Strategic Hotel Management

Executive Summary of Supply and Demand Shocks in The Covid-19 Pandemic

In this study different strategic management theories have been used to discuss and critically evaluate the strategic directions for the company. Most importantly, Hertzberg two factor theory has been used for discussing the motivation factors that the company can consider for enhancing the attitude and behaviour of their employees towards their responsibilities. Along with this, porter's generic strategies have been used for providing an effective strategic direction for the company. Based on the macro environment analysis, it has been found that economic activities has not been performing well in Australia, therefore, following a differentiation strategy where company finds new method for communicating with their customers, improving their digital presence as well as adopting new technological tools would highly help the business to sustain itself as well as achieve its objectives of improving performance level.

Table of Contents



Macro environment analysis.

Micro environment analysis.

Strategic directions for the company.

How the strategies will be implemented.

Practical recommendations.



Introduction to Supply and Demand Shocks in The Covid-19 Pandemic

The focus of this study is to elaborate about the strategies that will be implemented in the next first year of the HOTS hotel. Critical arguments have been presented providing details about the strategic directions as well as various management theories have been used to conduct critical analysis of micro and macro environmental analysis.

Body of Supply and Demand Shocks in The Covid-19 Pandemic

Macro Environment Analysis

Political factors

On analysing the political environment in Australia, it has been noticed that there is a strong and stable environment in the country, which has been providing all the necessary support to the hotel industry for their growth and prosperity (Higginson et al, 2020). A number of tax relaxations have been provided to provide better profitability to businesses.

Economic factors

Economic factors have been significantly poor in the country, since, a major slump has been observed in the GDP rate. As per the reports, it has been noticed that Australia has plunged into recession for the first time in last 30 years, as its GDP declined by 7 per cent between April and June, 2020 (bbc 2020).

Social factors

Social factors have deteriorated as the overall consumer confidence and sentiment is down owing to the fear and apprehension surrounding the covid-19 crisis (del Rio-Chanona et al, 2020). This can also be seen in the spending behaviour of consumers as they prefer more towards essential items and goods.

Technological factors

Technological aspect has been encouraging, as customers are moving more towards digital space and platforms. Rapid digitalisation of services and modes of communication adopted by hotel industry has proved to be beneficial, as businesses continue to stay connected with consumers.

Legal factors

There are effective policies and framework put in place by the government to ensure strict intellectual property rules as well as laws regarding minimum wages, benefits and other aspects related to employment (Hall, Scott & Gössling 2020). This acts as a strong support for employees as well as for employers.

Environmental factors

In the case of environment, government has been necessary steps to reduce carbon footprint in the country as well as advocating similar practices and methods across all industry and sectors.

Micro Environment Analysis


Major strength of the company is that it has strong influence over local customers. This helps to drive strong demand from the domestic market alone. In addition to this, company has adopted effective pricing strategies such that it has a good profit margin.


Company has been facing problems primarily in the case of digitalisation and adopting other new technological tools and techniques. This shows that the company is still following traditional practices and methods to run the business.


It is important to note that once the country recovers from the covid-19 crisis, there will be vast opportunities available. Most importantly, company will have to make better utilisation of online booking as well as take advantage of domestic travellers and tourists.


The biggest threat for the company right now is covid-19 crisis. Even after the covid-19 crisis, the demand of services will take time to recover. Therefore, low demand, changing customer behaviour and declining spending power will profoundly affect business.

Strategic Directions for The Company


The primary mission of the company is to sustain its business activities and focus on long-term orientation, which is to expand to more number of cities in Australia.


The vision is to deliver warm and welcoming experience to all guests who visit the hotel, along with best in class services accompanied with new technological tools and software.


  • To enhance communication abilities with the local customers
  • To make effective use of social media platforms
  • To integrate cloud computing and big data analytics with the core capabilities of the company
  • To achieve the pre-crisis performance levels within the next six months

Hertzberg two factor theory

It has been argued that hotel business is a service oriented business, where the behaviour and attitude of staff workers play critical success role (Trigeorgis & Reuer 2017). Therefore, it has been stated that implementing Hertzberg two factor theories to improve the motivation of existing employees even in the pandemic will prove to be highly impactful. Based on this theory, it has been defined that managers should focus on providing motivation through job-contents rather than going beyond it. In addition to this, the theory illustrates that business managers can also achieve high motivation level among employees through providing higher responsibility and higher roles in the company. In the current situation of pandemic, where most of the companies are reducing their employee count, retaining the existing employee and talent pool will help HOTS hotel to achieve their performance and productivity levels (Rosenberg Hansen & Ferlie 2016).

Another important strategic management theory that can be implemented includes Porter’s Generic Strategies, where businesses have options either to focus on cost leadership, differentiation and focus strategy.

