Business models of Hospitality and Tourism - Myassignmenthelp.Com

Question: Discuss about the Business models of Hospitality and Tourism. Answer: Introduction: The report is an analysis on the case study of Ryanair. Ryanair happens to be the largest low fare airline of Europe that started its operations in the year 1985 (Ryanair.com 2018). The airline ran a daily flight between the Waterford airport in South East Ireland and London Gatwick. The company made air travel affordable for the people of Ireland and United Kingdom. However, the company faced enough problems initially in delivering such commitment. The report puts forward an analysis of Ryanair in the macro as well as micro concept. The report also focuses on the SWOT analysis of Ryanair. Analysis in the Macro Context: The analysis of Ryanair in the Macro context ensures considering its PESTEL analysis. The PESTEL analysis of Ryanair includes analyzing it based on political, economic, social, technological, environmental and legal factors. Political Factors: Ryanair, although a registered airline of Ireland, has large bases in United Kingdom. The unfavorable outcomes of Brexit have not only influenced Ryanair negatively but also have an impact on other airlines. Economic Factors: The recession phase in the United Kingdom after its complete departure in the European Union will lead to a decline in the earning of the low-cost airline in the market of United Kingdom. Social Factors: The expansion of the low-cost airlines attributes to the accompanying lifestyles and the disposable income growth of the Generation Y travelers who are able to afford multiple trips around the year. They had completely different sort of expectations in terms of higher customer service without the necessity of paying any extra premium. They also have greater value for the airlines that provides advanced solutions technologically for managing their itineraries (Giaretta 2016). Technological Factors: The emergence of advanced technological factors has resulted in increased reliance of the airline industry and Ryanair is no different. The use of technology helps the airlines in gaining deeper understanding of the customer behavior through analyzing the customer data shared voluntarily on the digital platforms. Environmental Factors: The generation of heat waves is a common phenomenon in the airline industry. This is having an adverse effect on the environment as the temperatures above the aircraft is above the temperature of the ground. Thus, there are suggestions for an alternative strategy of operations for adjusting to the change of climate. Ryanair is thus using fuel-efficient aircraft and modern fleet thereby contributing to the carbon emissions (Giaretta 2016). Legal Factors: The International Air Traffic Agency has made certain rules and regulations for operations of flights across the world. Ryanair being a part of the airline industry needs to abide by these regulations and thereby provide necessary benefits to the passengers. Analysis in the Micro Context: Analysis of Ryanair in the micro context done based on customers base and competitive advantage. These are as follows: Customer Base: The customer base of Ryanair includes business travelers as well as families. Ryanair being a low-cost airline put forward better deals from time to time for luring its customers. For instance, they allow business travelers in changing their flight schedules provided their timings for the meeting change (Bertels, Koen and Elsum 2015.). Moreover, they also have specific products designed for families who are travelling with children. Thus, figures show that there has been a substantial rise in the number of passengers for Ryanair between the year 1985 and 2013 (Creaton 2014). The airline started with only five passengers in 1985 which increased to around 81, 300 passengers in 2013. Figure: Customer Base of Ryanair Source: (Mack 2013) Competitive Advantage: The Ryanair in addition to a low cost registered Irish airline has many competitive advantages. The airline is undoubtedly the low-cost airline and allows online bookings, ticketless boarding, single class travel and unallocated seats. The airline allows flying to secondary airports along with reduced turnaround time (Bridoux and Stoelhorst 2014). The airlines undertake in house marketing with no refund policy. Ryanair also offers corporate partnerships along with no cargo service. Compared to other airline service Ryanair has introduced new aircrafts that operates on hedge fuel risk. The airline also has an ancillary service offering that is quite successful. Lastly, the airlines also offer outsourcing services to the international airports. Figure: Competitive Advantage of Low Cost Airlines Source: (Dobruszkes 2013) SWOT Analysis: The SWOT analysis of Ryanair indicates analyzing it in terms of strengths, weakness, opportunities and threat (Dsseldorf 2016). Strength: Ryanair is an established airline in Europe that follows a low-cost business model. This helped the organization to gather better expertise in the industry. The airline is the largest in Europe transporting huge number of passengers compared to any other airline in the industry. However, Ryanair has a stronger presence in the European markets that also acts as a defense mechanism for the competing firms. The large size of the organization helps in exploiting the economies of the scale that allows them to keep the prices of tickets low. Ryanair also maintains an online reservation system that helps the customers in managing itineraries without having to rely on the travel agent (Ryanair.com 2018). Weakness: Due to the tricky arrangements of its service, implementation of ancillary revenues and unfair policy of pricing often misleads customers and results in poor customer service. Leisure travelers most often choose low cost airlines so a sudden change of demand can influence the earnings of Ryanair. Moreover, the airline has no diversification in other segments like cargo or maintenance that makes the airline exposed to the volatility of the travel demand. Opportunities: There are varieties of opportunities of Ryanair that helps the airline in sustaining its growth. The aircraft order put forward by the airline helps it to strength its market position in Europe while reducing its fuel consumption and impact on the environment. The airline has implemented a program for improving its perception and customer service that will also act as an opportunity in outperforming the rivals. Threat: There are certain external factors that are beyond the control of the company and which acts as threat to the airline company. These include currency movements, fuel prices and other external events that influence air travel demand. Conclusion: The report ends in the concluding note that the rapid growth of Ryanair is due to its low-cost business model. In addition to this, the company also adopts cost effective innovative methods and believes in alternative and creative means of revenue generation. References: Bertels, H.M., Koen, P.A. and Elsum, I., 2015. Business models outside the core: Lessons learned from success and failure.Research-Technology Management,58(2), pp.20-29. Bridoux, F. and Stoelhorst, J.W., 2014. Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives.Strategic Management Journal,35(1), pp.107-125. Creaton, S., 2014.Ryanair: How a small Irish airline conquered Europe. Aurum Press. Dsseldorf, I., 2016. Ryanair. SWOT Analysis of the Leading Low Fare Airline Giaretta, F., 2016.Changing business model. The Ryanair case(Bachelor's thesis, Universit Ca'Foscari Venezia). Mack, R., 2013. A study on airline strategy: comparing Ryanair and Lufthansa to determine the best strategy in the industry.Bachelor Commer Best Bus Res Papers,7, pp.49-61. Ryanair.com. 2018.Official Ryanair website | Book direct for the lowest fares | Ryanair.com. [online] Available at: https://www.ryanair.com/gb/en/ [Accessed 13 Jan. 2018].