Hotel Industry & Tourism Challenges

Hotel Industry & Tourism Challenges

Introduction

The hotel industry is a combination involving service providers, quality service and customer relations. It aims to serve and satisfy both physiological and psychological needs of the customers. The hotel industry truly encompasses the social, economical and environmental factors in a holistic way and thus faces pressures from all directions. The competitiveness in the hotel sector is drastically shaped by the dynamic internal and external factors. Tourism and its economic impact is one of the major drivers of the hotel industry. World heritage cities and sites are a constant source of tourism-based revenue generation that propels the hotel business in numerous countries. Recently, the investors and hotel management have been increasingly worried about the negative impacts from social and environmental factors affecting the hotel business. There is a huge pressure to integrate the better technology-oriented services to the customers ranging from online booking to better living ambiances. Cost reduction, need to streamline the practices based on sustainable development are other challenges hotel management are dealing with (Borralha, Jesus, Pinto, & Viseu, 2016). The dynamic nature of the hotel business and changing customer preferences is making the hotel business tough and challenging. It is imperative that this easy will be looking for the said challenges and dynamic external factors which are at present leading the change management strategies in hotel industry. The essay will bring forth the challenges at a global level and propose recommendations in light of management theories and frameworks.       

Main body: challenges

Global factors shape the national and local business environment. Tourism, aviation, employment, foreign capital is some of the interrelated factors which get easily impacted by global adversaries. Disasters, pandemics such as COVID 19, war and political instability at the global level are some of the factors which negatively impact the business relying on global customers. Hotel industry is one such sector which is based on the customer’s demand. Customers can be divided into domestic types (those traveling within the native country) and foreign customers (tourist and business purpose travelers going from one country to another) are the primary factor of revenue in the hotel industry.    

Hotel Industry & Tourism Challenges

The hotel industry has certainly come a long way from challenges ranging from human resource shortage to new emerging markets needing expansion of the hotel industry (Chiang, Birtch, & Cai, 2013). Technology and its allied applications such as social media marketing and promotion offer new competitive edges and a dire need for hotel businesses to evolve. Apart from the technical aspect, the basic challenges faced by the hotel industry in the global sector are mainly the demand from the tourist and customers. Low turnout of the tourist in any city or country would mean that hotel business will face concerns of business revenue generation and thus, need to reduce the operating cost and shed the extra employees. A full cycle of dependant sectors such as employment, revenue, and taxation relies on the booming hotel sector, which can result in economic hardships for any city. An economic recession such as of 2008 can also impact the hotel industry is a great deal impacting the financial budget involving the fixed cost, operational expenses, and profit margins. Seasonal fluctuations are also secondary level shocks impacting the hotel industry but a season-related shortage of demand is an internal factor and depends largely on the local tourist and business diversity.

Two of the main challenges impacting the hotel industry in current times as well as going to be the key concern to devise any solution oriented management framework is elaborated below: 

 Environment and climate change

 Environment sustainability has now pitched as a global hallmark of consorting the business. Supply chain stakeholders, service providers, and customers are increasingly aware of the need to conduct business, provide services and prefer the services of only those organizations having a good reputation and creditable ratings in keeping the environmental concerns at the forefront of business management. Currently, environmental sustainability and climate change concerns have become the biggest global factor impacting all and every business. The ripple effect phenomenon of climate change impacts is going to matter in terms of local, national and international levels. The climate change is directly impacting the tourism sector which in turn is closely connected with the profitability and sustained operations of the hotel business (Tsalis & Nikolaou, 2017).  In order to understand the gravity of impact from climate change in the hotel sector, it is equally important to understand the relation of climate change factors and how the hotel business operates.

