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The history,characteristics and importance of the hospitality industry
The history, the size, scope, growth and economic importance of the hospitality industry
The history of the hospitality industry and its external environment
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Macro-environment analysis: Opportunities and Threats PESTLE Analysis
Market Analysis
The overall industry saw a strong boom rate from 2010-2014. The global hotels & motels industry had total revenues of $677.1bn in 2014, representing a compound annual growth rate (CAGR) of 4.6% between 2010 and 2014. In comparison, the Asia-Pacific and US industries grew with CAGRs of 6.6% and 5% respectively, over the same period, to reach respective values of $163.7bn and $166.2bn in 2014(Global Hotels & Motels 7). The reason for this growth is due to the Asia-Pacific Region and Americas. The US alone with its world’s largest hotels/market has conquered net value growth, while China has literally doubled the revenue in the same time span. The leisure segment
These in their own possess hotels and franchises associated with their brands. An example is Marriot hotel one of the top competitors in the hotel chain industry, which offers exclusive apartments and sharing services aligned with independent companies in the various regional markets. This creates a strong competition in terms of consumer satisfaction, technological platforms, quality services, and venues. The top leading hotel bees are the Hilton, choice hotels, the Best Western, Accor and the
This leaves the American consumer confidence laying low, and people are being more cautious on their spending and not splurging. This ties in with the pace of recovery for the hotel industry. But a stronger hit came to the industry, when the trend developed in the market for substitutes to hotels and motels. The consumer due to the economic decline has developed a taste for an economical traveling experience, these substitutes offer cost undercuts. According to the United States Department of Labour, the unemployment rate in the US averaged to 8.9% in 2011. Higher unemployment rates strains discretionary spending, which in turn reduces the leisure travel by the customers. Sluggish wage gains and credit crunch are all expected to keep customers relatively cautious in 2012. Thus, a weak economic outlook for the important markets of Hilton Worldwide would put pressure on its top line and bottom line growth (Hilton Worldwide, 12). The pricing factor is almost hard to match by the hotel industry, the consumer is becoming more demanding but also exigent in terms of low pricing. Switching costs range from negligible to high, but a factor that motels can’t substitute are the various benefits including spas, restaurants, or a community holiday feel brought with the package of any chosen hotel/motel. But the consumers in the US for example see the switch as more of a necessity rather than
Cruise lines companies compete with other vacation alternatives, such as land-based resort hotels and sightseeing destinations for consumers’ leisure time. Demand for such activities is influenced by political and general economic conditions. Companies within the vacation market are dependent on consumer discretionary spending. The year 2012 was overall a very difficult for the cruise industry. Carnival International is still recovering from the effects of sinking of Costa Concordia off Italy in January 2012. On other hand, Royal Caribbean’s biggest challenge in 2012 was due to one-time impairment charges of nearly $385 million related to Spanish line Pullma...
Increasing fear amongst consumers afraid to fly and a downturn in the world economy caused a drastic decline in the demand for both business and leisure travel causing passenger numbers to plummet. Thomas Cook tour Operations, like it’s competitors experienced high profit losses as a result of falling passenger numbers, added security costs, falls in their share prices and increased insurance premiums in which occurred I the aftermath. Prior to September 11th the travel industry experienced a dynamic growth between 1995 to 2001. During 2001 20.6 million package holidays were sold to the British Consumer, 1 growth of 2.6%. However the deterioration of the industry’s success came immediately after the terrorism attacks.
There are five groups of customers that are affected by the rate changes. Travel agents are affected financially by reduced fares that will result in reduced commissions. On the other hand, American’s four-tier structure substantially reduced the numb...
Each year, America’s travel and tourism industry generates approximately $1.5 trillion dollars in economic output, or about 2.6% of the country’s gross domestic product (Select USA, 2016). Nearly 20% of this economic activity is directly related to accommodations, which serve the short term lodging needs of pleasure and business travelers. Unlike other American economic sectors, this lodging industry is a highly fragmented, diversified market with an incredible variety of suppliers. Temporary overnight lodging can range from undeveloped campsites, hostels, and capsule hotels all the way up to mansions and incredibly luxurious five store hotels. Price ranges run the gamut from just a few dollars a night to thousands of
The lodging industry has seen improvement since the economic downturn of late 2007. There are factors beyond the industries control that could stifle growth in the industry, including but not limited to the still weak global economy and governmental breakdown. Since 2010, the industry has seen steady growth in average daily room rate (ADR), revenue per available room (RevPAR), revenue and net income. The have either reached or almost reached pre-downturn (2007) rates. Room construction in much of the United States has also started to rise again but at a slower rate than the financial indicators.
In this essay I will be discussing and critically analysing each element of the PESTLE analysis within the hospitality industry, with examples to reflect each point. Also this essay will discuss how marketers should adapt to changes in the macro-environment. The PESTLE analysis is a marketing principle used to understand the relation between a company and the external environment. Murray-Webster (2010:88) states PESTLE analysis will help to capture understanding about aspects of the context by using the prompt political, economic, sociological, technological, legal and environment.
