University of Brighton

MA in Hospitality Management

Critical Issues in Hospitality Management

Module Leader: Pete Odgers

Submitted By: Aditya Joshi

Submission Due Date: 25/01/2010

Introduction

In order to initiate the systems thinking approach towards any case it is

mandatory to understand the meaning of the word systems thinking.

Systems theory studies the interrelationship between the components of

the system. Its application is known as systems analysis and the
important tool for this analysis is the systems thinking.

“Systems thinking is a way of helping a person to view systems from a

broad perspective that includes seeing overall structures, patterns and
cycles in systems, rather than seeing only specific events in the system.”
[Online: 2010]

It is also defined as “Systems thinking is a way of understanding reality

that emphasizes the relationships among a system's parts, rather than the
parts themselves.” [ Online:2010 ]

Both the definitions highlight the fact that systems thinking is the
understanding of the system on the whole including all the parts of it and
the relationships they maintain with each other.

Systems thinking flow diagram adapted from

http://www.systems-thinking.org/sdm/sdmodel.htm
Important part of systems thinking is the analyzing and evaluating of the
SWOT and PESTLE.

SWOT analysis:

When we say SWOT it refers to the Strengths, Weaknesses, Opportunities

and Threats. This helps designing the framework for the PESTLE Analysis.

PESTLE also known as PEST, PESTEL etc. is the abbreviated form of

Political, Economic, Sociocultural, Technological, Environmental and Legal.

SWOT is defined as “(Strengths, Weaknesses, Opportunities, Threats) is a

popular framework for developing a marketing strategy. ” [ Armstrong
J.:2004]

Threats
Confront Avoid

External Exploit Search

Environment

Opportunities Internal Environment

Strengths Weaknesses
Image adapted from
http://www.ifm.eng.cam.ac.uk/dstools/paradigm/swot.html

[Online:2010]

“A strength is a resource or capacity the organisation can use effectively

to achieve its objectives.”

The strength defined denotes that the points the organization knows that
it has the upperhand over the others having those quality points.

A weakness is a limitation, fault, or defect in the organisation that will

keep it from achieving its objectives.

These also mean the points which the organization tries to overcome or
tries to hide them from the competitors.

“An opportunity is any favourable situation in the organisation's

environment. It is usually a trend or change of some kind or an overlooked
need that increases demand for a product or service and permits the firm
to enhance its position by supplying it.”
These are the points which the organizations try to grab them taking the
strengths and weaknesses into account.

For example if there is a property being sold out nearby our hotel, no
organization would prefer to have one more hotel in the affinity to their
hotel. This is the opportunity to increase the business. But again when
doing this whole pestel analysis should be done and only then should the
property be purchased.

A threat is any unfavourable situation in the organisation's environment

that is potentially damaging to its strategy. The threat may be a barrier, a
constraint, or anything external that might cause problems, damage or
injury.

Threat is something which may hamper our business in some way or the
other.

Taking the previous example into account if the new hotel is being
introduced in the vicinity which obviously would be a threat as the
customers would prefer the new hotel which they feel would have new
facilities and trendy rooms and amenities.

There are various steps one could handle this situation. This is the place
marketing comes into the picture wherein the Organization could suppress
the new property with lavishing discounts so much so that the new
property would be in loss. This is just one prospect of marketing and has
various ways and measures .

Pestel analysis is done only with regards to external environment as the

full form of PESTEL i.e. Political, Economic, Sociocultural, Technological,
Environmental, Legal are the factors which affect only the external
environment.

PESTEL

“It is a strategic planning technique that provides a useful framework for

analysing the environmental pressures on a team or an organisation.”
[Online: 2010]

In other words it helps the organization to analyze the environmental

factors that may or are affecting the business.

One more definition says “PESTLE analysis is in effect an audit of an

organisation's environmental influences with the purpose of using this
information to guide strategic decision-making.” [ Online :2010 ]
This indirectly tells us that every company should do the PESTEL analysis
frequently to make necessary changes in the goals and take appropriate
decisions to be alive in the market and to have the upperhand on
competitors.

Brief Overview of the Property

Kamat Hotels a well known for their lavishing range of ecotels i.e.
environment friendly hotels. One of them is VITS Mumbai, India the then
The Lotus Suites which is situated in a prime location near the Mumbai
International Airport. It is a new chain of luxury business hotels in India
Promoted by KHIL [ Kamat Hotels India Limited ] [ Online:2010 ]

It is a four star property having 190 ensuite rooms to have the upmarket
hospitality experience. Vits has proposed to open new branches for VITS
hospitality experience in Ahmedabad, Aurangabad, Baroda, Belgaum,
Chinchwar, Gujarat, Hubli, Kolhapur, Nagpur, Nasik, Navimumbai, Pune,
Solapur, Surat, Thane and 20 more locations in the next five years.