Considering the current situation, the most effective strategy will be to adopt differentiation strategy, where business owners can implement innovative and creative ideas for communicating with customers, allowing them to resolve all their queries through optimised customer care process (Zhao et al, 2017). Focus will be to ensure that social media campaigns are used, design of websites are improved to make it more user-friendly. Mobile application will be used to inform all the necessary information of the business with customers.

How the Strategies Will Be Implemented

While implementing the strategies, focus will be given on ensuring that existing employees are able to work remotely at any given time. The next focus will be to hire new employees, especially in the area of marketing and human resource management areas. A new team will be developed primarily focusing towards social media campaigns and development of communication channels (Makadok, Burton & Barney 2018). Focus will to invest only in area which will help to streamline processes in the existing period as well as help to adopt digital practices. In a gradual process, the business owner will adopt technological tools like cloud computing and big data analytics. A new senior manager in the area of human resource department will be hired to improve hiring process as well as implement motivational theories as discussed above.

In order to improve the digital presence of the company, focus will be given to develop an IT team such that integration of new technological tools are done effectively. The team will also be given tasks regarding understanding of changes in customer behaviour and demands to align the strategic directions and processes accordingly (Siegel, & Leih 2018). All this is well aligned with the business objectives to improve digital presence and branding of the company. Effective communication and greater utilisation of technologies can definitely provide the HOTS hotel significant amount of leverage on other businesses.

Practical Recommendations

It has been recommended that the company should make improvements in their priority list. One of the most important things that the covid-19 pandemic has taught businesses is to include focus towards hygiene and proper emphasis on health related aspects. Therefore, it is necessary for businesses to implement strict cleaning protocols ensuring safety and proper hygiene levels for guests.

On the other hand, company should focus on improving their information sharing channels so that guests and tourists are well informed about all the frequent changes in the businesses (Bell et al, 2018). For this, company needs to develop different communication channels including their mobile app, websites as well as advertisements on other online platforms.

Along with this, company should focus on increasing their flexibility aspects related to the booking and accommodation services offered by the company (Makadok, Burton & Barney 2018). They should update their cancellation policies, as well as offer free cancellations to the local as well as international travellers. In addition to this, they should make adjustments in the online booking to allow modification up to 24 hours before arrival, as well as lay more emphasis on offering comfort with greater flexibility and upgrade their services (Siegel, & Leih 2018). A flexible check in and checkout process would help streamline the entire process for guests.

In addition to this, business owners should focus on offering 24/7 medical care and insurance services and agreement that would help them to earn the confidence and trust of their guests.

Conclusion on Supply and Demand Shocks in The Covid-19 Pandemic

While summarising all the key aspect that have been discussed above, it can be said that the company primarily intends to focus on improving their communication strategies and enhancing the technological adoption as well as improving their branding and presence in the digital world. It has been analysed that the primary focus of the business owners is to sustain the business even in the crisis situation. The target is to achieve the pre crisis performance levels within the next few months, for which they intend to focus on hiring new employees including managers in the HR department that would help to enhance the motivation levels of the employees.

References for Supply and Demand Shocks in The Covid-19 Pandemic (2020) Australia in first recession for nearly 30 years. Available at: (Accessed: 12 September 2020).

Bell, R. G., Filatotchev, I., Krause, R., & Hitt, M. (2018). From the guest editors: Opportunities and challenges for advancing strategic management education.

del Rio-Chanona, R. M., Mealy, P., Pichler, A., Lafond, F., & Farmer, D. (2020). Supply and demand shocks in the COVID-19 pandemic: An industry and occupation perspective. arXiv preprint arXiv:2004.06759.

Hall, C. M., Scott, D., & Gössling, S. (2020). Pandemics, transformations and tourism: be careful what you wish for. Tourism Geographies, 1-22.

Higginson, S., Milovanovic, K., Gillespie, J., Matthews, A., Williams, C., Wall, L., ... & Paolucci, F. (2020). COVID-19: the need for an Australian Economic Pandemic Response Plan. Health Policy and Technology.

Makadok, R., Burton, R., & Barney, J. (2018). A practical guide for making theory contributions in strategic management. Strategic Management Journal, 39(6), 1530-1545.

Rosenberg Hansen, J., & Ferlie, E. (2016). Applying strategic management theories in public sector organizations: Developing a Typology. Public Management Review, 18(1), 1-19.

Siegel, D. S., & Leih, S. (2018). Strategic management theory and universities: An overview of the Special Issue. Strategic Organization, 16(1), 6-11.

Trigeorgis, L., & Reuer, J. J. (2017). Real options theory in strategic management. Strategic Management Journal, 38(1), 42-63.

Zhao, E. Y., Fisher, G., Lounsbury, M., & Miller, D. (2017). Optimal distinctiveness: Broadening the interface between institutional theory and strategic management. Strategic Management Journal, 38(1), 93-113.

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