BU L7 The Tourism and Hospitality Industries
Introduction
The tourism and hotel industry has faced the hardest impact of the Covid-19 Pandemic which has caused immediate consequences in the whole spectrum of social and economic activities of the industry. The increases in the number of cases due to the Covid-19 Pandemic have shown a significant drop in accommodation as a result of less demand for holidays, business travel and conference. The detailed analysis of the impact of the Covid-19 Pandemic on the hotel chain of Shangri-La is conducted based on Leiper’s tourism system which has also highlighted the use of technology and innovations used as the mode of recovery to gain a stable business in the hospitality industry.
Organisation overview
The hotel chain of Shangri-La has been based in Hong Kong with its headquarters and the business is driven by the endurance of passion for consumer service, along with parenting with local business leaders and higher authorities to bring a positive impact on the economic conditions of the community and people. On the global level, Shangri-La Hotels and Resorts has employees around 6,292 who are responsible for meeting consumer needs by providing accommodations and management systems to provide excellent customer service (Shangri-la 2022). In 2020, Shangri-La Group has gained consolidated revenue in the global hospitality industry as part of the reservations earned through providing accommodation has been 1,033.4 million USD (Shangri-la.annual_report. 2020).
Critical analysis of smartness and technology and innovation opportunities in Shangri-La accommodation
Amid the innovations taking place in the global market, the hotel and technology industries have been racing to provide the target consumers with smarter hotels and accommodations and in the development of high-end smart hotels. The hotel company and the industry have utilised the opportunity of innovative use of Information technology (IT) and collaboration to provide the industry with facilities to increase the competitiveness of individual hotels and the destinations altogether (Buhalisand Crotts 2000). Shangri-La Group has been successful in utilising new technologies such as IT and Artificial intelligence (AI) in the expansion of the hotel chains in the global market and providing the target audience with accommodations facilities based on individual needs. The company has expanded to have more than 100 resorts and hotels across the Middle East and Asia Pacific through successful collaboration with the company Tencent in providing Intelligent Internet of things (IoT) and Machine learning in Cloud processing for smart hotel developments (Alotaibi 2020). The company has used smartness in enabling the usage of data storage along with sharing capabilities with the help of IoT Technology that supports intelligent technology, network service and virtualization (Buhalis and Leung 2018).
Amidst the impact of the Covid-19 Pandemic, the Shangri-La group among the tourism industry based on Leiper’s tourism system has faced a shift from offline to online travellers which have led to the company strengthening its Internet and online presence. This is done through the use of technologies and formulation of the Destination Management Organisation (DMO) to gain opportunities in remaining relevant in global competition and improve through the use of emerging technologies (Buhalis and Wagner 2013). Furthermore, Shangri-La Groups have also utilised the opportunity in using interactive technologies such as facial recognised the use of A1-metre robots to provide the audiences with high-tech accommodation facilities and gain brand value. Technology is stated as the key in utilising drivers for management-effectiveness, cost reduction, market penetration, safety improvements and sustainability which have been considered as the innovator for the creation of effective decision-making and enriching experiences by providing highly evolved accommodation facilities in the hospitality industry (Buhalis et al. 2022).
Reason for this report by evaluating the conceptual framework
This report and detailed analysis of technological and smartness innovations utilised by Shangri-La is conducted to identify the use of technologies to mitigate the impact of the Covid-19 Pandemic on the economic and social issues faced by the company. The rationale of the report is further done through the identification of a conceptual framework that is presented below.
Figure 1: Conceptual Framework
(Source: Self-created)
Evaluating the markets of accommodation Shangri-La attracts
The use of real-time service that is provided by Shangri-La has led to the personalization of the service that has enabled the business to provide relevant content to attract the targeted audiences. Based on Leiper’s tourism system, the target audience in the global market has been designed by the company to have consumers from the age of 18 to 44 who are especially from the up[per and upper-middle-class families (Yang et al. 2022). Furthermore, the dynamic communication model created by the company has resulted in the creation of meaningful and real-time information from the target market audiences in the co-creation of the experiences which are related to optimising value for the stakeholders involved (Buhalis and Sinarta 2019).
Analysing the key players in the market for Shangri-La
In the competitive market edge of the hospitality industry, various companies and hotel chains have utilised technological innovations and advancements in the creation of highly effective and consumer-attractive accommodation facilities. Shangri-La Group has identified definite competitors in the global hospitality industry such as Globes Oberoi Hotels, Hyatt, Westin and many more (Yang et al. 2021).
Figure 2: Competitor Map
(Source: Yang et al. 2021)
Based on the above map, Shangri-La has a position of providing moderate prices in business and leisure accommodations to the target audience in the global market as compared to the competitors. Furthermore, the company has utilised the SOSTAC planning model to define the scope of marketing and the business environment in the development of a marketing strategy to gain a competitive advantage in the hotel industry (Stephenson 2021). The utilisation of the model has provided the company to conduct an in-depth competitor analysis and explanation of current market trends to provide consumers with the desired accommodation facilities in the competitive global environment.