SWOT Analysis

We would discuss SWOT after the pestle analysis and it facilitates the way
of examining the external environment factors such as the opportunities
and threats.

These would be discussed after the pestel analysis as the opportunities

and threats could only be found after evaluating and analysing the
external environmental factors on the business.

PESTEL/ PESTLE/ PEST Analysis

Traditionally PESTEL analysis was known as the PEST analysis and only in
the modern times did the use of the word PESTLE came into being.

Social part of the PEST is split into environmental factors too as those
have a significant role in the strategic management these days. Alongwith
that economic factors are split into legal factors for the same previously
mentioned reason.

Political Environment

“These refer to government policy such as the degree of intervention in the

economy.”

[ Online:2010]
The Times of India by Rachna Singh, Jaipur, in a bid to attract international
tourists is gearing up with a host of new properties across different
segments. [Hospitality Biz India: Dec. 2009]

Hotel industry as well as tourism industry has a basic backbone of the

government support without which it won’t be able to sustain the
competitive world. Government charges huge amount of tax from the star
and luxury category of hotels and thus has a huge impact with the
political changes that occur. Any small step taken by the government by
changing some law it would seriously affect hotel industry. The hotel
industry is getting huge incentives and the state governments are
supporting the development of the hotels and their growth. This infact
answers the question how are Indian Hotels are planning to expand in the
economic crunch time.

The Terror attack on the city’s [ Mumbai ] renowned hotels Taj and the
Oberoi’s had brought a concern on the faces of the hoteliers with a
substantial drop in foreign travellers to India taking the terror threat into
account.

Economic

“These include interest rates, taxation changes, economic growth,

inflation and exchange rates. As you will see throughout the "Foundations
of Economics" book economic change can have a major impact on a firm's
behaviour.” [Online:2010]

Mumbai being the financial capital of India has many foreign tourists
arriving with the whole and sole purpose of meetings, conferences etc.
thus Hotels in Mumbai try to capitalise on the foreign travellers who are
seen to bring more money to spend along with increasing amount of
expectations from the hotels. As seen in the recent past the guests are
willing to pay for the services they get and the more the guests pay the
more would the hotel and the industry would prosper. With the increase in
the paying power of the guests the need for the good and luxurious hotels
become massive. The per capita income in India also has rose to a new
extent enabling the common man to goto luxurious hotels to have a lunch
or a dinner.

Economy of India faced one of the most minimal drop in the whole world
because of the controlled and sound financial system in the country. This
helped hotels to only concentrate on the foreign travellers which had
reduced and the local market being stable was much of a relief to the
Indian Hotel Industry.
Social

“Changes in social trends can impact on the demand for a firm's products
and the availability and willingness of individuals to work.”

Vits being situated near the airport sees the maximum amount of guests
who are in for the business meetings and conferences. There are very few
FIT guests seen in the hotel as compared to the BTC guests [ Bill to
Company Guests ] and the business travellers.

This explains the reason why the hotel could be seen having single room
guests or a twin bedroom guests more than the double bedroom guests.
Being the Business hotel it has maximum males arrivals compared to
female arrivals.

The Vits could also be seen having layover guests many a times which
becomes the revenue generator for the hotel in the slack period of time.

Seeing the ratio of the various classes of guests of VITS it could be easily
said that the Hotel must strive for the FIT and the group checkins by
linking the VITS to the travel agencies in and outside India. This could
probably balance the demographic ratio of the arriving guests.

Technological

As said before the technology used in VITS is way below the standards
when it comes to Hotel management software and the Mini Bar system.
Some Technologies used are quite old and need to be replaced with the
new ones in the technological market.

For example: If a hotel used the printed KOT and BOT and the stewards
had to give it themselves to each of the departments. It could be
substituted with the direct computerized sending of KOT and BOT to the
kitchen or the Bar.

Technology always has been seen to have reduced the manpower and the
energy required by the people. It would always be a boon to mankind and
the technological upgrades would also help to show the advances and the
progress of the property.

VITS does not have the wifi installed instead they provide internet
connection to every room personally which should be made wifi which
would reduce the guest complaints about the in room facilities complaints
and thus VITS could find many guests happy and satisfied with a thought
of you get what you pay for.

