Introduction

Significant developments in the field of transportation, sophistication in

communication, growing importance of sophisticated information technologies in the

business world, emerging corporate culture, changing lifestyles and many others paved

copious avenues for the development of hotel industry worldwide. The officials on

deputation, the business magnets on trade promotion mission, the foreign

representative on peace mission, and the domestic or foreign tourists interested in

visiting a place for pleasure or for enriching the knowledge bank, the international

events and the like are some of the important reasons for the development of hotel

industry.

The growing significance of managerial proficiency in the hotel industry made

possible innovations in the marketing decisions of the hotel industry. Today, the services

are planned, controlled, automated, audited for maintaining and controlling the quality.

The concept of total quality management is found to be getting an important place in

marketing management of hotels. Of late, the organizations engaged in the hotel

business are required to conceptualize modern marketing principles. This makes it

essential that they formulate a sound marketing mix that makes possible an optimal

development of the marketing recourses and makes the process of development cost

effective. Like other industries the hotel industry also needs to explore avenues for

innovation, so that a fair blending of core and peripheral services is made possible. The

latest developments in the field of promotion have paved avenues for the introduction of

innovative and aggressive promotional measures. The advertising, publicity, sales

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promotion, word of mouth promotion, personal selling and even telemarketing have

been found used in the process of promoting the hotel business.

The purpose of this is to provide a background analysis of the hospitality industry

describing its nature and examining its External Environment specifying the Micro and

Macro environmental factors affecting the industry.

Industry Definition and its Nature

Globally, the hospitality industry is one of the largest service industries in terms of

revenue generation and foreign exchange earnings. The hospitality industry is a 3.5

trillion dollar service sector within the global economy today. It is an umbrella term for a

broad variety of service industries including, but not limited to, hotels, food service,

casinos, and tourism.

The hospitality industry is very diverse and global. The industry is cyclical;

dictated by the fluctuations that occur with an economy every year. Today, hospitality

sector is one of the fastest growing sectors in the world.

The concept of hospitality business began when people started traveling away on

business trips or other matters and they needed a place away from home which could

cater to all their needs. Today, hospitality has evolved from the basic food and

accommodation industry and taken a very important position in almost all businesses. In

fact, it has become a huge industry and drives economies across the globe.

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 At the outset, this paper is an industry analysis that specifies Accommodation or

Hospitality Industry through the concept of hotel. The common law says that the hotel is

the place where all who conduct themselves properly and who being able and ready to

pay for their entertainment accommodation and other services including the boarding,

like a temporary home. It is a home away from home where all modern amenities and

facilities are available on a payment basis.

The aforesaid viewpoints regarding the hotels clarify that a hotel is a public place

where all possible facilities are made available to a person or persons who stay. The

facilities like food, entertainment, accommodation, and all others, thus are the core

services of hotels. It is also considered to be a large city house of distinction and a utility

product for tourists.

External Business Environment

Industries operate within an environment. There are many variables that operate

within an industry’s environment that have a direct or indirect influence on its business

strategy. A successful company or organization is one which understands and which

can anticipates and takes advantage of changes within their environment. This paper

focuses on external environmental forces that affect the hospitality industry.

Furthermore, it is divided into Micro and Macro environmental factors. Micro

Environment refines the analysis into Customers, Employees, and Marketing, while the

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Macro Environment utilizes the PEST model comprising of Political, Economical,

Ecological, Social and Technological factors.

Micro Environment

Customers

The hotel industry caters people who avail of its product and services. it is

important to know about the different types of users availing the services with diverse

aims and objectives. Below are the list of Users according to classification:

Table 1. Users of Hotel Industry

DOMESTIC FOREIGN
 PILIGRIMS  POLITICAL REPRESENTATIVES
 STUDENTS  TRADE REPRESENTATIVES
 OFFICIALS  EDUCATIONISTS
 FILM STARS  TOURISTS
 INTELLECTS  SPORTSMEN
 SPORTSMEN  PLIGRIMS
 BUSINESS EXECUTIVE  BUSINESS EXECUTIVES
 TOURISTS  CULTURAL REPRESENTATIVES

In the group of domestic users, the different categories are the pilgrims visiting

the sacred places, students on educational tours, officials on deputation, political

representatives, film stars on location shooting, and many more. The hotel users stay in

hotels with different motives. Generally the domestic customers pay less attention on

value and more on price. A majority of domestic users are found price sensitive and

therefore the hoteliers are suppose to make pricing decisions motivational.