Evaluate the external environment and area of resilience and crisis management
Porter’s 5 forces
| Forces | Degree of impact | Impact |
| Bargaining power of suppliers | Low | The bargaining power of the suppliers as external stakeholders is low due to the presence of numerous suppliers in the field which provides an advantage to Shangri-La. It may be implied that adopting a holistic approach always becomes fruitful in expanding a business by making appropriate decisions (Buhalis and Volchek, 2021) |
| Bargaining power of buyers | High | The bargaining power of the buyers being external stakeholders is high as the buyers have a good reputation and brand image in the market. The buyers maintain direct communication with the customers which increases their power significantly. On the other hand, carrying out detailed market research becomes effective in enhancing the overall image of a brand in the global context (Malhotra et al. 2015) |
| The threat of new entrants | Low | The threat of new entrants in the market is low as the expense to enter the field of business is extremely high. It may be asserted that experienced managers and leaders directly impact and influence the performance of an organisation (Bowles et al. 2007) |
| Rivalry among existing players | High | The existing rivalry and competition among the companies are high which is a disadvantage to Shangri-La and requires the adoption of a competitive strategy. The most crucial competitors of Shangri-La include Hyatt Hotels, Hilton Worldwide Hotels, Oberoi Hotels and Cox and kings |
| Threat of substitute | High | The threat of substitution is high as other companies have been showing promising efforts to provide excellent service to customers at an affordable price. Due to this purpose, the management of Shangri-La needs to remain alert as well as cautious in analysing the trends of the market in an accurate way for generating impressive outcomes in the post-pandemic business landscape |
Table 1: Porter’s 5 force analysis
(Source: Self-created)
According to the above table, it may be concluded that all the five forces associated with Porter’s analysis directly impact the business of the company to a great extent where factors such as low bargaining power of the suppliers provide an advantage to Shangri-La whereas high threats of substitution create a barrier in the course of business expansion of the company. The above discussion has also made it clear that the existing degree of rivalry among the companies in the industry is also high which may become a serious cause of concern for Shangri-La in the upcoming years. However, the threat of new entrants in the industry is low which provides an advantage to the company along with improving its brand reputation and image. Exploring the various fields associated with the tourism industry with the help of advanced technologies becomes vital for overcoming obstacles and hindrances (Willis et al. 2017). In a concluding remark, constant analysis and evaluation of all five factors become immensely essential for generating impressive outcomes in the long run without overlooking the factors which may bring unprecedented challenges to the organisation and hinder progress in the global context.
Discussion over Shangri-La’s crisis management and resilience techniques
The outbreak of Corvid-19 has profoundly impacted every industry and the hospitality industry is no exception to it where companies such as Shangri-La have confronted various challenges. The crisis of Covid-19 has generated issues related to customer management, employee engagement, issues related to hygiene and safety, short supply of workforce and issues related to communication. On a broader note, customer personalisation and understanding the preferences of the customers become truly essential in making progress in a competitive business environment (Tomczyk et al. 2022). However, the management team of Shangri-La as an internal stakeholder has been able to deal with the situations and circumstances related to the crisis of Covid-19 effectively which will be discussed in a detailed manner in this section of the report.
Figure 3: Crisis management strategies
(Source: Tomczyk et al. 2022)
The Board of Directors of Shangri-La has focused on changing its existing leadership style for confronting post-pandemic issues where a flexible leadership style has been adopted for providing a better experience to the customers. The leaders and managers as part of internal stakeholders have paid attention to the process of stabilization by making changes in the cost management of the company. Moreover, face-to-face social contact plays a vital role in establishing strong communication with customers which may be done through implementing Information Communication Technology (ICT) (Fan et al. 2019). The management team of Shangri-La has also sought the opinion and advice of industry experts to deal with the challenges and crisis related to Covid-19 which has proven to be immensely useful. Shangri-La has also focused on preparing a team for dealing with the crisis along with preparing a recovery strategy by assessing the factors associated with the crisis.
The management of Shangri-La has also focused on identifying the risk factors which may become a serious threat in the future and has taken necessary steps to deal with them strategically. It has to be mentioned that advanced technologies such as Big data have proven to be immensely effective in dynamically handling data along with saving time (Stylos et al. 2021). The internal stakeholders such as the management of Shangri-La have also completely changed its existing organisational hierarchy for improving the overall performance and productivity of the organisation.
