Strategic Management in the Hospitality Industry

Strategic Management in the Hospitality Industry
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  • 0:03 Strategic Management…
  • 0:43 Four Key Strategies
  • 1:21 Build the Brand/Franchise
  • 2:19 Operational Excellence…
  • 3:40 Be a Good Corporate Citizen
  • 4:18 Lesson Summary
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Lesson Transcript
Instructor: Tara Schofield
The hospitality industry offers a wide variety of services to consumers. It's a very competitive industry, so it's important to establish and operate with helpful management strategies. This lesson reviews four important hospitality strategies.

Strategic Management in Hospitality

The hospitality industry encompasses all businesses related to optional and recreational services provided to customers for their leisure. This means that not only does it include accommodations, such as hotels, motels, and bed and breakfasts, but it also includes businesses, like entertainment, events, transportation, and cruise lines. Basically if it's a want rather than a need and is paid for with disposable income for pleasure, it's part of the hospitality industry. Because there's strong competition in the hospitality industry, strategic management in the hospitality industry, or creating effective plans and processes to have a successful hospitality business, is critical to company success.

Four Key Strategies

According to Robert A. Rauch, there are four key strategies that hospitality business owners and managers need to focus on in their operations. These four strategies include building the brand/franchise, increasing customer value, achieving operational excellence, and being a good corporate citizen. If you own a hospitality business, these strategies can help you have an edge over your competitors.

Let's imagine you own a small chain hotel. With 75 rooms, you have a beautiful property that is part of a well-known brand of over 3000 hotels. The strategies below will help you develop ways to grow your hotel's business.

Build the Brand/Franchise

Whether your company is part of a chain or has a private brand, building the brand will be essential to attracting customers. If you have created your own brand, you need to determine what the brand will represent. Will you offer inexpensive options with few amenities or will you be a five-star property with a high price point? What will help you stand out from competitors? Having a plan that identifies and supports your brand's message will help you attract the right target market.

If you are part of a chain, the brand has likely been established. Your goal is to support the existing brand and ensure your business is in alignment with the global brand. The parent company will likely provide strict guidance and policies to help you support the overall brand.

In your hotel, you are part of a family of hotels. You were given operational guidelines that clearly explain what services you need to provide, the amenities that must be offered at your hotel, and cleaning standards that must be followed. These guidelines help your property to support and build the overall brand, giving guests the services they expect from your hotel brand.

Operational Excellence and Value

Customers want maximum value for the money they are spending. Regardless of whether you are targeting high-paying customers or value customers, your customers will expect value for what they are paying. By offering additional services or products for their money, guests will find value for their money.

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