).

In addition to this, the hotels should also focus on the development of service brand name, so that the personalized brand name can be marketed through the marketing channels. It also facilitates the hotels in establishing effective customer relations and gaining profitability from the customers’ investments. The commitment of the hotels towards the service brand is also essential due to the requirement of standardized and excellent customer value in the diverse market conditions. Regarding this, the key work force of the hotels is also required to become more competitive by adding value to the customer service and quality based provision of the lodging facility to the customers (Zhang 2008).

Flexible management structure oriented towards customers

In concern to this strategy, the hotels should develop flexible and easily adjustable management structure oriented towards the customers for the accomplishment of the operational goals. This strategy is helpful in meeting the customer requirements in an appropriate manner and promoting quality performance oriented work environment. In order to be successful in fulfilling the needs of the customers’ with quality services, an integrative and coordinated approach of the different divisions of the hotels is required, which plays a significant role in the reformation of the management structure for delivering service quality with ease and flexibility (Favilla 2004).

This strategy promotes the customer-centered approach among the management and the employees at the hotels, which makes vital contribution towards the betterment of the efficiency and productivity of the services furnished at the hotels. Due to the existence of flexible management structure, the hotels can develop the adaptation capability for surviving in the competitive market place and altering the service quality as per the expectations of the customers. The main mission of the hotels is to develop competence in terms of the assurance among the customers for their products and services. This strategy facilitates the coordination among the customer service and the personnel management operations (Lake & Hickey 2002).

With the assistance of these strategies, the hotel management can effectively provide responses to the customers and increase the overall customer satisfaction level. Customer loyalty can be stimulated by the hotels and uniform relations with the customers can be sustained, which is the result of quality based customer service. Regarding this, the strategy of taking customer survey is beneficial for the hotels in assessing the service quality with respect to the different customer groups. The feedback of the customers is helpful in making requisite alterations in the customer service strategy and sustaining flexible management structure (Zhang 2008).

Hotel Strategy in the Present Scenario

In the present market overview, the hotels require integrating their procurement strategies, business strategies and practices in order to overcome the influence of economic recession. The uncertainties imposed by the economic environment, which were faced by the industry, affected the overall performance and operability of the industry. Therefore, the industry needs considering a well- defined budget and specific criteria based customer service portfolio, so that the position of the industry can be raised and new business challenges can be effectively handled by the industry players (Medlik & Ingram 2000).

The major business approach of the hotels should focus on the sustenance of the business performance to progress in the industry and overcoming the business related threats for generating the desired outcomes. The outlook of the hotel industry can be altered effectively by implementing the innovative procurement strategies and reformed business services. In concern with this, it is vital for the hotels to promote the business properly with the assistance of the alignment of the core business capabilities in accordance with the alterations in the requirements of the prospective customers (Peters & Pikkemaat 2006).

It will assist the hotels in capitalizing on their potentialities and securing well supported customer relations. The strategy of the hotels should be based on developing continuing and enduring relationship with the prospective customers and the new clientele to be added. The communication plan of the hotels should be elaborated and re-defined, so that the strength of hotels in the domestic and international markets can become more intensified. It will assist the hotels in attaining a strong position in the market and sustaining the market share accompanied by the quality service oriented portfolio (Seaton & Bennett 1996).

The hotels should adopt the differentiation strategy, so that the products and service offered to the key customers can be differentiated from that of the competitors, which will aid in retaining a brand name in the market. The customers will recognize the brand name of the hotels through the quality services more than their anticipation, which induces their future preference for the hotel. It will also stimulate the customer’s attention towards the differentiated hotels and it also resolves the issues related to the profit generation for the hotel management (Hotels: Managing in a Downturn 2008).

This strategy can be effectively implemented by the hotels with the assistance of a well- defined marketing and communication plan. It will stimulate the market attractiveness towards the services of the hotels. In addition to this, consistently implemented employee training and development programs also stimulate the orientation of the employees towards enhancing their skills and customer service capabilities. It is helpful in assuring high standards of customer service and enhanced productivity, as well as, efficiency of the hotel in the market, so that the hotels services can be differentiated (Dibb & Simkin 1994).

Moreover, the hotels should also focus on the identification of the new markets for the specific target groups. It will assist the hotel management in reducing the varying nature of services to be included in their service portfolio due to the consideration of the needs of the target groups. Since, the need for limited service properties in the market is increasing and customers’ preferences are also changing, so the hotels should consider this as an opportunity and establish limited service provisions for the customers. The hotels can generate optimal revenues in the current market environment through this.

