Challenges and Opportunities in the Global Hospitality Industry

The provided assignment content discusses various aspects of the hospitality and tourism industry, including its challenges, human resource management, marketing strategies, and impact of climate change. The articles and reports highlight the importance of understanding constraints, promoting destination regions, eliminating old practices, responding to consumer behavior, and benchmarking industry responses to climate change. Additionally, the content touches on topics such as accessible tourism competitiveness, hospitality business operations, and the future of the industry. Overall, the assignment emphasizes the need for effective human resource management, marketing, and adaptability in the face of changing environmental conditions.

EASSY

TABLE OF CONTENTS
EASSY.......................................................................................................................................1
ESSAY Writing..........................................................................................................................1
REFERENCES...........................................................................................................................9

ESSAY WRITIING
The tourism and hospitality industry is a type of service industry that provides distinct
type of services to the customers. It is one of the fastest growing industry that majorly
contributes to increase the gross revenue for the economy. This sector covers a wide range of
operating functions (Barrows, Powers and Reynolds, 2012). Operations of the hospitality
industry mainly classified into three categories that are accommodation facilities, food and
beverages as well as travel and tourism services. Accommodation services mainly involves
hotels, motels and resort services. On contrary, restaurant, bars, cafes and night clubs services
fulfil the food and beverages requirement of customers. However, travel and tourism industry
includes transportation services such as airline, ships and taxi cabs services. Further, the
industry provides services for flight attendants, travel agents, tour operators and leisure
centres. The industry transports people to new venues and places and assists through
accommodation facilities. In addition to it, international tourism consists of number of
tourists who travel from their residence country to another country. People travel in different
countries for the purpose of visiting. However, the time period for staying in another country
will not exceed from 12 months.
Success of this industry significantly helps in making economic development. It
builds economic growth through generating incomes and creating jobs that help to reduce
unemployment rates to a great extent (Bernini and Cracolici, 2015). Further, the industry
helps to maintain the welfare of society. In United Kingdom, sector employs millions of
people in many establishments that contribute pounds of billion to the UK economy. Thus, it
can be said that travel and tourism industry is a vital source for the economy. Success of the
industry depends upon the ability of the establishments to attract large number of tourists and
visitors in their country. International tourism and hospitality industry in the digital age
explore opportunities for making growth and development.
Currently, market is highly competitive therefore organizations are facing distinct
issues in the market. Every industry whether it is business organization or service industry is
facing some kind of key issues due to rapidly changes in the environment. There are different
factors that are existed in the market that bring risk to the industry. It includes cultural
changes, political environment changes, customer preferences, their consumption behaviour,
social issues and so on (Bharwani and Butt, 2012). Therefore, it is important for companies to
identify all the issues and then make effective and strategic planning in order to eliminate its
negative impacts. The policy makers are required to address all the key issues that they can

face in future period so as to achieve the organizational goals. By assessing all the key issues,
establishments can gain competitive advantage over their competitors. The present report will
help in identifying the general issues that may arise in tourism and hospitality industry in the
upcoming ten years. International Society of Hospitality Consultants (ISHC) has defined
some key issues that are described below:
Shortage of Labour and their skills: Tourism and Hospitality is labour intensive and
large source of employment. It creates number of jobs that require varying degree of skills,
knowledge and experiences (Brotherton, ed., 2012).The industry provide jobs for both the
direct and indirect occupations. Direct occupations are related to sector's activities that
include hotel and restaurant employees while indirect occupations include taxi services,
transport occupations services, tourists guide and others. One of the major global challenges
that industry confronting is labour and skills shortage. It is the problem of attracting qualified
and skilled workforce and retaining them in the organization. In UK, State of Nation reports
stated that in the difficult economic conditions, it is important for industry to improve skills
through getting services from skilled and qualified workers. The present report is highlighted
that industry needs to focus on the staff retention issues. Further, the British Hospitality
Association focuses on Tourism and Hospitality industry to be recognised as world class. UK
Government focuses on providing and creating valuable jobs in order to get competitive
advantage and build economic growth (Dale, Ritchie and Keating, 2012). There are different
factors that cause labour shortage including demographic factor, wages rate, industry
reputation and so on. Under the demographic factor, large number of workers are leaving the
organizations. Further, it is comparatively lower than the number of workers who are entering
in the industry. Moreover, employees have the objectives to earn higher income. Therefore,
lower the level of workers salary and their wages rate reduces the number of skilled workers.
Therefore, it becomes difficult for the hospitality industry to attract and retain qualified
employees for the longer time period. On contrary, reputation of the hospitality industry has
not attracted large college graduates as their top career choice.
Knowing customer’s taste, preferences, their likes, dislikes and their expectation is of
great importance on which the success of industry depends mostly. Higher the level of skills
offers best quality of services. This in turn, improves its reputation to a great extent.
Moreover, it helps to improve the quality of customer services and their level of satisfaction.
Therefore, it becomes necessary for industry to attract and recruit qualified and experienced
employees in the business. The most important way of increasing the number of skilled

