Research Proposal on "Hotel Strategy Marketing UK"

Research Proposal 10 pages (3540 words) Sources: 15

[EXCERPT] . . . .

Hotel, Strategy

The Impact and Future Effects of the Recession on the Hotel Industry

Over the last several years, the hotel industry has faced a number of different challenges, as the sector would change focus and begin to concentrate on improving their earnings, by taking more of an international view. Where, everything from the location to the way the staff interacts with the guests are determining, how a company will be able to stand out from its competitors. (Brotherton 2006, pp. 6 -- 7) In most cases, this focus has meant that a variety of properties have been opened around the world by a number of different chains such as: the Four Seasons and Hilton. Part of this was in response to the increasing pressures various companies were under, as globalization was changing the way these organizations would interact with other customers. For the most part, this strategy worked well during times of economic expansion, when the number of available rooms was declining. Since the global recession took place, the industry has felt these severe effects of the slowdown in spending from leisure and business travelers, with the revenues per room figures consistently declaiming. These are the statistics that will tell you if the hotel profits are rising or falling, based upon what they are earning per room. During times of economic contraction if the declines are affecting major chains, this is sign that a series of different challenges could be impacting the industry. (Surviving the Recession 2009) For example during 2009, Marriot International would see a decline in revenues per room of 12.4%. This is following several years of having the overall levels of room revenues increasing, as the company would benefit from the surge in international travel. (Marriot International Reports Fourth Quarter Results 2010) This is significant, because it shows how large corporations have been hurt by the severe deceleration in consumer spending. The downturn in the hotel industry would be signified, by consistent declines in revenues per room. Evidence of this can be found by looking no further than, a study published in the Cornell Hospitality Quarterly, which found that foreclosures of various hotel properties are expected to increase in 2010. This is because the recession and slowing demand have had profound impact on profitability. (Smith 2010) To determine the effects of the slow down on the industry requires examining: the impact of the recession on the sector, how customer patterns are changing and how the recession is changing the business model of many corporations. Together, these different elements will provide the greatest insights, as to the how the economic contraction is impacting the hospitality sector.

Aims

This project is intended to see the overall effects that the recession is having on the industry. As a variety of hotel chains have been going into bankruptcy. During times like this, is when the sector can change as managers / executives need have innovative strategies to increase the overall bottom line. This causes a shift in the business model, as many different organizations will begin reflecting the lesson they learned from the recent economic contraction. To determine how the current recession is impacting the industry and its effects in the future, we must examine three different aims to include:

The impact of the recession on the hotel industry.

How the recession is changing the underlying business model.

How customer patterns / demographics are changing.

Once these different aims have been successfully achieved, they will provide the best insights, as to the overall scope of the challenges facing the industry and what it will more than likely look like in the future.

Significance of the Study

A major issue that has been affecting most hotel operators over the last several years has been large amounts of overbuilding. This is in anticipation of the large influx of new travelers expected from: Asian, North American and European markets. The reason why is because the period of economic expansion lasted for several years and interest rates were at historically low levels. This meant that an increasing number of projects would be built to illustrate the new trends in the industry. A good example of this can be seen with the Palm Resort in Dubai. This is an island that is being constructed for: various luxury hotels, shopping, dining and water sport activities in the Persian Gulf. During the boom years, this was supposed to be a symbol of the changing face of the hospitality industry. (Palm Island Dubai 2010) As every chain and resort, was looking for unique ways, to be able to reach out to various travelers. Now that consumer spending has impacted the industry, these different projects are starting to become relics of time that was based on unfounded principals and theories. In the case of Palm Island, the recession has hit the resort and the various hotels particularly hard, as nearly all of the different projects have been severely scaled back. At the same time, a variety of luxury villas have been seeing a wave of distress sales, as real estate prices for these properties hit an all time low. (Iconic Palm Island Reaches New Low 2010) This study is seeking to determine, if these kinds of projects are only seeing temporary setbacks that will return to normal, once an economic recovery begins or if a new trend is emerging. As a result, we must engage in some kind of examination that will determine if the industry can be able to recover and what the sector will look like once it begins.

Scope

The scope and breadth of this study are to see the underlying effects that the recession is having upon the hotel industry. Where, there will be an emphasis on finding out what specific factors could be affecting the industry and consumer trends. The geographic segment will be middle class / upper middle class leisure and business travelers. The hotels that will be targeted would include combination of: three, four and five star hotels. A few of the hotels that we will be examining would include: the Four Season, Hilton, Marriot and Hyatt. To determine which issues are creating the most amount of changes requires: conducting a survey of various leisure and business travelers. This will be accomplished by selecting a random sample of between 100 and 500 travelers. At which point, we will be seeking to see the effects that the recession has had upon: these views, how they have changed the opinions of the traveling public and how they are impacting the way hotels conduct business.

Research Questions and Objectives

The different questions and objectives of the study are: to focus the overall efforts of researchers, on specific aspects of the hospitality industry that are relevant to hotels. This is important, because the overall scope of the sector is so large, that any kind of study must focus on specific aspects in order to be as accurate as possible. In this case, we are going to be focusing on the on how the recession is impacting a variety of hotels around the world. Where, there will be an emphasis on how the various corporations are adapting to the changes they face, how this is changing the underlying focus of the business and how the current economic conditions are affecting consumer trends. To answer these different objectives, three questions will be utilized to direct the investigation to include:

How has the recession impacted hotel marketing strategies?

What are the effects that globalization is having upon consumer choices?

How has the current recession changed the business model of hotels?

Once these different questions have been answered they will allow researchers to be able to make accurate inferences about: how the industry is changing and what strategies can be utilized by hotels to adapt to what is taking place. This will provide an accurate assessment as to: how the recession has impacted the industry, how it is changing and what the business model will more than likely look like in the future.

Literature Search and Critical Review

The various pieces of literature can be corroborated with possible questions, to ask to respondents as a part of the survey. Where, there will be an emphasis on identifying specific and general factors that are causing the most dramatic changes to occur. As a result, the literature review will provide a basic foundation in focusing the various research questions.

When you examine the hotel industry it is clear, that the recession is causing many people to begin to question the underlying business model. Part of the reason for this, is because of the tremendous amounts of growth that have taken place in the sector throughout the 1980's and 1990's. The literature from Dierkiex, highlights how this shift is occurring, as the industry would see a change in the underlying business model after oil prices peaked in 1980. This would cause a variety of new tourism destinations, to quickly become reliant upon high air passenger arrivals. A good example of this can be… READ MORE

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