2025 Lecture1ConceptsProducts AS MAKAUT SYLLABUS PDF.pdf

strategic contexts in hotel industry

1. HOSPITALITY BUSINESS
DEVELOPMENT
LECTURE 1
BD AND UNDERLYING CONCEPTS AND
HOSPITALITY CONCEPTS AND PRODUCTS

2. Topic 1: Hospitality Concepts
and Products
and its underlying rationale
• Scope of hospitality business development
•Hospitality concepts and hospitality products
•Levels of product
•Product life cycle

3. LEARNING OUTCOMES
•By the end of this Lecture, you should be able
to:
–Define business development and its underlying
rationale
–Outline the potential scope of hospitality business
development
–Define, and distinguish between, hospitality
concepts and products
–Identify the various levels of any product
–Describe the nature and significance of the
product life cycle

4. •Business development is the process by which
a company can improve its performance
through:
–a) modifying or enhancing the features and
attributes of its current products or services;
–b) developing new products or services;
–c) entering new markets;
–d) forming partnerships or strategic alliances.

5. “Hospitality business development refers to the
process by which an organisation uses
internal, external or joint resources in order to
launch, improve, modify or extend its
offerings in an existing or new market”
(Hassanien, Dale & Clarke, 2010, p. 2)

6. Profitability
To improve
market share
Business
growth goals
Unique product
or niche
Customer attraction,
satisfaction
and retention
Economies
of scale
New market
opportunities
Legal factors
Competition
Partnership
or alliances
Brand and image
improvement
Small and saturated
existing market
Globalisation or
internationalisation
Seasonality

7. Booz, Allen and
Hamilton’s (1982)
six categories of
new products.
New to
the world
products
Reducing
costs
Repositioning
products
Additions to
existing product
lines
Improvements to
existing products
New
product lines

8. Related
Diversification
Unrelated
Diversification
Penetration
Consolidation
Withdrawal
New
Markets
New
segments
Improved
Products
Innovation
New
Products
Hospitality
Development
Routes
Adapted from Johnson
and Scholes (2006)

10. HOSPITALITY CONCEPTS
•“…normally consists of a service delivered in a
purposely-designed property, whose quality,
atmosphere, service style and content, supported by
a specified operation and management in a specific
location, determine price and define the product”
(Ransley & Ingram, 2004, p. 5)

11. HOSPITALITY PRODUCTS
•“Any bundle or combination of qualities, processes
and capabilities (goods, services and ideas) that a
buyer believes will deliver satisfaction” (Enis & Roering, 1981, cited in
Williams, 2004, p. 22)
•“Multi-dimensional and dependent upon how the
buyer responds to different facets of the offering”
(Gabbott & Hogg, 1998, cited in Williams, 2004, p. 22)

12. HOTEL PRODUCTS
•A hotel is “a composite of activities and interactions
each of which has physical and emotional content”
(Nightingale, 1985, as cited in Williams, 2002, p. 28)
•Principal hotel products:
–Accommodation
–Restaurants
–Bars
–Conference and banqueting
•Offering physical and emotional satisfactions through
tangible and intangible components

13. THE HOTEL AS A MARKET CONCEPT
Source: Medlik & Ingram, 2000, p. 14

14. KEY RESTAURANT CONCEPT CONSIDERATIONS
Source: Davis, Lockwood, Pantelidis & Alcott, 2008, p. 118

15. PRODUCT LEVELS
•The three levels of product:
–The core product: fulfilling the consumer’s need
for food, accommodation or social interaction
–The tangible product: the physical benefits offered
–The augmented product: achievement of
differentiation and competitive advantage through
(perceived) addition of value
(Kotler, 1994)

16. THE HOSPITALITY PRODUCT
Source: Hassanien, Dale & Clarke, 2010, p. 34

17. EXAMPLES OF HOSPITALITY
AUGMENTATION

18. THE PRODUCT LIFE CYCLE
•“Plotting products or services to identify what stage they are
at in their PLC is a valuable way of reviewing a product’s past
and current position and making predictions about its future.
As part of a portfolio analysis, an organisation should access
each good and service in terms of its position in the product
life cycle”(Hudson, 2008, p. 155)
•Overall aim is to maintain the larger part, if not all, of any
portfolio within the growth and maturity stages of the cycle

19. LIFE-CYCLE MODELLING
•Life-cycle analysishelps determine the relative
positions, and thus competitive conditions,
between rivals
•In practice, hospitality and tourism product
life-cycles tend to be cyclical e.g. destinations
inevitably stagnate over time and either have
to keep rejuvenating themselves, or face
decline

20. PRODUCT LIFE CYCLE AND EXTENDING THE PLC
Source: Davis, Lockwood, Pantelidis & Alcott, 2008, p. 350

21. Four stages of the related industry life
cycle, namely Introduction Stage,
Growth Stage, Maturity Stage and the
Decline or Renewal Stage

22. The industry life cycle-a framework to
describe the stages that an industry goes
through from its inception to its eventual
decline or renewal. Each stage –impacts:
•*competition,
•*market dynamics,
•*business strategies
organizations adapt their strategies to
remain competitive.

