Hospitality Business Development


HospitalityBusiness Development

HospitalityBusiness Development

Thehospitality industry has been one of the most fundamental sectors inthe contemporary human society. Indeed, it has experienced atremendous growth, not only in the United States but also in otherparts of the world as the effects of globalization take effect acrossthe world. However, it is well acknowledged that differenthospitality business entities have varying magnitudes of success.This may be traced right from the manner in which they are developedand the running of their operations. This underlines the importanceof business development to the overall success of the hospitalityindustry in both the long-term and the short-term. This studyexamines the varied aspects of hospitality business developmentparticularly with regard to the factors that would have a bearing onthe success of the same. It particularly examines the alreadycomposed literary works pertaining to this aspect as a researchmethodology.

Businessdevelopment may be defined as the creation of long-term value for abusiness entity from relationships, markets and customers. Itunderlines the processes and tasks that are aimed at developing, aswell as implementing growth opportunities between numerousorganizations. It encompasses the processes and tasks pertaining tothe analytical preparation of the likely growth opportunities,monitoring and support of implementing growth opportunities. It isnoteworthy that it does not encompass decisions pertaining to theimplementation and strategies of growth opportunities.

Volumesof literary works have been written with regard to the development ofa hospitality business. Scholars note that the starting point forevery other fundamental business decision is the business entity’smission statement and the associated goals. Indeed, the importance ofthe mission statement is underlined by the fact that it wouldarticulate the vision, as well as offer a sense of directionpertaining to all the operations of the entity. A hotel’sdevelopment department would use the mission, strategies andobjectives of the business entity to develop its own specificobjectives, task oriented mission statement control procedures andstrategies. Further, scholars state that individuals that areinvolved in the preparation of the development strategy of a businessmust incorporate perfect knowledge regarding the destination of thebusiness, have perfect knowledge regarding the brand or product, aswell as be aware of the traits pertaining to the consumer profiles(Russ,2010).Development strategies underline statements regarding the manner inwhich a business entity aims at reaching its growth objectives. Ofparticular note is the fact that a development strategy in thehospitality industry would entail the construction and expansion intonew units. This should be differentiated from hospitality businessdevelopment, which is applicable to the entire spectrum ofhospitality businesses including day-to-day or strategic operationsand expansion of the market exposure of the business. The expansionof a hospitality business, in this regard, may be attained through awide range of possibilities including the purchase of existinghospitality businesses, organizational mergers, branding, marketing,business repositioning, new-builds, hotel extensions or evenrenovation of the existing facilities (Bowen, 1998).

Nevertheless,hospitality businesses come as highly complex projects that involveenormous risks and usually taking up immense amounts of capital, timeand energy. Indeed, the challenge is worsened by the combination ofintense uncertainty, a dynamic and extensive array of marketsegments, as well as high expectations from the stakeholders that areinvolved in the development of the business. Researchers note thathospitality businesses are considerably unusual forms of businessformula that combines some form of real estate with the continuedreal-estate service oriented businesses (Russ,2010).

However,there are numerous factors that affect the hospitality businessdevelopment. It is well acknowledged that hospitality businesses areextremely volatile. For instance, a research on 25 regional hotelsover the last 30 years in the United Kingdom including two instancesof recession and two of peak performance (1981 and 1993, as well as1990 and 1998 respectively), indicated that the industry experiencedsustained real growth in their productivity, with the trading profitsincreased by 2.9% to 3.5% within the same period (Russ,2010).This does not undermine the short-term volatility pertaining to theperformance of the earnings. Other factors that would affect thehospitality business development include the socio-economic,political and technological, as well as other uncontrollable aspects.Of particular note is the fact that the factors that affectmacro-economic environments come with direct but considerably delayedeffects on the hotel industry, as well as business environments(Russ,2010).This would, in turn, impact the profitability and revenues ofbusinesses, thereby negatively affecting the feasibility ofhospitality business development.