Environmental Factors
“The growing desire to protect the environment is having an impact on
many industries such as the travel and transportation industries (for
example, more taxes being placed on air travel and the success of hybrid
cars) and the general move towards more environmentally friendly
products and processes is affecting demand patterns and creating
business opportunities.” { Online: 2010 ]

Being an environmental friendly hotel this factor becomes the most

important to the property.

Basically when we talk about the environmental factors affecting the

business of the hotel the only thing that comes into our minds is the
floods which Mumbai saw in 2005 and the heavy rains and showers across
Mumbai. The period from June – September is the only period of time
when such factors play a role and there are very few things which could
be done by the hotel about it.

Generally what is done in such factors is to let the guests know the
situation outside and making them aware would help them from the
troubles they may face when they would be in those heavy rains.

Another environmental factor could be an earthquake or any other natural

factor which directly affects the occupancy of the hotel and the sales.

The solution or the rules of the hotels in India are that they do the drills
for the emergency situations frequently to help employees understand
what is supposed to be done in hard and emergency conditions.

Legal Factors

“These are related to the legal environment in which firms operate. In recent
years in the UK there have been many significant legal changes that have
affected firms' behaviour. ” [ Online:2010 ]

This also includes the health and safety laws, the recent outbreak of the Swine
Flue [ H1N1 virus] would have been the upcoming serious factors for the VIts and
the service they could have provided is the free checkup of the incoming guests
for the swine flue.

As of now India does not have age discrimination law but does have the
disability discrimination law and every star hotel is supposed to provide a
room for the disabled guests and having special facilities for the blind deaf
and the leg or hand impaired people.

This room is generally located on the first floor near the lift entrance and
is always taken care of in a special way.

SWOT Analysis of The Property

Strengths:

The major strength of the property is the fact that they are the only
ecotel i.e. the environmental hotel around that place which makes them
unique in a way.

The Property is very close to the international airport and a few kilometres
away from domestic airport of Mumbai.

The Wellness club which is situated in the lobby area is a well known and
a renowned place to be for the local visitors. It is a well maintained all
instruments fitted fitness gym which also has a sauna and steam bath.
This often is the attraction of the in house guests.

Having said that the hotel is very close to the international airport many
international airlines prefer the hotel for the compensatory stay to the
layover guests. Layover guests are the guests whose flight has been
delayed or cancelled for some reason and are offered the fine
accommodation and the food and beverage facility to them.

The property has six banquets and conference halls which have conducted
many successful conferences as well as banquet parties till date. This is
the main attraction for many small budget companies to have their
conferences in a luxurious atmosphere.

The employees are given a certificate of honesty which keeps them

motivated to be loyal to the guests as well as the property.

The Poolside Restaurant is a well known attraction among the higher

middle class families for a peaceful breakfast lunch and dinner facilities. It
also conducts food festivals as other hotels do which makes the
restaurant even more attractive for the targeted market.

The occupancy percentage of the hotel is generally very competitive with

regards to its range of hotels which it fits in. The hotels included in the
range are Kohinoor continental, Mirador, Bawa International etc.

Weaknesses

The major weaknesses in and around the hotels are as follows:

Basic weakness of the hotel is again the locality. Being situated off the
road it may see a significant impact on the FIT guests [ FIT denotes Free
Individual traveller ]

The Hotel having the best possible kitchen as explained earlier lacks the
major departments of the kitchen that is the bakery and the butchery
section. There is a small bakery which handles small orders of cakes etc
and needs an attention of the management.

The solution the management found was to bring the bakery and the
butchery items from their sister hotel The Orchid which is situated near
the Domestic Airport and is managed by KHIL itself [ Kamat Hotels India
Ltd. ]

The Hotel also has a basic problem of internet as the wi-fi has not been
installed in the property and the internet access has to be given to the
guests individually. Also the Internet facility provided is not included in the
rack rate and needs a fair bit of attention.

The solution the management found was that they have introduced the
package of rack rate plus the internet rates which is quite fair in order to
reduce the initial installation cost of the wifi.

The Hotel as seen has not upgraded the hotel management software and
has stuck to PMS i.e. Property Management System whereas the other
hotels in the locality may have upgraded it to the Opera or the Fidelio
which are the industry’s current softwares which are faster in
performance and standards.

The hotel also lacks the mini bar technology wherein if the product is
removed from the bar and is not kept in 1 minute the product is charged
on the guests bill. This technology helps save the time of checkout of the
guests as the mini bar handling steward does not have to attend every
checkout room on the spot. He gets some buffer time having the room
cleaning to be done.