There are no immediate concerns from climate change which the hotel industry can fight off. Climate change and environmental sustainability is a long term business strategy that is going to be very important in the coming years (Hong, 2018). The current functions of the hotel industry do not pollution which is not controllable and containable. The frontline environmental concerns such as using the non-renewable energy sources for operations creating kitchen waste and wastewater is going to be effectively managed by the current waste management and energy solutions. Also, the important part of the hotel industry is the logistical and supply chain support. In order to address the concerns of environmental sustainability, all the logistical and supply chain stakeholders need to comply with the green business practices. The support system providing the food, paper, water, and other support also runs on energy and produces waste which again can be tackled by effective management strategies. The only problem is the nature of climate change and the preparedness of the hotel industry depending upon the cost and scale of the business (Anansiriprapha & Wu, 2016). Climate change factors are largely causing a rise in temperature, leading to a global rise in sea level. The nature of the global scale is such that the majority of the cities located on the coastal lines will be inundated if the climate change impacts won’t be checked. This has to be with all the business along with the hotel industry. But, the precursor to the global rise in temperature is also contributed by the release of greenhouses gases. The other major pollution caused by the hotel is related to the noise, smoke, chemical pollutants. But, the release of the CFC’s is likely to be the main contributor to the overall climate change implications.

The example of “Flight shaming” which is about the public shame in using the airlines to commute from one place to another because of the increased carbon emission by the airlines has already started showing its impact on major airlines operating between European cities (Aboulafia, 2019). The concept of flight shaming was propelled by young Swedish activists, Greta Thunberg promoting the people to shun the air travel. Major cuts on the airline customer flow will go to impact the travel flows and thus the impact will go on to impact the hotel industry as well (DiScala, 2019).      

Technological challenges for marketing and promotions

There is a major disruption in the hotel industry due to technology implications. Dynamic change in technology is forcing hotelier management to think and redraw the management and marketing strategies more often than any other challenge (Mathews, 2019). The customer demands the advanced technology and the hotel preference in technology matters has forced the hotel management to look into the change in the infrastructure of hotel interiors. The need for change in the hotel industry has made the hotel management frame technology agile, nimble and flexible strategies (Perini, 2011). The rise in social media use of the technology has challenged the hotel industry to work out the human resources hiring and implant the technology gadgets as a primary service demand of customers.     

The hotel management is facing problems in terms of ease of installations and software integrations. The website is the primary information face of the hotels of international and local reputes. The website of hotels holds great capabilities in terms of exciting features in the integration of the software. The property management system for large hotel establishments is primary a communication and integration tool that needs to get enhanced. Any delay in integrating the customer’s preferences and online tools such as hotels CRM, CRS, POS, social media, etc. small hotel business are unable to integrate their PRM with that of technology because of low operational cost (Gonzalez, Gasco, & Llopis, 2019).

Another issue of technology linked issues in the hotel industry is the lack of centralized solution providers. Offering guest-centric services to the customers does require a customized approach of technology which is currently a centralized human-controlled approach. With the use of technology a robust portfolio is required that can offer efficiencies, visibility and control of organizations (Guzzo, Abbott, & Madera, 2019). Marketing and promotion platforms based n the social media is also offering competition for new innovative hotel businesses. The worldwide approach of social media is making the business tough field and marketing options in terms of flexibility offered by competitors such as Airbnb is posing a threat to the hotel business. 

Recommendations/solutions

Climate change strategy requires the hotel management to plan for the effective building management system based on green practices. The management plans need to work on the effective building controls which are creating the temperature rise and can offer green living. The economic benefit of offering the environmental friendly stay in the hotels will be charged from the clients as a green tax (Xie, Zhang, Zhang, Singh, & Lee, 2016). The minimization of the waste materials, enhancing the use of recycled utensils and equipment, using the paperless office working patterns and using the online monitoring systems with sensor-based equipment; the reduction in energy usage will certainly garner more customer likability.   

Technology is a great source of marketing and business integration. The hotel business is a customer-oriented business where technology can impact very positively. Technology and sensor-based monitoring equipment will also help the building management system to work more energy-friendly and as per the needs of the customers (Viglia, Minazzi, & Buhalis, 2016). Social media sites are a great source to revamp management strategies as per customer feedback and likability. It is an excellent customer relations application where frequent travelers and guests can be offered a high-value service enhancing business loyalty and retaining the clients. Managing the roosters, working shifts of the teams working in a hotel can also be effectively created and shared and managed by integrating the technology into operation management. 

Strategy in Various Stages

The first strategy is to control the contribution of carbon emission and GHG’s. The strategy includes following stages:

  • Assessment: Current practices of business in hotel industry as well as any individual hotel premises needs to be put on assessment regarding the use and type of resources involved.
  • Identify: Once the assessment of energy intensive products and process is done, correct identification is to be made on the various level of danger and priority of changing or alternatives.
  • Alterative: Once, the identified process or gadget is noted, the alternative process and gadget is to be put to use replacing the original energy consuming process.

