brands. The result of this type of approach is that
eventually the core brand can lose its competitive edge.
A second approach to multibranding is more reflective of
the strategic alliance concept referred to above. That is,
instead of developing their own brands, firms are joining
forces with firms whose products complement their
strategy and have a proven track record. The recent
contract by Forte plc with the American quick-service
Italian theme restaurant chain called Sbarro is such an
example. These types of alliance can be expected to create
greater complexity within firms since operating licence
requirements often stipulate many activities which must
be performed by the licensee. For firms such as Forte,
which has many such agreements, this will add to the level
of specialisation at head office in order for them to
successfully deliver the necessary product standard.
It is more important than ever
to have a product that looks
fresh and new
The gradual move to contract management firms from
asset-owning firms, coupled with decentralisation and
strategic alliance activities will place new emphasis on the
content of the management contract and/or licence
agreement. The unit manager will be required to pay more
attention to the needs of the owner as well as keeping
the owner informed and, in some cases, educated about
the nature of the hospitality industry. The most critical
problem in the management contract will be appropriate
language regarding the timing and funding of refurbishment
and upgrading. It is clear today that it is more important
than ever to have a product that looks fresh and new, and
unless management firms can be assured of the necessary
capital to combat the shortening life cycle, then both the
owner and the management company will find it difficult
to survive.
Summary
It is clear from discussions with European hospitality
executives that the most significant issue facing hospitality
firms during this decade will be how to accomplish the
change in thinking necessary to develop operationsoriented
unit-level managers into strategic-thinking
managers. While the increasing competitiveness of the
industry in Europe is well recognised and the downsizing
of corporate headquarters is nearly accomplished, in most
firms the managers in the field are not yet ready to accept
the decentralisation challenge. What are required are
unique and innovative ways to try to educate, and in many
cases socialise, these managers about the need for and
value of thinking strategically. While this is taking place,
head office personnel will have to address their energies
to the problem of increasing buyer power and the
technology which will enable them to strengthen their hand
in negotiating for the best rates and services. Thus, while
the challenges of the 1990s are upon the industry, firms
are not quite ready structurally to meet them. It is now
a question of timing as to who can accomplish the
important match between the strategies necessary to face
competition and the internal structures essential to
implement these strategies.