The Hotel also uses the whitney rack system and needs to be upgraded to
the fully computerized system which would serve the hotel’s motto of
saving the environment by reducing the amount of paperwork. This would
also reduce the hustles and bustles of the reception staff as they would
not have to check each and every bill. This would also reduce the work of
the night auditor.

The Hotel lacks the proper swimming pool which is located next to the
restaurant and there is no privacy for the swimmers which they may feel a
bit weird.
Opportunities

With the upcoming government plans and incentives for the Hotel
Industry as explained earlier, the VITS has been one of the hotel chains
who are growing their business by introducing more and more properties
as explained earlier. This is the part where the Hotel Chain “Vits” has
capitalized and has grabbed upon the opportunities.

The upcoming opportunities for the chain on the whole are the cricket
world cup which is scheduled to be organized in 2011. We have taken this
as an opportunity because the hotel has a chance to capitalize on the
world cup by targeting audiences from India as well as around the world.
They could have special facilities designed for the fans of cricket by
introducing the bus service or the special cab service for the fans to the
stadiums in and around the world cup venues. Capitalizing on the world
cup would help build a new customer profiles and the service the guests
perceive would hold the key and would help the business by seeing loyal
members in them in the coming years.

The concept of the celebrity chefs has not been that popular in India and
this could be th opportunity by hiring the celebrity chefs and throwing the
celebrity special dinners etc. which the guests would relish.

Threats

The recent Bomb Blast in Mumbai’s best Hotels would be seen as a

biggest threat as the consumers/ guests would have been afraid of the
fact that the terrorist activities could be prevalent. But as Indian
government came up with the NSG [ National Security Guard] Branch
specially for Mumbai, this threat would have been diminished.

One more threat for the Hotel would be the local 4 star properties which
would obviously be trying to succumb the pressure put by the VITS by
introducing their new policies and the discounts. The local Hotels which
may try to introduce the competitive marketing plans are the Kohinoor
Continental and the Mirador. Even then the Hotel has been doing well with
an upper hand in the Occupancy percentages of the local Hotels.

The upcoming concern for the Hotel could be the recent changes in the
human behaviour towards the health and living. People have started
becoming more and more conscious about having low calorie, low salt and
spices food which may be a threat if the menus are not worked out for
those guests demanding that type of food.
“ Studies show that those who reduce their sodium intake have lower
blood pressure and are less likely to have a heart attack, stroke or other
complications of cardiovascular disease.” [ Online:2010 ]

Conclusion

The study could be concluded with the following points highlighted:

Taking the government incentives into account the Hotel as a chain has
been expanding their business with upcoming properties as is becoming
the strength of the chain in a way by expanding their brand name within
lot of target markets and many more loyal customer/ guest profiles from
different parts where the branches are opening.

The Hotel could look affirmatively towards the upcoming world cup by
targeting the fans of cricket which would help build new loyal customers
for the business in coming years with the quality of service they would
perceive.

The Hotel should introduce the latest trend in the food and beverage
industry of the low calorie and low salt [sodium] diets specially designed
for the diabetic patients and the Heart patients which could be seen
increasing day by day.

Introduction of celebrity chefs and celebrity chef nights could be a boom

for the hotel restaurant business, the reason being the number of fans of
the celebrity chefs is huge and this measure taken could be one of its
kind.

The hotel should embrace the new technologies which are being
introduced which would help reduce the time and the human errors.

The Hotel being the ecotel could concentrate and target on the
environment enthusiasts as their potential customers and planning their
schedule in many nice botanical gardens in and around the city.

URL= http://www.hospitalitybizindia.com/detailNews.aspx?
aid=6942&sid=41 December 09,2009 issue.
References

Armstrong J.(2004) Don’t do SWOT: A Note on Marketing Planning, Many

world Inc.

URL=http://www.cipd.co.uk/subjects/corpstrtgy/general/pestle-
analysis.htm

URL=http://www.eatingwell.com/recipes_menus/collections/healthy_low_s
odium_recipes

URL=http://www.ifm.eng.cam.ac.uk/dstools/paradigm/swot.html

URL=http://www.improvementnetwork.gov.uk/imp/aio/1033478

URL=http://www.managementhelp.org/misc/defn-systemsthinking.pdf

URL=http://www.oup.com/uk/orc/bin/9780199296378/01student/additiona
l/page_12.htm

Telephonic Interview with the staff and the experience.

URL=http://www.thesystemsthinker.com/systemsthinkinglearn.html

URL=http://www.vitshotels.com/