23. Introduction Stage: Characteristics:
Innovation and New Entrants: *emergence
of new products, services, or business
models.
-introduction of new concepts such as boutique hotels,
eco-friendly resorts, or tech-driven guest experiences.
High Costs and Low Revenue: Companies
face high initial costs for research,
development, and marketing,
*while revenue is typically low due to limited
market awareness..

24. Limited Competition: There are a few or no
competitors, as the industry is still in its
infancy. Early adopters are the primary
customers.
Uncertainty and Risk: The market is
uncertain, and businesses face high risks as
they try to establish a foothold.

25. hospitality organizations should:
Focus on Innovation: creating unique value
propositions to attract early adopters
Invest in Marketing and Awareness: -build brand
awareness and educate potential customers
Niche Markets: target niche markets or specific
customer segments that are more likely to embrace
new concepts.

26. Growth Stage: Characteristics:
Rapid Market Expansion: rapid growth as customer
demand increases. More players enter the market, and
competition begins to intensify.
Increasing Revenue and Profitability: Companies start to
see higher revenues and improved profitability as the market
expands and economies of scale are achieved.
Product Differentiation: Businesses focus on differentiating
their offerings to gain a competitive edge.
Infrastructure Development: Companies invest in
infrastructure, such as new properties, technology, and staff
training, to meet growing demand.

27. What organisations should do:
Expansion of Services: Hospitality businesses
expand their offerings to cater to a broader
audience.
Brand Building: -building strong brands to
differentiate themselves from competitors
Franchising and Partnerships -expand
through franchising or partnerships to quickly
scale their operations.
Increased Competition: -innovate and
improve efficiency to maintain their market
share.

28. Maturity Stage: Characteristics:
Market Saturation: The industry reaches a point
where most potential customers have been tapped,
and growth slows down.
Price Competition: With many players in the
market, competition intensifies, often leading to
price wars. Profit margins may shrink
Consolidation: Larger companies may acquire
smaller competitors to consolidate their market
position. Mergers and acquisitions are common in
this stage.
Focus on Efficiency: Businesses focus on
operational efficiency and cost reduction

29. Effect on Hospitality industry:
Standardization: Hospitality businesses
standardize their operations to reduce costs and
ensure consistency
Customer Retention: With limited growth
opportunities, companies focus on retaining existing
customers …
Innovation for Differentiation: To stand out in a
crowded market, businesses may introduce new
features or services.
Global Expansion: Many hospitality companies
look to expand into new geographic

30. Decline or Renewal Stage: Characteristics:
Decline in Demand: -decline in demand due to changing
consumer preferences, technological advancements, or
economic downturns.
Exit of Players: Some companies may exit the market, -
bankruptcy, mergers, or shifting to other industries.
Renewal Opportunities: While some businesses may
decline, others may find opportunities for renewal by
reinventing themselves, adopting new technologies, or
targeting new markets
Cost-Cutting Measures: -implement cost-cutting
measures to survive, which can include layoffs, reduced
services, or property closures.

31. Effect on Hospitality:
Adaptation to Trends: -must adapt to changing
consumer trends
Sustainability and Innovation: -focus on
sustainability initiatives or adopt new technologies
(e.g., AI, automation
Niche Markets: -pivot to serve niche markets, such
as wellness tourism, adventure travel, or luxury
experiences
Exit or Diversification: -diversify into other
industries.

32. Effect on Hospitality:
Adaptation to Trends: -must adapt to changing
consumer trends
Sustainability and Innovation: -focus on
sustainability initiatives or adopt new technologies
(e.g., AI, automation
Niche Markets: -pivot to serve niche markets, such
as wellness tourism, adventure travel, or luxury
experiences
Exit or Diversification: -diversify into other
industries.

33. REFERENCES
•Cousins, J., Foskett, D. & Gillespie, C., (2002), Food and Beverage
Management, (2
nd
Ed).Harlow: Pearson. Ch 2.
•Davis, B., Lockwood, A., Pantelidis, I. & Alcott, P. (2008), Food and
Beverage Management (4
th
Ed). Oxford: Elsevier Butterworth-Heinemann.
Ch 4.
•Hassanien, A., Dale, C. & Clarke, A. (2010),Hospitality Business
Development , Oxford: Elsevier. Chs 1 & 2.
•Hudson, S., (2008), Tourism and Hospitality Marketing. London: Sage. Ch 5
& 10.
•Jones, P. & Merricks, P., (1994), The Management of Foodservice
Operations.London: Cassell. Ch 2.
•Ransley, J. & Ingram, H. (Eds), (2004), Developing Hospitality Properties &
Facilities, (2
nd
Ed).Oxford: Butterworth-Heinemann. Ch 1.
•Waller, K., (1996), Improving Food and Beverage Performance.Oxford:
Butterworth-Heinemann. Chs 1 & 6.
•Williams, A., (2002), Understanding the Hospitality Consumer.Oxford:
Butterworth-Heinemann. Ch 2.