In the group of foreign users we find political representatives on peace mission,

trade representatives on business promotion, educationists, sportsmen, cultural

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representatives and all others. These categories of foreign tourists visit hotels with

diverse aims and objectives. They normally prefer to stay in the classified hotels where

the services are found standardized. We also find cases where foreigners stay even in

unclassified hotels. To be more specific the existing worldwide economic depression

has made even the foreign users sensitive to price and this makes it significant that

policy makers and the senior executive assign due weightage to this new development.

The main thing in this process is to study the levels of expectations of both the

categories of users that the marketers find it convenient to undertake an in depth study

of their changing behavior profile, which would help them substantially in developing the

marketing resources and formulating a sound product folio. The formulation and

innovation of market decisions would be made easier when we are well aware of the

emerging trends in the behavioral profiles.

Employees

Most of the services in the Hotel depend on the direct, personal interaction

between the customers and firm’s employees. Customers will often judge the quality of

service they receive based on their assessment of the people providing that service.

Hotels often involve higher level of customer interaction; employees assist the

customers in providing them the services, e.g. a receptionist helping the customer by

telling him, what are the different kinds of rooms available in the hotel. Also, a waiter

who serves food to the customers should be well behaved and should possess good

communication skills.

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 Hence, employees play a very important role in hotels. The employees should be

well trained and motivated to satisfy customer’s needs. The hotel targets mainly at the

business class like the corporate and the international tourists. Their customers from

people who come for the business purposes, stay for a few nights and checkout. They

expect quality and speedy delivery of their requests.

Marketing

The key points of difference in the hotel marketing as against other consumer

products are that once customer has spent money in hotels, he/she has nothing

substantial to show for his/her money except the bills, as compared with buying a

television or a refrigerator. Effective marketing and dynamic selling become significant

in the context of the hotel marketing because once you have not sold a seat in a

restaurant or a room in a hotel, the income is lost and lost forever. A hotel bedroom or

restaurant seat has no shelf. For marketing hotel services, it is essential that marketing

be understood fully by the executive at the top of a hotel group with total commitment on

his part to the continuous need to market. A number of experts have gone through the

concept of hotel marketing as summarized below:

Gerry Draper

“Ascertaining consumer needs, tailoring the product as closely as possible to

meet those needs, persuading the customers to satisfy his needs and finally ensuring

that the product is easily accessible when the customer wishes to purchase it.”

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 The definition of hotel marketing consists of almost all aspects, right from

ascertaining customer needs to getting the customers satisfaction.

Anerson & Lembke

“We believe that the real meaning of marketing is listening to the demands of the

market and satisfying these demands at a profit, from that it follows that superior

marketing is listening to the market more intently than your competitors and satisfying

the demands more effectively.”

This definition concentrates on creating the demand and satisfying the customers.

Further, it emphasizes on the formulation of competitive strategies for excelling the

competition

In marketing the hotel services, it is included in its purview everything and almost

all the dimensions directly or indirectly helping in promoting the business and this

necessitates formulation of a sound marketing mix, such as an aggregation of different

sub-mixes like product, promotion, pricing, place and people. This kind of industry

manages services, promotional activities, pricing, distribution process and people

serving as hotel personnel.

Macro Environment

Political

Rules and laws are inclined with citizens’ everyday life. We have to abide by

certain rules and regulations in order to remain in society. This goes for corporations as

well. All corporations have to face some sort of rules and regulations. Although each

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corporation has to face rules and regulations, each industry faces different rules and

regulations.

An analysis of the hotel industry has revealed that there are environmental, labor,

and food & safety regulations as well as regulations for merging, which must be looked

at before entering into the industry. Environment is one aspect the government will

always have their eye on, and they will introduce laws that will protect the environment.

Such laws will need to be looked at as a player in the hotel industry. Hotels could be

liable for cleanup of contamination and other corrective action under various laws,

ordinances and regulations relating to environmental matters. Such laws referring to

keeping the environment in good shape can be quite costly to hotels in the industry.

Another political factor that can impose a concern for a member in the hotel

industry is the laws regarding labor. For instance, there are laws that govern minimum

wage. Although this might not seem to be a concern, but anytime you are forced to pay

a wage not in plans, which are taking away bottom line. Another law that can be quite

costly is treatment of employees. For example, there are laws that prevent

discrimination, and sexual harassment. If a hotel company violates these laws, it can

lead to severe lawsuits, and at the same time the hotel will be slicing their revenues.

The labor laws are pretty straightforward, but must be obeyed in order to keep on going

profits.

Ecological

Environment is something we as human beings come in contact with everyday.