The first situation is that of “special events” such as holiday periods, sporting/political events, etc. These events throw more power in the relationship to industry players due to the large customer demand and constrained supply. For example hotels see huge demand around the World Cup sporting event and hotel prices as a result on average spike between 100-300% compared to normal levels and for the last World Cup prices in one city went even further north of around 583% (Mallén, 2013). On the flip side, periods of economic recession have the opposite affect by impacting demand negatively thus forcing hotels to greatly lower prices to spur demand or compete with other industry players. During the last US recession, the average hotel occupancy rate dropped to a record low of 45% at one point from the normal average of 63%. As a result of the greatly declining revenues, such as a 48% drop by Marriott International, industry players laid off over 400,000 employees and greatly scaled back costs and new developments. Also importantly to customers who now saw more power in the relationship drift to their side during this time period, the average daily room price dropped to $98.18 (2009) from the record high of $107.42 pre-recession (2008). Both effects on opposing fulcrums show how important customer demand can affect the industry and the players’ actions
The Hotel industry has become very important in the past years due to immense traveling and growth of international business. Hotel industry not only plays an important role in the life of people but as well as the economy of the country. Development and advancement in the Hotel industry have rapidly been taking place and especially since the rapid change in technology, it is very important for hotels to be promptly keeping up to date. When the hotel industry is spoken of, there are many famous hotels but one hotel company that has been outstanding in growth and other aspects of business, like in Leadership, Teamwork (Employee turnover), Motivation (Customer retention and satisfaction, Goals and objectives, (changing the way hotel business has worked), and Change within the company; structurally inside and physically outside, adding elements, like entertainment, gaming, and outdoor activities, is the Hilton Hotel Company.
Founded in 1919, Hilton Worldwide has remained a beacon of innovation, quality, and success. What Hilton Worldwide calls their mission statement imposes its worldwide high status: “We will be the preeminent global hospitality company - the first choice of guests, team members and owners alike.” Fierce competition, however, does currently exist among hotel corporations within the market. Marriott International, Hilton’s main competitor, currently stands as the third-ranked world leader within the industry (according to hospitalitynet.org), coming in after Hilton. Other competition faced by Hilton comes from Wyndham Worldwide, Starwood Hotels and Resorts, and Best Western, to name a few. Affiliated with ten different hotel brands, Hilton Worldwide provides its guests with the advantage of choosing from any one of their 4,000 operating hotels located throughout 90 different countries. This has evidently contributed to Hilton Worldwide becoming one of the top leaders (ranked second to be exact) in the hospitality industry, despite their competition. The vision of Hilton Worldwide is “to fill the earth with the light and warmth of hospitality.” As the modern luxury hotel, Hilton has created a prestigious heritage with a modern attitude. The values of Hilton Hotels are stated uniquely, giving one value to each letter that constitutes the word for the hotel brand. “H” stands for Hospitality– “We are passionate about delivering exceptional guest experiences”; “I” stands for Integrity– “We do the right thing, all the time”; “L” stands for Leadership– “We are leaders in our industry and in our communities”; “T” stands for Teamwork– “We are team players in everything we do”; “O” stands for Ownership– “We are the owners of our actions and dec...
Airbnb is now valued more than the Hyatt chain of hotels (Cannon and Summers). Airbnb has been able to change the balance of power in the hotel industry, allowing home owners with a spare room to connect with short-term renters, creating “a peer-powered business with virtually no overhead” (Ingram). Airbnb is also making progress into the corporate travel market. In the U.S., companies are projected to have $310 billion in business related travel costs (Ruch). With Airbnb saving business travelers an average of 41%, or $102 per night, over hotels, they are gaining more and more of the business travel market (Ruch). Further proof of this is given by Concur, a top travel-management company, that “reported in July 2014 that Airbnb transactions in their expense reports had increased by 27x year-over-year while Uber transactions had climbed 5x” (Ruch). With the Airbnb business model that charges between 6%-15% per transaction, traditional hotels cannot compete because of the overhead and infrastructure costs they have. The situation faced by traditional hotels in response to Airbnb can be illustrated by the cost- based pricing strategy. This strategy is based “on an understanding of production- and marketing-related costs as the key elements in determining a product’s initial or standard price” (Finch). The standard price is the price floor of the room, and any costs
The hotel industry performs within a saturated market, driven by customer loyalty and competitive pricing to stand-out. This competitive nature makes it extremely important to capitalise on strengths while improving on
Hilton Worldwide carries out business through three segments: (1) management and franchise; (2) ownership; and (3) time-share. These business segments enable management to capitalize on strengths like brand recognition and economies of scale. The company focuses primarily on the management and franchise segment which consist of 3,918 hotels with 610,413 rooms. Managing the properties, rather than owning them, allows the company t...
The most prestigious name in the industry, Hilton Hotels & Resorts stands as the stylish, enthusiastic and global leader of hospitality. With over 92 years of experience, Hilton continues to be synonymous with hotel because of innovative approach to products, facilities and service. They help make traveling easier with smart design, innovative restaurant concepts, authentic hospitality and assurance to the global community.
Sri Lanka's tourism sector is developing rapidly, strengthened by an increasing range of national and international air travel networks and rising awareness of its countless attractions, as well as better safety awareness since the end of Sri Lanka’s civil war. With international tourist arrivals increasing rapidly, Sri Lanka's hotel and accommodation sector is inviting substantial foreign investors. The luxury hotel sector in specific is developing rapidly.
Today all the hotel chains and small privately owned hotels have their own revenue plan for a year, 5 years and, in some cases, up to 20 years. Hospitality industry is one of the fastest changing industries; as it’s always have to match the requirements of each client and industry standards. Revenue managers have to deal with new standards of costumer service and high level of competition.