The hospitality is experiencing enormous variations and burden over the previous decades(Zagade and Fernandes, 2018).
What main trends have been uniformly changing the industry and where is hospitality going in the future?
Online travel agents usually have three basic impact on the hotel industry. Among these impacts, first one is regarding their role in modifying various distribution channels. They are also responsible for diverting values away from people. Second impact mentioned the notorious behaviour of various brands. It means that these companies have replaced the hotel brands to a great extent. In the end, the third one is that, they are responsible for building harmonious relationship with travellers.
More people travels because of low cost carriers, the people travel across the world at a very reasonable price. Various new markets have confirmed that their GDP started increases at a very high rate, which helps in planning their citizens to travel across the world.
Various Social networks or TripAdvisor have had a reflective effect on customers. These networks help in providing more transparency and helps in providing better quality of the services hospitality companies.
There are various factors that affect the hotel industry. These factors are categorised in External factors or internal factors;
- External factors are also termed as the macro factors. The Market environment has all the factors, which may affect the decision of the organization. The external factors (Bernini and Guizzardi, 2010) may affects in the internal settings of an organization.
The factors which can affect the organisation indirectly:-
- Legal factor
Pestel Analysis for the industry is the superlative and new way to find various factors which may affect the hotel industry. Various factors like social and environmental play an important role in the strategic management. However, economic factors are divided into many legal factors. The various factors also include the political factor, economic, social and technological factors, the PESTEL analysis helps in understanding these factors:-
Political factors have a major role in finding the different factors that can impact the, Hotel Royal’s long term profitability in a country or the particular market (Saavedra-Rivano, 1979). Hotel Royal is effective in accommodating in more than 10 countries and providing itself to various types of political environment and system risks(Moonsri and Moonsri, 2019).
- Political stability and need of accommodating sector in the country.
- Various Regulations in hotel industry.
- Bureaucracy and interference in lodging industry by government.
- Legal structure for contract procedure.
- The protection of intellectual property of the industry
- Trade regulations & tariffs related to industry
- Laws related to accommodation.
- Regulation relating to prices
- Taxation – tax slabs and deductions
- Minimum Wages to the labour class.
- Regulations relating to work
- Schemes regarding benefits of employee.
- Regulatory measures regarding industrial safety.
Various economic factors including inflation rate, savings rate, interest rate, forex rates and other economic cycles usually assist in the estimation of aggregate demands along with investment in any viable economy. Apart from these, certain other factors such as competition among major players also play a vital role in the aggressive impact of the firm(Turner and Guilding, 2012).
- Kinds of economic mechanism in the economy
- Governmental interventions in the market and the services related to it
- Exchange rates of the base country
- Quality of Infrastructure in accommodating industry
- Advantages of base country and Services sector.
- Skill level of management in accommodating industry.
- Level of education in the economy
- Cost of the labor
- Restricted income
- Rate of unemployment in the economy
- Inflation rate in the country
Social factors involve social culture and other processes of performance of certain activities are responsible for affecting the industrial environment. Beliefs and attitudes of the general public plays a major role in how the service providers at Hotel Royal understand the customers of a market and how they make the message relating to market for accommodating industry customers(Leroux and Pupion, 2018).
- Level of skills in the population
- Different hierarchy and structure of power in the industry
- Education level and the standard in the Hotel Royal
- Culture in the economy
- Wider character of the society. Some societies promote entrepreneurship
- Attitudes of the management as well as tourist
- Leisure interests
An industry shall take various steps in performing the technological analysis in the industry also it should check the speed at which technology affect that industry. Slow speed will give more time while fast speed of technological disruption may give a firm little time to cope and be profitable. Technology analysis involves understanding the following impacts –
- Current technological amendments by Hotel Royal competitors
- Impact of technology on product offering
- Cost structure impact in accommodating industry
- Rate of technological diffusion
Environmental Factors: Profitability of any enterprise is determined by various market conditions. And different market conditions include diverse environment standard. In fact, usually states inside any country have their own environmental standards and relevant liability laws. As, in the United States, Texas and Florida has their different liability clauses and varied environmental laws in case of environmental hazards. Similarly there are lot of European nations which are know for providing health tax benefits to companies operating in renewable sector(Leroux and Pupion, 2018).
- Weather and associated systems.
- Climate change and vulnerability
- Laws for regulation of environmental pollution
- Regulation regarding air and water in the hospitality sector.