The second strategy will also follow various stages of software integration involving:

  • Identifying the current needs and customer base as well as an assessment of the current service is to be done along with the trend in customer preferences.
  • Social media platforms need to be created by creating a separate team of one or two person under a manager tasking to work on a social media marketing strategy.
  • Integrate the CRM and test it before operating.

Conclusion

The hotel industry is going through a drastic change. Technology innovation and disruption is a constant agent that seeks to impact the hotel business. Changing customer preferences and technological changes have been a constant cost investment for the hotel business. The small hotel business is dealing with the pressure of technological-based customer demands but also using the cost-effective website and online booking solutions to reutilize the operation cost. Climate change and environmental concerns are not an immediate threat that would usher the change in daily operations of the hotel industry, but it is a clarion call for the entire business line and allied activities to reassess the current business trends to a minute level of detailing and refocus to contribute to the fight against climate change and environmental challenges.  Technology is a challenge only for that hotel having low budget investment and reducing profit margins whereas the hotel chains focusing on the larger customer service and operational strengths can still use technology to its own benefit.  

References

Aboulafia, R. (2019). Flight Shaming Threatens To Take Air Travel Industry Down Tobacco Road. Retrieved April 17, 2020, from Forbes website: https://www.forbes.com/sites/richardaboulafia/2019/07/11/are-air-travelers-fated-to-join-smokers-as-social-pariahs/#497207aa325c

Anansiriprapha, P., & Wu, X. (2016). Economic Factors on the Tourism Industry in Thailand. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2858937

Borralha, S., Jesus, S. N. de, Pinto, P., & Viseu, J. (2016). Hotel employees: A systematic literature review. Tourism & Management Studies12(1), 120–126. https://doi.org/10.18089/tms.2016.12112

Chiang, F. F. T., Birtch, T. A., & Cai, Z. (2013). Front-line Service Employees’ Job Satisfaction in the Hospitality Industry. Cornell Hospitality Quarterly55(4), 398–407. https://doi.org/10.1177/1938965513514628

DiScala, J. (2019, October 11). The Flight Shaming Phenomenon Is Here: Business Travelers Should First Consider These 4 Factors Before Flying. Retrieved from Inc.com website: https://www.inc.com/john-discala/the-flight-shaming-phenomenon-is-here-business-travelers-should-first-consider-these-4-factors-before-flying.html

Gonzalez, R., Gasco, J., & Llopis, J. (2019). ICTs in hotel management: a research review. International Journal of Contemporary Hospitality Management31(9), 3583–3609. https://doi.org/10.1108/ijchm-07-2017-0470  

Hong, J. (2018). Rise of the Sharing Economy and the Future of Travel and Tourism Industry. Journal of Business and Hotel Management07(02). https://doi.org/10.4172/2169-0286.1000180

Mathews, B. (2019). The Unique Technology Challenges Faced by Large Hotel Chains (Part 1 of 2 Part Series) | By Binu Mathews. Retrieved April 17, 2020, from Hospitality Net website: https://www.hospitalitynet.org/opinion/4095059.html

Perini, V. (2011). What are the three big technology issues for the hotel industry? Retrieved from www.phocuswire.com website: https://www.phocuswire.com/What-are-the-three-big-technology-issues-for-the-hotel-industry  

Tsalis, T. A., & Nikolaou, I. E. (2017). Assessing the Effects of Climate Change Regulations on the Business Community: A System Dynamic Approach. Business Strategy and the Environment26(6), 826–843. https://doi.org/10.1002/bse.1953

Xie, K. L., Zhang, Z., Zhang, Z., Singh, A., & Lee, S. K. (2016). Effects of managerial response on consumer eWOM and hotel performance. International Journal of Contemporary Hospitality Management28(9), 2013–2034. https://doi.org/10.1108/ijchm-06-2015-0290

Viglia, G., Minazzi, R., & Buhalis, D. (2016). The influence of e-word-of-mouth on hotel occupancy rate. International Journal of Contemporary Hospitality Management28(9), 2035–2051. https://doi.org/10.1108/ijchm-05-2015-0238


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