Onthe same note, any hospitality business proposals necessitate theundertaking of feasibility studies that would evaluate the marketdemand so as t assess the economic viability of proposed projects.There are varied fundamental question on which the proposals mustconcentrate including, the presence, size, demand, current needs, andpotential share of the market to be captured (Hassanien et al, 2010).Further, it is imperative that the realistic nature of feasibilitystudies is enhanced, not only through re-examination of methodologybut also consideration of crucial issues such as trade-offs inherentin yield management decisions, average occupancy and daily rateprojections, relative profitability of the beverage and food outletsamong others (Russ,2010).

Oneof the key aspects for consideration regarding the hospitalitybusiness products would be the service products, which encompass thebundle of benefits and features. It incorporates three aspectsincluding competitive supporting services, essential facilitatingservices and most importantly the core benefit. Core benefitunderlines the generic function that the service product offers toguests or rather the reason that the establishments are in themarkets. Hospitality businesses may be exist for relaxation, socialexperience, nourishment, entertainment, night’s lodging amongothers (Ransley &amp Ingram, 2000). The facilitating services arecrucial to the provision of the core benefits and may includeservices such as kitchen services, housekeeping, front desk servicesamong others. Without such facilitation services, the establishmentswould, with no doubt be forced to close down. On the other hand,supporting services may not be essential to the provision of the corebenefit but are essential to the marketing of the operation (Butler,2001).They are used in the creation of a distinction between the operationand similar establishments in the industry. For instance, anestablishment may create differentiate itself from others in themarket by incorporating a reservation service in case it has lodging(Hassanien et al, 2010). Scholars acknowledge that the success ofhospitality businesses is based on their provision of an experiencethat would satisfy the guests, an element that would be accomplishedthrough having the staff or management of the establishmentsconcentrating on the perspectives of guests regarding the things thatare crucial and delivering on those expectations (Butler,2001).

Further,it is imperative that one examines the hotel development criteria. Asnoted, the development planning would begin with the setting ofoverall objectives, where a large number of unsuccessful hotels beingthat the original inspiration of an inexperienced party is notconsolidated using sound business planning (Ransley &amp Ingram,2000). In establishing the development objectives of a property, thedevelopers have to determine the financial objectives, developmentobjectives and operational objectives. These objectives have tocoordinate with the real-world conditions. In essence, the initialplanning must identify the activities and conditions that may havenegative or positive effects on the development of the hotel (Butler,2001).

Inconclusion, hospitality business development underlines the creationof long-term value for a business entity from relationships, marketsand customers. Numerous factors have been acknowledged as playing afundamental role in the success of any business entity. First in lineis the state of the economy, alongside the financial constraints andinducements that have the capacity to restrict or favor a businessinvestment (Ransley &amp Ingram, 2000). On the same note, there mustbe an unsatisfied demand for accommodation as a result of otherfactors such as business attractions, recreations and tourism.Further, it could also depend on enterprise, or rather theappropriate interpretation of the requirements, as well as theentrepreneurial organization pertaining to the required expertise andfinances for the successful implementation of a project. All in all,it is imperative that the original vision of the inexperiencedinvestors who came up with the idea are incorporated and shaped bythe economic realities and expertise so as to enhance the success ofa hospitality business.


Bowen,J.T. (1998) “Market segmentation in hospitality research: No longera sequential process”, InternationalJournal of Contemporary Hospitality Management,10(7): 289-296.

Butler,D. (2001).&nbspBusinessdevelopment: A guide to small business strategy.Oxford [u.a.: Butterworth-Heinemann.

Hassanien,A., Dale, C &amp Clarke, A (2010). Hospitality BusinessDevelopment. New York: Routledge

Ransley,J. &amp Ingram, I. (2000) DevelopingHospitality Properties and Facilities, Butterworth-Heinemann: Oxford.

Russ,M. (2010).&nbspKnowledgemanagement strategies for business development.Hershey, PA: Business Science Reference.

Turkel,S. (2000) “A fresh look at feasibility studies”, InternationalSociety of Hotel Consultants.