Analysis of smartness and innovation utilised for support of recovery and resilience for the company and hospitality and tourism ecosystem
The management of Shangri-La has utilised all the available resources in the most appropriate way for generating constructive outcomes along with mitigating the different aspects of the crisis through advanced innovations and smart technologies and techniques. It may be added that an organisation is required to focus on developing the emotional intelligence of the leaders which enables the leaders and managers to increase the levels of satisfaction of the customers (Stoyanova et al. 2020). Creative innovative approaches including merging teams and different departments have played a significant role in addressing the issues along with resolving them quickly. Using Artificial Intelligence is another important aspect which has generated fruitful results in managing the employees along with providing training and development to the workforce of Shangri-La. The use of AI has also helped in increasing the levels of focus of the workforce (Internal stakeholders) through better levels of communication and transfer of important data within the organisation. Innovations related to maintaining the health and hygiene of the customers and employees have impacted the overall process of crisis management positively. In other words, data analysis with the help of advanced innovative technologies directly impacts the decision-making process of organisations (Rubio et al. 2021).
The adoption and use of smart approaches have helped Shangri-La in overcoming the crisis related to Covid-19 where training has been provided to the workforce for making quick decisions during any particular situation which becomes important for business recovery in the post-pandemic world. Furthermore, it may be implied that Artificial Intelligence has also proven to be effective in increasing the skills of the employees which becomes beneficial in the recovery of business without failing to analyse the business of the competitors.
Critical discussion over the socio-cultural, health, economic and environmental impact of Covid-19 on the hospitality and tourism industry
Economic
The impact of the Covid-19 Pandemic has been greatly felt by the rise in the cancellation of events that have affected the tourism and hospitality companies such as Shangri-La which has seen huge financial losses in the industry resulting in the permanent shutdown of many companies. As for the impact of the Covid-019 Pandemic the tourism industry has faced a financial loss of about $910billion to about $1.2 trillion in 2020 which resulted in the reduction of global Gross Domestic Product (GDP) from 1.5% to about 2.8% (Unwto. 2022). This further resulted in the industry leading to take actions to mitigate economic-socio impacts on livelihood, especially for women and economic security.
Socio-cultural
The social-cultural impact imposed due to the emergence of the Covid-19 Pandemic has been felt gravely in the employee structure of the hospitality and tourism industry companies such as Shangri-La. In 2020, there has been a decrease in the number of tourists in the industry by 58 to 78% which has led to increases in concerns for sociocultural changes being brought in the industry (Üngüren and Güçlü 2021). The cultural and social influences have resulted in the change in the target audience’s lifestyles, beliefs and values which has further led to the need for changes to be made in the employee stature to adapt to the cultural and social differences created by the impact of the Pandemic.
Environmental
The Covid-19 Pandemic has impacted environmental health as a linkage has been found between the increases in emissions and atmospheric pollution has risen to attract more tourists in the hotel and tourism industry. It may be stated based on Leiper’s tourism system, the impact of tourism activity is not directly linked with environmental depletion, however, international tourism is responsible as the rise of tourists has led to a boost in energy consumption and an increase in carbon dioxide emissions.
Health
The impact of Covid-19 has presented the tourism and hospitality industry with concerns over the health issues that are faced by tourists in the global market. The inflow of tourists has led to increases in cash flow for the business, however, the risks to tourists’ and employees’ health during the pandemic period have increased significantly without the promise of preventive measures taken by the companies.
Conclusion
It may be concluded that the hospitality and tourism industry and the company taken here Shangri-La have been greatly impacted by the emergence of the Covid-19 pandemic which has led to financial loss and cultural changes have been required to be made. However, the imposition of the use of technologies such as AI and IoT based on Leiper’s tourism system has led the company in assessing the changes to meet the requirements of the target audiences in the global hospitality industry. The preparations for the emerging changes have been boosted through strategic planning and implemented technologies in providing the audiences with the needed accommodations changes to increase brand value in the competitive market.
The critical evaluation of the future of Shangri-La for new realities emerging in the global marketplace
The following are the important recommendations that Shangri-La may follow for emerging in the global marketplace:-
- Internal stakeholders should focus on improving the levels of communication for the smooth flow of all the important information within the organisation or avoiding any sort of misunderstanding or misinterpretation of the information
- The leaders and managers of Shangri-La should adopt a flexible leadership style and approach for dealing with various challenges and issues effectively along with focusing on improving leadership styles and approaches from time to time
- The management of Shangri-La is required to provide excellent training and development facilities to its employees as internal stakeholders for improving the overall productivity and performance of the employees which may be done by appointing skilled Human Resource (HR) managers
- The management of Shangri-La is required to pay attention to taking feedback from the employees as well as from the customers for making constant improvements in the workforce
All the above-mentioned recommendations will certainly prove beneficial in emerging in the marketplace as a reputed organisation in the post-pandemic period which will boost business outcomes to a significant extent. Along with this, investing more funds in the research and development field is also required for increasing the effectiveness of the workforce of the company which will increase the levels of satisfaction for the customers in the upcoming years. Allocating more funds for the training and development purposes of the employees will prove effective in increasing the levels of revenue collection of the company. It has to be concluded that establishing a good relationship with all the stakeholders through effective communication will certainly generate impressive outcomes and for this reason, organisational transparency is to be maintained all the time.
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