The resort and spa business has over the years developed into global phenomena as businesses acknowledge the unique needs of travellers and business people. The resort and spa industry is one of the industries that have experienced growth through implementation of different strategies and processes within the hotel industry.
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As a result, this essay is going to analyze two factors that are going to be analyzed in respect to implementation of strategies in the resort and spa industry. Strategic management is an important ingredient in the success of any organization since it involves planning for the purpose of achieving organizational goals.
Strategic goals and initiatives are imperative in the development of the resort and spa industry especially in this competitive world of business. The issue of segmentation and cost differentiation are going to be compared and contrasted as towards their effectiveness in the resort and spa business.
Strategic management has been used in changing the business environment for any business in the world. As a result, this essay is going to analyze the effects of strategic management on the implementation of business processes. In particular, the essay is going to analyze the effects of strategic management in the resort and spa industry. We are going to analyze the key difference and aims of the two strategies of cost leadership/focus and segmentation in this industry.
Analysis of the Resort and Spa Business
The resort and spa business has evolved over the years from a traditional craft to a multi-billion industry in the world. The intense competition in the world has seen hotels groups launch services to reach out to their customers in this segment. As a result, different strategies have been deployed in ensuring that customers sample services from certain service providers (Bodeker, G. & Cohen, M, 2012).
In this case, strategic management has been used in roping in talent, cost techniques or services in a bid of ensuring differentiation in the industry as the resorts scout for more business. Strategic management has been used in achieving long term objectives of an organization in all fields including the resort and spa industry (Hing, N. & Breen, H, 2009).
Some of the strategic management techniques that have been used in the resort and spa business include conducting business analysis on the industry. For instance, we make use of SWOT and PESTEL analysis in the process of analysing industry strengths and weaknesses (Johnson, G., Whittington, R. & Scholes, K, 2011).
The development of some of the top notch resort and spa business had to conduct business analysis for their business to understand and come up with informative strategies. Through the use of SWOT analysis, resorts and spa industry players try to analyze the external opportunities and threats that exist in the market.
Whilst, at the same time looking at the internal structures of an organization to determine the viability of undertaking organizational goals. Strategic management relies on the issues gathered through these SWOT and PESTEL analyses in relation to adopted organizational goals and objectives (Baum, 2006)
The resort and spa industry is a unique industry where service and cost are the main drivers of growth and competition. As a result, this industry has undergone a lot of transformation to meet with the needs and expectations of the customers. The resort and spa industry grew in the past years when the element of health and fitness came into the hotel industry. As a result, many hotels started with offering spa treatments to its customers with the aim of attracting more customers (Cohen, M. & Bodeker, G, 2012).
Moreover, some health and fitness centres introduced spa treatments that inculcated massages and treatments as a niche service within the hospitality industry. In the hotel industry and segment, resorts introduced spas as a means of increasing its service and products to its customers. However, many spas were launched all over the globe offering different kinds of treatments (O’Fallon, M. & Rutherford, D, 2010).
The concentration of spas in different locations all over the world led to the mushrooming of spas which offered poor services and at the same time were run by untrained staff. For instance, in India and Malaysia, the resort and spa industry in plagued with an influx of spas which were unregulated and offering poor services (Kaye, 2007).
In some cases, brothels were disguised as spas and this did not help much in boosting the spa industry. Thus, some resorts and spas came up with purely unique premium wellness and treatment services under a segmentation strategy (Ooncharoen, N. & Ussahawanitchakit, P, 2008).
Segmentation vs. Cost Leadership/Focus in Resort and Spa Industry
In the resort and spa industry, several factors are used in the development of business and this includes two major factors. These factors are service and cost which drive the resort and spa industry in all global locations where hotels and other amenities are located. When to we analyse segmentation we have to look at the services offered within the resort and spa industry (Hill, C. & Jones, G, 2009).
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We also have to look into human resources/staff, training and support services needed to offer these services. While on the other hand we have to analyse cost within the resort and spa industry and how this factor affects the industry (Muphy, G. & Dempsey, C, 2010). Cost factor implies that organizations have to come up with strategies which ensure operating costs are lowered to ensure that optimum profit levels are achieved.
Input costs are some of the major costs that affect production within an organization and therefore the resort and spa industry is also imparted with these costs. Spas and resort require specialised equipments and knowledge to operate unique spa services. In terms of investment in the resort and spa industry, resorts need to come up with products that are affordable for the customer (Lim, 2007).
As a result, many resorts and spa offer their services as a complimentary to other services such as dining and accommodation. This is usually done by big hotel chains which offer these services within their health and fitness program. This is in contrast to organizations which offer spa services as the core strategy of their businesses since these organizations only invest in spa oriented services (D’Angelo, 2009).