Therefore, the hotels also focused on the urban redevelopment strategy for rationalizing their products and services in accordance with the domestic and international market customers. The hotels should mainly focus on prioritizing their needs for maximizing the productivity through the available opportunities. The major steps that should be taken by the hotels are described below:

  • Firstly, the hotels should analyze the influence on their operations and understand the loopholes in their contingency planning, which can further be improved significantly for rationalizing the future implications of the business strategy and planning.
  • The hotel management must consider the importance of taking strong decisions in the uncertain and risky situations. Along with this, it is essential to analyze the key value drivers related to the business and assessing the business risks for taking adequate position and advantage in the form of upturn in the profitability.
  • The hotels should analyze the availability of the adequate funds and working capital for procuring their credit functioning and avoiding the situations related to liquidity. Appropriate cash management is essential with respect to the management of the treasury, funding and financing in terms of the integration of the financials (Hotels: Managing in a Downturn 2008).
  • It is necessary for the hotel management to concentrate on the important segments, which are generating profits for them. In this regards, the management should assess the requirement of the products and services to be included in the hotel for creating value to the customers and elaborating the business channels. It is also helpful in examining the major investments of the hotel in the different segments.
  • The operational performance should be consistently assessed by the hotel management for managing the targets related to the cost cutting and reducing complexity, which is not required. It will facilitate in assessing the requirement of alterations in the business model and strategies accompanied by the value creation for the hotels.
  • The information about the management within the hotels is required to be communicated effectively and it is also essential for the management to analyze the integrated framework of hotel. Regarding this, the hotels should define the key performance indicators with a lucid vision. The decision making process of the hotel management should focus on the reliable facts and accordingly, the decision should be modified and implemented (Rus & Toader 2008).
  • The strategic planning approach of the hotels should be based on different business settings, so that the policies and plans can be made flexible with market alertness. The influence of adverse situations on the operational, financial and human resource related aspects should also be considered while making strategic plans for the hotels. It will facilitate the hotel management with the ability to responsively adapt the other strategic alternative.
  • Employee engagement practices should be clearly defined by the hotels in order to increase their value and recognition. Effective communication network with the employees is required to be established within the hotels, so that the employees can be engaged within the management practices. Along with this, the hotels must consider the importance of the key work force and concentrate on the identification of the key talent and providing justified, as well as, appropriate incentives to the employees, so that the work force can be retained and get motivated. This strategy is helpful for the hotels in managing the requirement of talented work force in future.
  • The consideration of the key stakeholders is also necessary for the hotels. So, the management should recognize the suppliers and purchasers for strengthening and maintaining the relations after facing drastic conditions of recession. Regular communication with the stakeholders is essential for the hotels.
  • The hotels should also seek relevant advantage from the market opportunities and maximize their revenues accordingly. Thus, the consideration of innovative servicing approaches will be beneficial in intending the hotel towards the accomplishment and progress of the future growth perspectives. In order to be progressive, the hotels should mainly concentrate on the brand valuation accompanied by the future growth objective (Hotels: Managing in a Downturn 2008).

Since the economy is recovering from the recession, so the consumer behavior will also change. Thus, it is necessary for the hotels to consider the variations in the consumer behavior and develop their flexible service portfolio accordingly. The hotel industry will be recovered modestly and the customers will rebound with the improvement in the financial prospects of the market. With the assistance of the above described steps, the hotels can develop flexible business structure and manage the changes in the consumer trends. This implies that it will optimize the business approach of the hotels and will improve their efficiency and productivity, which will directly increase the revenues and brand name in the market.


Since the business environment has two aspects, one is full of opportunities and another imposes threats, so minute ignorance can become a major loss for the hotels, so this aspect should be considered while developing the business strategy. In order to retain the operational excellence and the market share, the hotels should follow appropriate business framework and short, as well as, long term variations in the business environment. The major recommendations for the hotel industry that should be considered by the hotels adequately for sustaining the business operations effectively are described below.