- Recycling mechanism.
- Waste disposal and management.
- Behavioural changes regarding green and ecological products.
- Endangered and vulnerable species
- Adoption of renewable energy.
Legal factors- various countries have a number of regulations in the form of legal compliance. There are counties where legal framework and relevant institutions are not that much robust to protect intellectual property rights of their organisations. There must be careful evaluation of such factors before entering into that market as these factors can cause serious repercussions. There are list of various legal factors that Hotel Royal should consider at the verge of entering new market:
- Provisions of Anti-trust law in Hospitality industry and relevant regulations overall in the country.
- Provisions of Discrimination law
- Copyright, patents / Intellectual property law related laws and statutes.
- Adequate regulations of Consumer protection and e-commerce.
- Employment laws and various mechanisms.
- Health and safety law
- Regulations regarding data protections
There are some internal factors that may affect the hotel industry.
- Customers– Customers plays a key role in the hospitality industry. The service provider should focus on providing good customer service, Quality products at good price, nice and clean environment to attract the tourist, that help in increasing their profit margin(Bernini and Guizzardi, 2010).
- Board of Directors (BOD)- Board of Directors play an important role in managing the hotel industry(Farhangmehr and Sim[otilde]es, 2001). Board of Directors are pillar of any organisation that helps industry to grow. It helps them in making high profit margin, in expanding the business or providing high turnover.
- Government– Government also play an important role in the hotel industry, as these factors may affect the industries. Tax rates by the government, security deposits, deductions provided by the government etc.
SWOT analysis is a technique which helps in identifying the factors that may affect the industry, in context of Hotel Royal.
- Provides secure Place Away from Home– The hotel industry have many well -mannered spaces. With a various range of hotels across the world which ranges from boutique type hotels to the well recognised name brands along with other hotel that will fulfil the customer’s needs(Hotel Industry Research Progresses At Cornell, 2013).
- Contributes to the Economy:Industry that provides important financial control,the hotel industry has ability to mutually coordinate along with local economy. The local attractions that attracts the tourist, but it’s the hotels that help them to stay there.
- It Provides Employment: The hotel industry has enormous scope and provide employment to many people.(Mohammad Arabzad an, 2012) Hotel industries provide employment to various local peoples, which help them to earn their livelihood.
- High-Profit: The hotel industry needs huge initial capital, but the cost of labour is lower, and the profit ratios are higher.
- Hotel Charges–The charges of the hotels are so high that the average person are not able to afford the same. Hence, hotels are trailing its customers to competition in the industry.
- Unfavourable Tax Rates–In some countries, the tax rates are not favourable to the hotel industries which, make the cost of services very high. These unfavourable tax rates down the market because it makes the cost high(The Future of the Restaurant Industry, 2016).
- New policies– Various opportunities will make field for all the participants of the hotel industry. It provides a new opportunity to provide the advantages of new technology and help in gaining the share in the market.
- New customers from online platform – In the past few years, the industry has invested large amount of money into the online channel. Due to this investment, The investment has opened various opportunities for the hotel industry (V, 2016). In the coming years the industry can use this opportunity by fulfilling the needs of the customers(Choy and Gee, 2014).
- Less innovative products – The industry has launched various products. Then, the supply of new products is not usual thus it leads to high and low levels in the sales in the industry.
- Improving strengths of the distributors also act a threat in the markets as the competition is paying higher profits to the local service provider(The hospitality industry, 2015).
The segmentation of services provided by Hotel Royal is based on the facilities of offerings, ambience and complementary services like spa, gym, bar etc. Along with these, it also includes housekeeping services and the services offered by the locality of the hotel.
Also the offerings made by these hotels, typically based upon the income level of the customer and therefore there exists a marvellous differentiating technique in the form of multiple stars rating such as 3-star, 4-star, 5-star etc.
The Hotel Royal has already placed itself at a lead position in the whether culturally or industriallyasaprominentbrandgivingadequateemphasis over localcultureandtraditions(Harrison, 2013).
It is the process of dividing consumers’ kr business market. It usually consists of all the potential customers into subgroups of potential customers, which are known as segments, depends upon certain shared characteristics(Crawford-Welch, 2015).
It determine whether your hotel is in big city or rural town, beach or land locked, distance from hospital, amusement park etc
There must be a reason to attract people to stay at your place , irrespective of the fact whether you have boutique bed or a part of a brand hotel chain.
