Examining the challenges faced by the hospitality industry in both countries

The hospitality industry in the UK and USA faces several barriers to growth and development. The CAGE framework highlights cultural, administrative, geographic, and economic distances between countries, which create challenges for businesses operating internationally. The study concludes that the industry needs to overcome these barriers by developing effective plans and taking corrective actions. Key drivers of the industry's growth include market, cost, government, and competitive factors.

Strategic drivers
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TABLE OF CONTENTS
Introduction .....................................................................................................................................3
Identification of drives and barriers affecting development of hospitality industry .......................3
Conclusion ....................................................................................................................................10
References......................................................................................................................................11
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INTRODUCTION
In the present scenario, hospitality industry has become one of the leading
and most potential industries in the world. Further, it can also be explained that this
sector has a significant impact on the economic growth and development of a
country (Kusluvan, 2006). It also provides aid to local economies and supports them
to overcome from issues such as unemployment. The present report explains
identification and analysis of important drivers and barriers which affect the
hospitality industry. Along with this, it also highlights the comparison between
hospitality industry of UK and USA. Two different models which are cage model and
the Yip model has been used in this study to become aware about the key drivers
and major challenges which has been faced by the hospitality industry.
IDENTIFICATION OF DRIVES AND BARRIERS AFFECTING
DEVELOPMENT OF HOSPITALITY INDUSRTY
Hospitality industry provides a wide range of products and services to people
in the market. It includes restaurants, hotels, amusement parks, country clubs,
resorts, cruise ships, etc. One of the main purposes of businesses operating in this
industry is to gain high degree of customer satisfaction (ENZ, 2009). This is the only
reason why hospitality organizations make frequent changes in their products and
services in order to meet the needs and demand of people in the market. In last few
decades, the entire industry has grown significantly as more private organizations
have entered in it. Parsa, (2015) has explained that the entire image of a country
get affected by the operations and activities of hospitality industry. In simple words,
it can be stated that better products and services will enhance the overall image of
a nation whereas poor services will result in degradation of the same (Parsa, 2015).
Key drivers in hospitality industry
In UK, hospitality industry contributes a lot in the overall development of the
country. However, Lee-Ross and Lashley, 2010 has argued that like other sectors,
hospitality industry is also facing various kinds of issues and challenges. The nation
is having more than 10000 hotels which are operating with the purpose of satisfying
needs and demand of tourists (Lee-Ross and Lashley, 2010). As per the views of

Sloan, Legrand and Chen, (2013) key drivers include marketing, sustainability,
technology, etc. It can be stated that marketing has started to play an important
role in the success of businesses that are operating in hospitality industry. The
growing rate of internet and mobile users has provided organizations with more
potential and cost effective platforms to advertise and promote their services
(Legrand and Chen, 2013)). Nowadays, businesses are able to interact with
customers with the help of social networking sites such as Facebook and Twitter.
Organizations are able to display their new products, services or any offers with the
help of these sites. According to Pizam and Holcomb, (2010) one of the major
benefits of using social media to market products is that it helps the firms to reach
at mass audience easily. Another key driver linked with hospitality industry is
sustainability. Further, it can also be explained that with the increasing rate of
pollution and scarcity of resources, businesses are now required to utilize resources
in an appropriate manner (Pizam and Holcomb, 2010). In addition to this, they are
also required to ensure the fact that their operations and practices do not have any
kind of negative impact on environment as well as on society under which they
operate.
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Barriers to hospitality industry
At the time of operating in global business environment, businesses in
hospitality industry are facing various kinds of barriers. As per the views
Brotherton, (2012) of, one of the key barriers in success of organization is the
shortage of skilled and talented workforce. It can also be stated that the rate of
employee turnover is very high in hospitality industry (Brotherton, 2012). In the
present scenario, managing and hiring effective and talented personnel has become
very challenging. The reasons behind lack of skilled human resources are low pay
and inadequate work timings. Jauhari, (2014) Has argued that businesses operating
in hospitality industry are required to take corrective measures to retain the
workers and to lower down the rate of employee turnover. This can be done with
the help of providing motivation and rewards to workers at regular intervals
(Jauhari, 2014).