The condition of the environment will often guide decisions. For instance, if it is really

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smoggy outside, the chances of going for a hike or to an amusement park are very

small. So, it would only make sense as a member of an industry that is looking to

increase the demand of consumers to fully understand what environmental factors for

their industry might impose an impact on the customer’s decision. For example, during

rainy seasons, disasters like earthquake, the customer decision to stay in a hotel in the

affected places will change and in this way the change may cause the hotel industries of

the particular region not to prosper.

Global warming is another ecological factor calls for concern. The ozone is slowly

being exhausted by human actions while leaving the earth degrees warmer. The

uncertain climate can have a direct impact on hotels that are in areas of ski-resorts.

However, even though this is a definite concern, it should be a concern for long term

planning the time frame for such effects is more likely to happen in the future. A way that

could allow this not to be an impact for other hotels is to build a strong image in the

consumers mind. Such image would come from being eco-efficient by improving

resources to prevent pollution.

Social

Social cultural factors are a big issue to look into for hotel industry because it

deals with a lot of consumers who have different demographic, ethnic, cultural

backgrounds. By satisfying each consumers or generalizing the way to hospitalize, hotel

industry can have chance to expand more.

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 Just as people’s lifestyles are becoming less predictable, more fragmented, and

we have more active but riskier lives, people tend to seek relaxation, and most of the

time, going on a vacation is the most rewarding for them. People are working most of

the time and for them relaxation is to be somewhere free from the hassle and buzzle of

the environment where work is, so they prefer going on a short trip to reduce the level

of stress and spend some quality time with their family or friends. Thus this results in

boosting the domestic travel, and the hotels industry is benefited the most.

Technological

In order for a hotel to prevent obsolescence and remain technologically

advanced, the hotel must be up to date with all the latest technological changes that are

taking place that might have an impact on the industry. As it moves through the twenty-

first century, it is evident, that there is a strong focus on technology. Today, the Internet

is increasingly being used. Consumers are shopping on the Internet, from music to

travel and anything one can think of. For the hotel industry, they need to take this into

consideration. The reason is that if hotels don’t have a well developed website, they will

possibly loose potential consumers.

Not only do they need to alternate their distribution channels of information, they

also need to advertise aggressively on the Internet. Discussing in further detail of what

the computer has brought is using it for organizing the hotel operation. The day of

having everything on paper is obsolete. So, in order for a hotel to have a competitive

advantage, they need to have a very high tech information system.

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While the computer is changing the way hotels in the industry can offer information to

their potential consumers and the way a hotel organizes their operations, materials

supplied to the hotel are starting to become obsolete. For example, in most hotels, you

will still find stereos, VCRs, and regular televisions. However, things have changed in

the way people access music, movies, and of course T.V. Today’s society, individuals

have moved away from those big boxes and adopted the use of digital technology. So,

for a hotel to prevent obsolescence the must change from the suppliers that are

supplying them with stereos, VCRs, and regular TVs and look for suppliers that will offer

them ipods, DVDs, and digital HDTV for room use. Moving in this direction will make the

hotel much more attractive, thus the revenues will increase.

The final technological factor that needs to be looked at is the rising costs of

energy. These are uncontrollable costs, thus the only thing that can be done to limit the

impact of these increasing costs is for hotels to manage the use of energy efficiently. A

strategy of how to manage it would be one thing; however, a hotel must also look at the

alternatives of energy that are coming into the world. For example, with high-energy

costs some businesses are thinking innovation. Solar Cities will be the successes of the

21st century.

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References:

Books and journals:

Henderson, J. C. (2007). Corporate social responsibility and tourism: Hotel companies

in Phuket, Thailand, after the Indian Ocean tsunami. International Journal of Hospitality
Management.

Jones, P & Lockwood, A 2006, The Management of Hotel Operations, Thomson

Learning, London.

Kasim, A. (2006). The need for business environmental and social responsibility in the
tourism industry. International Journal of Hospitality & Tourism Administration.

Mathisen, O. (2006). Profitability, environment, and social equity. Cruise Industry News

Van der Wagen, L & Goonetilleke, A 2012, Hospitality Management: Strategies and
operations, 3rd edn, Pearson Australia, Frenchs Forest, NSW.

Website:

NSW HSC online Hospitality

www.hsc.csu.edu.au/hospitality/hosp_240/comp_units/SITXENV001A/4042/issues.htm

• Ecological Footprint Measuring our impact on the environment

www.epa.vic.gov.au/ecologicalfootprint/about/default.asp

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