There also exist persons who cancel their bookings because of absence of certain amenities. Therefore, segmentation here helps to cater them.
Hotels must determine the need of traveler as the needs of a business professional will be different from that of family of five with children. Therefore, awareness about the type of traveller attracted towards your hotel is also major observation.
It is one of the major cornerstone of service development process.Hotel Royal uses comprehensive targeting strategy in order to target different segments. It always positioned itself as a brand which strives to give world class experience with every level of amenities to provide the best. It also uses value based positioning strategy to achieve its target.
Positioning is the process involving complex sets of perception and opinion, impressions, feelings which are customers are about to exposed. This is the kind of scale used to compare ourselves with the other competitors.
Hotel bookings are recorded as a purchase by a customer on the basis of perception attributed by the brand. For example of corporate level offices, the customer is always the person doing formalities but not the one who stays. The attributes perceived by the brand are tangible and intangible both(Lewis, 2014).
SMART objective are those aspirations which have potential to channel the attention and achieve the respective commitments from all the level of business. Hotel Royal has determined some of the below mentioned smart objectives.
One of the prime smart objectives for Hotel is to grow by 15% per year for at-least half a decade. And in order to achieve this objective,
Hotel Royal is determined to invest additional of $1M in advertisement along with expansion of business by opening at least 10 new hotels..
Hotel Royal is also determined for making their hospitality brand to become the most preferred brand amongst corporate travellers. It has decided to achieve this objective within three years.
Founder of Amazon, in context of branding, told that “Your brand is what other people say about you when you’re not in the room”. Therefore, to achieve this objective, identification of target customers, and focusing on niche customers can be a major step towards achieving their branding objective.
Hotel Royal is also determined to augment its profit margin and reach a net of 11% within next five years.
In specific context of hospitality sectors, business expansion in International markets, focusing on online service expansion and efficient management of services for utmost consumer satisfaction can assist the company in achieving those profitability objectives.
Marketing Mix in business studies is known as the foundation model for business. It has been defined as the “set of marketing tools that any firm implements in order to pursue its market aspirations and objectives with reference to target market. It usually includes decision making at four broad levels which are Product, price, place and promotion. Therefore, implanting the tools of market mix in context of promotion of hospitality industry includes following considerations.
Inclusion of display boards that can assist in awareness about the product of the business..It is type of display usually seen at the counters of any restaurant. It’s prime objective is to stimulate the increasing sale. It contains signs , banners for exteriors, table tents in the lobbies, room service menu, guest room and elevators etc to assist the smooth functioning and self help culture in the hospitality industry.
Example: various hotels implement displays to announce certain promotional events like food festivals, beverage festivals etc. for sales promotions.
It’s a joint marketing conduct and require teamwork. It also includes special packages for tourist with common destinations. These offers are intended to meet the aspirations of large group of people. Usually it includes accommodation along with meals but there can also be innovations to include sight seen, attractions , special local events or programs etc.
It is the method which helps in distribution of products. It includes analysis of geographical areas in the close proximity of buyers preferred areas. Also known as the location where buyer was looking for service and adequate availability at required geographical location.
This includes the advertising and events in order to support certain devices and products. It requires various strategies that are made to promote the product in real market.This system is intended to make the end user well aware about the product.
The hospitality industry has been experiencing spike due to hike in global tourism industry over the past years. This, industry now supports 9.8% of GDP of Australia. With the expected growth of the sector at nearly 4% annual, concerns are already arising in context of climate change and the future of global tourism industry.
Bernini, C. and Guizzardi, A. (2010). Internal and Locational Factors Affecting Hotel Industry Efficiency:. Tourism Economics, 16(4), pp.883-913.
Choy, D. and Gee, C. (2014). Employment Opportunities in Tourism. Cornell Hotel and Restaurant Administration Quarterly, 19(3), pp.57-64.
Crawford-Welch, S. (2015). Market Segmentation in the Hospitality Industry. Hospitality Research Journal, 14(2), pp.295-308.
Harrison, J. (2013). Strategic analysis for the hospitality industry. The Cornell Hotel and Restaurant Administration Quarterly, 44(2), p.8.
Hotel Industry Research Progresses At Cornell. (2013). Cornell Hotel and Restaurant Administration Quarterly, 6(4), pp.40-40.