Undertaking strategic management based on cost leadership means an organization will analyze its potential market and come up with services that cater for this market. Since the resort and spa market is faced with a lot of competition for customers, many organizations will fight for consumers based on cost leadership (Engel, 2011).
Cost planning is an important factor within any organization and as a result, making use of the cost leadership strategy tends to emphasize on lowering costs or making use of economies of scale. Hotels conglomerates such as Hilton and Hyatt hotels have numerous resorts and spas backed up by a huge customer base. These hotels have the advantage of their huge market presence in the hospitality industry and therefore they make use of the cost focus and leadership strategy (Hoskisson, R., Hitt, M. & Ireland, D, 2008).
For instance, the Hyatt hotels offer premium services to customers and to attract the loyalty of these customers, they have a cost focus services within their spas (Roll, 2005). They make sure that spa and wellness services are offered at low cost compared to their other services.
This strategy has been mostly adopted across the resort and spa industry in several global locations. Resort and spas have resorted to becoming amenity localities where customers get their wellness or treatment services as additional amenities (Enz, 2009). Cost focus and leadership strategies are means of lowering costs while at the same time attracting a huge clientele base with purpose of making profits.
This strategy in most cases work for the short term since customer satisfaction is usually pegged on customer value (Pryce, 2008). Cost focus and leadership does not focus on the service being offered and as a result, this strategy is mostly undertaken where resort and spa services are offered as complementary or non-core services of a hospitality organization (Robbins, S., DeCenzo, D. & Coulter, M, 2012).
Segmentation is another key strategy factor in the hospitality industry sine this factor looks into the operation of a resort or spa based on its services. Segmentation differs from cost leadership or focus since it focuses on service provision or product differentiation based on a specific market segment.
In most case, segmentation tends to offer products and services to a certain class of consumers (Raybould, M. & Wilkins, H, 2006). In this case, resort and spas will offer services to customers who are keen on getting health and spa treatments exclusively. Most of the customers who are targeted through segmentation are those who want to be targeted for certain services that mainstream industry players do not offer (Erfurt-Cooper, P. & Cooper, M, 2009).
In terms of service offering, resort and spa have different strategies and thus some offer exclusive health, wellness and spa services as their key product offering. These spas give these exclusive services to their customers with emphasis being on quality service, value and expertise.
The resort and spa industry requires the services of well trained professionals who have an understanding in the resort and spa industry (Ireland, R., Hoskisson R. & Hitt, M, 2011). These professionals are well trained in offering different types of treatments and massage such as the traditional Urut massage, foot reflexology and wellness services.
Resorts and spas which offer niche wellness and treatments services are different from other establishments which offer basic massage services (Wood, R. & Brotherton, B, 2008). These category of resort and spa have a different clientele in mind how have no concern for cost and are only interested in quality and value for the service provision.
The main idea behind segmentation is differentiation in that these resorts and spas have an understanding of their competitors and want to offer unique services in the industry. Due to cut throat competition in the industry, it is imperative for every resort and spa to target specific customers for its organization (Horner, S. & Swarbrook, J, 2005).
The resort and spa industry is mainly oriented towards service as a key factor in many regions globally. As a result, the development on the spa industry in countries such as Malaysia suggests that service innovation plays a critical role in business success. The differentiation strategy which segments the market is different from the cost strategy since it aims at giving value against gaining quantity in relation to the cost strategy (Keith, 2009).
Differentiation involves a lot of techniques such as training and hiring health and wellness experts for the sake of maintaining quality services (O’Fallon, M. & Rutherford, D, 2010). In some countries such as Malaysia and Singapore, there are standards and oversight authorities in the regulating the resort and spa industry.
Due to the uniqueness and value of the segmentation strategy, it is necessary for premium cost to be attributed to this strategy. This is informed by the problems posed by the cost leadership strategy which is prone to poor services, competition and redundancy (Mill, 2008). Consequently, the differentiation strategy ensures service quality which has a direct influence on the customer satisfaction is ensured (Lee, T. & Christine, P, 2010).
Some of the resorts that practice this strategy include the Zoetry Wellness and Spa resorts located in different locations globally. It is indeed important to note that service quality is crucial to the success of an organization in the wellness and spa industry (Hoque, 2010). Thus, it is imperative for an organization to adopt differentiation strategies compared to cost leadership or focus based ones in the implementation of business goals and objectives.
The resort and spa industry has seen a lot changes since its inception not so long ago and thus these changes have been informed by different business strategies. The main focus of strategies in the resort and spa industry is cost and differentiation whereby these two factors are compared and contrasted.
The cost leadership model has been adopted by many hospitality organizations with limited success since it does not serve the purpose of services required by the industry. When cost factors of low cost and high customer turnout are adopted service quality goes down and this affects greatly on customer value. This is unlike the differentiation strategy which focuses on the needs of the client and thus most of the time the customer is assured of good service and value for money.
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