Another barrier which is affecting the success of businesses is related to
customer satisfaction (Pizam and Holcomb, 2010). Nowadays, people in market
want these businesses to deliver high quality of products and services at low or
convenient prices. Management of these businesses is required to upgrade their
technology at regular intervals in order to lower down their cost of operations. In
addition to this, they also need to respond quickly to the changing needs and
demand of people in the market. As per the view of Madera, (2011) one of the major
barriers in the success of businesses in hospitality industry can be termed as its
high degree of competition (Madera, 2011). In today’s era, it has become very
difficult for the organizations to retain their old customers and to attract the new
one. People have a wide variety of alternatives that are available to satisfy their
needs and demand. This has made it very difficult for businesses to increase their
sales and profitability. Pizam, Okumus and Hutchinson, (2013) has asserted that
organizations are now required to offer something new and unique to meet the
demand of people in market and to gain competitive advantage over other market
players (Pizam, Okumus and Hutchinson, 2013).
According to Taylor and et.al., (2011) hospitality industry is also facing
challenges related to up-gradation of technology. In order to operate in a cost
effective manner and to survive in the long run, businesses are required to invest
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large amount of human and financial resources in their technology (Taylor and
et.al., 2011). This is having a direct impact on the overall cost of operations of these
businesses. The threat of substitute has become very high for organizations which
are operating in this industry. Further, majority of businesses offers same kind of
products and services at similar prices. Now, the major challenge for these
businesses is to encourage customers to choose and buy their services over other
players in market. Warren, (2010) has explained that the bargaining power of
customers in this industry has become very high. Major reason behind this is the
development of online businesses. It can be stated that the need of travel agents
and tour operators has been decreased to a great extent. Customers have options
to search and book services via online. This has resulted in increasing the overall
bargaining power of customers. People in market have enough power to drive away
the price of products and services which are offered by businesses in this industry
(Kokkranikal, 2013). Other than this, it can be also stated that the competition
among the firms operating in hospitality industry is also very high. Due to low
investment required there are many small and large firms which are having tough
competition among themselves to steal market share and customers (Taylor, 2008).
High degree of competition has also resulted in affecting the sales and profitability
of all the businesses which are operating in this industry. Other than this,
bargaining power of suppliers is very low with regards to the hospitality industry.
Organizations have wide range of suppliers available which can provide them with
better and quality products and services. This means that supplier do not have
adequate power to drive away the prices of the products and services which they
have supplied. Therefore, organizations are required to take care of various
opportunities and threats which can have direct or indirect impact on their entire
operations.
Yip framework to identify key drivers of hospitality industry in UK and USA
It can be stated that there are several driving forces associated with The
development of hospitality industry of UK and USA. This includes market drivers,
cost drivers, government drivers and competitive drivers. It can be stated that the
need and demand of customers in both the market is same. The customers of
hospitality industry wants that better and quality services are provided to them at
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more convenient prices (Taylor and Forte 2008). Along with this, customers of UK
and USA wants the hospitality services should be highly creative and innovative.
The market drivers has helped in addressing the need, demand, taste and
preferences of people in both the countries. Further, cost drivers are the one which
helps in standardizing those identified need and demand of customers in UK and
USA. All the rules and regulations which has been developed by government and
other regulatory bodies are covered in government drivers (Tsang, Lee and Qu,
2015). By taking all regulations into consideration, businesses are able to operate
more effectively and smoothly in the long run. This also supports them to ahicve
higher profits and sales.
On the other side of this it can be also stated that the globalization of need
and demand of people in these two markets has also affected the economy of
hospitality sector. On the other side of this, government drives such as trade
policies, technical standards and policies developed by host government has also
affected the operations of hospitality industry (Gorman, 2007). The government of
both UK and USA encourages growth and development of the entire hospitality
industry. Policies related to trade in these countries are more fair and transparent.
This results in increasing the sales and profitability of businesses operating in
hospitality industry for both the nation (Brookes and Becket, 2011.). At the time of
operating at both local and international level, there are many key drivers which
supports businesses in hospitality industry.
