Australian Hospitality Sales Challenges

This assignment delves into the factors influencing sales performance within Australia's hospitality sector. It categorizes these factors as controllable and uncontrollable, examining issues like customer retention, competition, wastage, operating costs, and shifting customer preferences. The analysis aims to understand the challenges faced by businesses in this industry and potential strategies for overcoming them.

Running head: BUSINESS RESEARCH
Business Research
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Table of Contents
1.0 Introduction..........................................................................................................................2
2.0 Project Objective..................................................................................................................2
3.0 Project Scope........................................................................................................................2
4.0 Literature Review.................................................................................................................2
4.1 Australian Hospitality Industry........................................................................................2
4.2 Major Factors Affecting Sales Performance in Australian Hospitality Industry.............3
5.0 Conclusion............................................................................................................................5
6.0 Reference List......................................................................................................................7
7.0 Appendix..............................................................................................................................9

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1.0 Introduction
Over the bygone years there has been an extraordinary development across the business
sector of Australia. Among the many segments, the hospitality industry is recognized to be
one of the most influential economic drivers not only at a local and state rank, but also at a
national level. As per Chen (2014, p. 431), with an employment of more than 300,000
personnel over 6,807 hotels, restaurants and bars, the Australian hospitality industry
generates an annual income ranging between $10 billion to $14 billion. However, Bugeja et
al. (2014, pp. 248-261) states that there has been a recent downfall of sales performance due
to certain factors.
This particular project focuses on the various issues that have greatly affected the hospitality
business of the country. In order to identify and learn about the different characteristics, the
report includes a literature review as well.
2.0 Project Objective
The major objectives for this project are as follows:
To study the current condition of Australian hospitality industry
To recognize and categorize factors that affects sales performance of the sector
3.0 Project Scope
Despite of being well developed, the Australian hospitality industry has been faced with some
challenges that directly or indirectly impacts its sales volume and thereby revenue generation.
This particular project along with studying the past conditions focuses on the present to be
able to find out the most affecting elements. Further, the project also makes use of several
primary and secondary data sources with a motive to develop an accurate report on the topic.
4.0 Literature Review
4.1 Australian Hospitality Industry

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According to Chon et al. (2013, pp. 103-121), hotels, restaurants and pubs in Australia have
acted as significant contributors to the economic prosperity and development of the nation.
From the first pub built after European settlement to a spread of more than 6,500 set ups
across the country, hospitality industry have undergone a long and tiring journey. However, it
is noticed that among the growth of the sector, there has emerged certain factors that has not
only impacted stability and efficiency, but also affected revenue growth and sales
performance of the hospitality industry. As per Tarí et al. (2014, pp. 1-12), the various
elements that affect business can be typically divided into two parts, controllable and
uncontrollable factors. In addition to certain internal characters, there exist a number of
externalities that has changed the face of the segment.
The different micro and macro component that put a pressure on the hospitality industry are
the following:
PEST Analysis
Political Factors:
1. Legislative changes
2. Unplanned policy integrations
3. Government regulations
4. Wars and domestic conflicts
5. Internal trading
Economic Factors:
1. Income rate changes
2. Tax fluctuations
3. Interest and exchange rate falls
4. Declining markets
Social Factors:
1. Changing customer behaviour
2. Lifestyle trends
3. Demographical changes
4. Media opinions
5. Ethical issues
Technological Factors:
1. Innovation growth
2. R&D instalments
3. Technology incentives
4. Technology maturity
5. Market entry barriers

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6. Automation needs
7. Digital economy
8. Technological rate change
9. Telecommunications
Table: Macro and Micro Affecting Factors (Hospitality Industry)
(Source: Assaf et al., 2017, pp. 270-279)
4.2 Major Factors Affecting Sales Performance in Australian Hospitality Industry
The hospitality industry of Australia has been booming for last few decades now. Although
the sector produces a huge revenue, Kandampully et al. (2015, pp. 379-414) states that there
has always certain factors that put a negative pressure on business. As compared to earlier
situations, the present has felt a hardened pinch of the factors. In addition to a down fall of
profits, the industry has also been confronted with lowered customer visits, employee
complains and degraded trade volumes.
The various factors that significantly impacts sales performance in the Australian hospitality
industry are as follows:
1. Intensive Competition: Being a high profit earning section, the section is subject
to a large number of entrepreneurial ventures. An increase in the competition
noticeably increases bargaining power of the customers, which in turn result in a
downfall of income levels of companies. Based on the study of Jones et al. (2016,
pp. 36-67), it can be noticed that a 59% of the sector believes that a rise of rivalry
has affected their sales performances. Additionally, foreign intervention in the
industry has also increased by 7.4% in the last two years (2015-2016).
2. Degraded Customer Retention: An increase of organizations providing similar
kind of services has provided consumers with innumerable options to choose