  • Forecasting: The hotel management should implement appropriate forecasting policies in order to analyze the market trends and assessing the consumer behavior in a proper manner. For this, hotels can also take services of the external market forecasting companies for the development of contingency plans (Rutherford & O’Fallon 2006).
  • Contingency planning: It is the most important segment of the business strategy, which should be considered by the hotels effectively. With the assistance of appropriate contingency plans, the hotel management can adapt requisite modification in their service policies corresponding to the market environment. It will provide assistance to the hotels in the implementation of the new plan for making adjustments in the business policies and sustaining the competitive advantage.
  • Market analysis: Proper strategy for the market analysis should be developed by the hotel management, so that the management structure and the service portfolio can be made adjustable within the available resources. It is helpful for the hotel management in analyzing the influence of the market trends and the market environment on their operational excellence. The consideration of market trends is helpful in mitigating the risk posed by market fluctuations and adverse conditions similar to negative waves of economic collapse.
  • Integrated business strategy: The hotels should also consider the importance of integrated business strategy accompanied by well structured business approach for different segments of operations. It will provide assistance to the hotels in the integration of the market structure and the collaboration of the key work force with the business goals and customer oriented business framework (Thompson & Martin 2005).

With the assistance of the consideration of these recommendations, the hotel industry can propagate the required business level in the competitive business environment. The implementation of appropriate strategic plans provides assistance to the hotel management in making adequate transformations in their business policies for gaining excellence over their market performance.


It can be interpreted from the above discussion that economic recession has significantly affected the business operations of different industries. Due to recession, the productivity and profitability of the businesses has been reduced and some big business organizations have got liquidated. With respect to the analysis of the hotel industry, it has been analyzed that the industry is widely influenced by recession. It is due to the reason that the hotel industry has a direct relation with the tourism industry and decrease in the tourist arrivals directly influences the hotel revenues.

The occupancy rates of the hotels and the average room rates got reduced, which affected the output from the business operations. The hotel industry involves large amount of fixed cost in the form of wages of the employees and billing of the desired utilities, so many organizations focused on the cost cutting and lay offs. The consumer behavior regarding the lodging facilities was changed and it affected the operability of different divisions of the hotels. Financial market variations reduced the credit availability to the hotels due to this; small business operators in this industry got adversely affected. The level of competition in the hotel industry was intensified and the hotels focused on differentiating their services for sustaining their brand name as well as service quality.

In order to become successful in the adverse economic conditions, the hotels require integrating their business strategy and the different divisions, so that the market opportunities can be maximized and tapped effectively for gaining control over the business operations in the adverse economic climate. It is necessary to create demand for the lodging services, which are available at affordable prices with adequate service quality, so that the influence of recession can be counterbalanced. The inclusion of flexible management structure oriented towards the customers will be helpful for hotels in the establishment of adaptive services and operational efficiency.

Regarding the organization and execution of the business operations effectively, the hotels require implementing well structured and formulated management practices, so as to manage the different business aspects in an optimal manner. For overcoming the challenges posed by the recession climate, the implementation of effective marketing, human resource, financial and customer service strategy is essential. The marketing strategy provides assistance to the hotels in optimizing the market overview of the products and services favorable for the customers. It also promotes the services of the hotels for the creation of the brand image in the market and differentiating the service portfolio.

Since human resource is the key towards the success of the hotels, it is essential for the hotels to provide adequate incentives and motivation for retaining the key talent. It is also helpful in the coordination of the different service divisions of the hotels. The financial strategy of the hotels requires focusing on the cash management and financial resources for fulfilling the requirement of funds in the management of the diversified operations and maintaining the relations with the suppliers for the sustenance of the service quality. It also facilitates the hotel management in effectively allocating their financial resources and managing the requirements of the key stakeholders.

The customer service strategy oriented towards the fulfillment of the customer’s requirements in an optimal way and developing a brand name of the hotel in the market. Besides this, it also facilitates the hotels in gaining competitive advantage and differentiating themselves from the major players in the market. These strategies facilitate the hotels in the customization of their services and making their business policies in accordance with the market fluctuations. In addition to this, these strategies are also helpful in the promotion of the hotel services in the market and accomplishing the requisite customer focus, which aids in gaining competitive edge to the hotels.

For the accomplishment of competitive advantage and managing the business operations in the recession influenced market environment, the hotels should alter their business strategy and focus on the integration of the different management practices optimally for generating better outcomes. It is essential for the hotels to focus on the restructuring of their management practices and including contingency plans for the sustenance of the efficiency and profitability in the adverse market conditions. Moreover, the process of maximization of the market opportunities for the execution of the business operations, the hotels requires developing service quality oriented approach, which enhances their operational excellence significantly.


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