This can be explained by the fact that with the help of driver such as
internationalization, the industry has been able to develop because the need and
demand of people in both countries are same. Along with this, various kind of
economies of scale supports businesses in both UK and USA to lower down their
overall cost of operations (Kusluvan, 2006). Government drivers has supported
organization to operate freely by discouraging any kind of unfair practices and
policies. It can be also stated that with the help of technology, businesses in this
industry are able to lower down their cost of operations. This has also supported
them in getting competitive advantage over other businesses. The hospitality
industry of both UK and USA are interdependent which each other (Lee-Ross and
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Lashley, 2010). This means that increase in demand of hospitality services in one
country will increase the demand of in other.
CAGE framework to identify and discuss the barriers (challenges) to
industry development in the two selected countries/regions
After applying the cage framework, it can be stated that there are many
challenges or barriers which are being faced by hospitality industry in UK and USA.
The four major barriers includes cultural distance, geographic, administrative and
political and economic/ wealth distance (Pizam and Holcomb, 2010). It can be
argued that religious norms and language in both the countries are different. This
has become a major barrier in development of hospitality industry (The Cage
framework, 2012). On the other hand, there is lack of social connection between
both the countries. The application of the cage framework on both the countries is
mentioned below as:
Industr
y
Cultural
Distance
Administrativ
e Distance
Geographic
Distance
Economic
Distance
Hospitali
ty
One of the major
challenge which
has been faced
by hospitality
industry in both
the country is
related to their
cultural
differences.
It can be also stated
that there is no
common
network
between these
The
governmen
t of UK is
not stable
politically
and this
has created
various
kind of
obstacle in
growth of
its
hospitality
industry.
It can be also
stated that
there is no
common
boarder
present
between
both the
countries.
Common
broader
would have
enhanced
the growth
The income
level of
people in
both the
countries is
completely
different.
Lack of
resources
such as
human and
natural has
also become
a big barrier
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two countries
which has also
emerged as
challenge for
development of
their hospitality
industry.
The kind of
hospitality
services offered
to customers in
UK and USA are
also very
different. Both
the countries
offer services by
keeping the
need, taste and
culture of local
people in mind.
The currency
between
both the
countries is
also not
common.
This is also
created
obstacles
in growth
of entire
industry.
rate and
development
of hospitality
industry in
both UK and
USA.
Geographic
distance has
separated
the
hospitality
industry of
UK from the
industry of
USA.
The
communicati
on links
between
both the
countries are
also very low
and
inadequate.
in the
developmen
t of the
entire
industry.
Situations such
as recession
has lower
down the
demand of
hospitality
services in
both the
countries.
Therefore, with the help of the above explained two models, it can be stated
that there are lots of barriers which the hospitality industry of UK and USA are
facing. The industry in both countries are considered as highly potential and
effective. Furthermore, it can be explained that its key drivers are the one which
has supported in the growth and success of the entire industry (Tsang, Lee and Qu,
2015). On the other side of this, it can be argued that the hospitality industry at
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local as well as at international level is required to eliminate all barriers which it is
currently facing. The government of both the countries which is UK and USA needs
to develop effective plans to overcome cultural distances between both the
countries (Kokkranikal, 2013). Along with this, the government is also required to
overcome deal and lower down administrative, geographic and economic distance.
With the help of CAGE framework, the scholar has been able to view the distance
and differences more clearly. It has also supported in getting aware of differences
between the countries which has resulted in creating barriers in growth of their own
hospitality industry. It can be also stated that differences such as geographical
affects the overall cost of the transporting services from one country to another
(Taylor and Forte, 2008). On the other side of this, the cultural differences has
resulted in differentiation of customer demand in both the countries. The model has
also supported in comparing the hospitality industry of home country which is of UK
to another country which is USA.
CONCLUSION
From the above study, it can be concluded that the hospitality industry is
facing lots of issues and challenges which are required to be overcome as soon as
possible. Along with this, it can be also concluded that market, cost, government
and competitive drivers are some key drivers which has resulted in the growth and
development of the entire industry. From the above study, it can be concluded that
there are various challenges and obstacles which has restricted the growth of
hospitality industry. All the businesses and government of home country are
required to take corrective actions and develop effective plans to overcome from all
the major barriers. Therefore, it can be stated that hospitality industry needs to
work upon various factors to develop in long run.
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