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from. Further, competitive prices set by every other firm acts as a major attraction
for the people. On the other hand, almost 54% customers in the nation also prefer
to try new restaurants or bars rather than being loyal to any one of them.
Statistically, 60% companies have faced a stretched sales figure due to this
problem (McManus, 2013, pp. 140-152).
3. Changing Customer Perspectives: Modern hospitality businesses are not only
based on high quality - cheap rate products, but also give a increased importance
to ambience, service, infrastructure and many other factors (Cantallops and Salvi,
2014, pp. 41-56). The uncontrollable preferences of customers greatly tend to
affect the sector. On other hand, with a change in the demographics of the
Australian population there is a change in their likings as well.
4. Increased Wastage: Wastage of products by companies have increased by 5.4%
in the current year. It is noted that a progressive rise of competition levels have
put a direct pressure on food and beverage firms. Further, improper planning and
management have also contributed to the loss of the business in the sector.
5. Employment Destabilisation: Surviving in the hospitality industry of Australia is
a challenge for business organizations (Xie et al., 2014, pp. 1-12). In addition to a
sustainable management system, presence of highly skilled and well trained
employees helps to develop sales and revenue. However, employment of such
workers is an issue for about 54% enterprises in the sector. Apart from hiring,
poor retaining of staff gives to rise to performance disputes.
6. Increase of Operating Costs: Among the several factors, one of the most directly
impacting elements is the increase of operating cost. The presence of penalty rates
and employment charges put a huge weight on the finances of a firm.
Additionally, existence of a complex taxation system and GST obligations in the

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Australian hospitality industry play a major role in degrading sales profits. 72% of
the business owners in the sector classify penalty rates to be among the top three
hurdles for their firm. On the other hand, GST and taxes stress about 45% of the
industry. Further, the increasing Eftpos and credit card charges also tend to cut
down sales volumes (Chon et al., 2013, pp. 103-121).
5.0 Conclusion
Based on the above project it can be inferred that the Australian hospitality industry has been
confronted with several hurdles in the modern years. With a growth and development of the
nation there has been a rise of several factors that tend to affect smooth flow of business in
the sector. Despite of being well developed, the segment is faced with numerous issues that
need to be managed. It is noted that an increase of competition, loss of customers, change of
perspectives, increase of wastes and employment problems have noticeably affected sales for
organizations. Further, a rise of operating costs also puts a pressure on financial performance
of firms as well. Lastly, it can be concluded that in order to regain sales health and maintain
efficiency enterprises need to plan, control and thereby manage negativities.

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6.0 Reference List
Assaf, A.G., Josiassen, A., Woo, L., Agbola, F.W. and Tsionas, M., (2017). Destination
characteristics that drive hotel performance: A state-of-the-art global analysis. Tourism
Management, 60, pp. 270-279.
Bugeja, M., Lu, M., and Shan, Y. (2014) Cost Stickiness in Australia: Characteristics and
Determinants. Australian Accounting Review, 25, 3, pp. 248-261.
Cantallops, A.S. and Salvi, F., (2014). New consumer behavior: A review of research on
eWOM and hotels. International Journal of Hospitality Management, 36, pp. 41-51.
Chen, J. S. (2014). Advances in hospitality and leisure: Volume 10. United Kingdom :
Emerald, p. 431.
Chon, K. S., Barrows, C. W., and Bosselman, R. H. (2013). Hospitality Management
Education. Hoboken: Taylor and Francis, pp. 103-121.
Jones, P., Jones, P., Hillier, D., Hillier, D., Comfort, D. and Comfort, D., (2016).
Sustainability in the hospitality industry: some personal reflections on corporate challenges
and research agendas. International Journal of Contemporary Hospitality
Management, 28(1), pp. 36-67.
Kandampully, J., Zhang, T. and Bilgihan, A., (2015). Customer loyalty: a review and future
directions with a special focus on the hospitality industry. International Journal of
Contemporary Hospitality Management, 27(3), pp. 379-414.
McManus, L., (2013). Customer accounting and marketing performance measures in the
hotel industry: Evidence from Australia. International Journal of Hospitality
Management, 33, pp. 140-152.
Tarí, J.J., Molina-Azorín, J.F., Pereira-Moliner, J., López-Gamero, M.D. and Pertusa-Ortega,
E.M., (2014). Quality Management and Performance in the Hotel Industry: A Literature
Review. In Action-Based Quality Management. Springer International Publishing, pp. 1-12.

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Xie, K.L., Zhang, Z. and Zhang, Z., (2014). The business value of online consumer reviews
and management response to hotel performance. International Journal of Hospitality
Management, 43, pp. 1-12.

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7.0 Appendix
7.1 Factors Affecting Sales Performance in Australian Hospitality Industry
(Categorized)
Controllable Factors Uncontrollable Factors
1. Degraded Customer Retention 1. Intensive Competition
2. Increased Wastage 2. Changing Customer Perspectives
3. Employment Destabilisation 3. Increase of Operating Costs
Table: Categorized Factors Affecting Sales Performances
(Source: As created by author)