employees is planning for effective training and development programme. Adequate training
builds the personnel skills and provides proper guidance and complete knowledge about their
work. Workers can increase their performance and productivity with the help of training.
Trained employees will be more capable and can deliver excellent services to the customers.
Another, higher salary, retention rates and clear career pathways help to address the skill gaps
and increase their productivity (Riley, 2014). In addition to it, better working environment,
better incentives, leadership and motivation also help in retaining personnel in the business.
State of Nation reports says that training and retention are the future of tourism and
hospitality industry. Therefore, training is the key of successful business. It boosts customer
satisfaction, increases customer loyalty and builds the industry growth (Shaping the Future of
Hospitality and Tourism, 2014). Further, it helps to attract new customers and retain existing
customers for the long time period. This in turn, establishments can achieve their business
targets and objectives. Higher the success of the industry ultimately helps to increase the UK
economic growth and development.
Operational challenges: Uncertainty with changing the market environment brings
many of operational challenges for the tourism and hospitality industry that are explained
here as under:
Cost: It includes both the construction and operating cost that industry experiences.
Construction cost includes the cost of furniture, fixture, and equipment as well as build hotel,
motels, restaurant, cafeteria, bars, nightclubs and so on (Su, Hall and Ozanne, 2013).
However, operating cost includes the cost of petrol, diesel and fuel for transportation purpose.
Changes in the market create operational challenges for the industry. Volatility in prices
brings different risk to the organizations.
Further, industry capital expenditures are increasing at very faster rate. Increasing in
labour cost, benefit cost and energy cost due to changing demographics, regulations and
labour agreement adversely impacts the returns. Government makes rules and regulations that
higher the minimum wages, so new labour agreements require significant wages as per the
rate increases. Another, benefit costs are increasing due to increase in health insurance costs
and pensions. Thus, it is the issues that may arise in the future period and impact the industry
return to a great extent.
Increase in the number of hotels will lead to increase the construction cost and as a
consequences, reduce the business profits. Therefore, it is clear that if costs are fixed and

rising continuously so that it may reduce the quality offered. Thus, the industry is required to
deal with the negative impacts of increasing the prices effectively. It can be done through
regular monitoring the market changes in order to determine the cost. Further, construction
project management must be qualified and full capacity should be utilized to ensure new
development.
In addition to it, increasing the employee’s retention rates and reducing the capital
expenses can maximize the industry return (Goodall and Ashworth, 2013). British Hospitality
Association (BHA) stated that in the global competitive market, government and industry
both are working together for the infrastructure development. In regard to investment,
Scottish Development International (SDI) takes initiatives for hotel and resort development.
SDI consults with the local hotel so as to make future investment plans efficiently.
Finance and funding: The industry requires adequate availability of funds for its
operational purpose. Inadequate availability of funds and finance is the second operational
challenge that industry may face in the future period. Expectation of revenues is highly
depended upon the availability of capital (State of the Nation report, 2013). Numerous factors
are existed that affect the availability of timing, amount and capital. For instance, reducing
the term credit from 60 days to 30 days creates financial problem for the industry.
Moreover, financial institution banks do not sanction loans for the expansion purpose.
In addition to it, interest rates are rising that is resulted in higher the cost of capital. Many of
the investors believe that in hospitality industry, entry barriers are very high. High
development cost may destroy the profits and undercut the project feasibility (Geneva, 2010).
On contrary, recession, government cuts and declining its spending level contribute to the
fund problems. Funding by the central government is the major challenge for the industry that
brings uncertainty in the business. Without having proper availability of funds, industry
cannot provide better services to the tourists and operate efficiently in the market.
On contrary, adequate liquidity is required for the operational purpose. Therefore,
under the available internal finance sources, money is tighter and squeezed to meet their
fund’s requirement. Efficient flow of capital helps to overcome the business difficulties that
business may face in the upcoming period. Hotelier and Investors are required to make
efficient and strategic investment planning as per the changes in market conditions (Top ten
issues in the Hospitality Industry, 2007).

Technology: In the modern age, technology changes at very faster rate. Technology is
not updated due to complexity of the hotel environment and lack of awareness about the
modern and integrated systems. Further, the industry historically preferences in investing
funds in Furniture, fixture and equipment (FF&E) rather than investing funds in new
technology. Hospitality industry needs to sophisticated and well integrated that help to serve
guests in an efficient manner. It helps to attract large number of guests, generate more
revenues and attain increased level of efficiency. Further, it helps to gain competitive
advantage through competing effectively. Therefore, it becomes necessary for industry to
upgrade its technology on the regular basis.
More comprehensive system and good user interface design provide better data
layouts. Guest room technology must be familiar for the customers (Mouaffo, 2007). Using
internet facilities through websites bring benefits for the industry. Online booking for airlines,
hotels, restaurants and travels increases the level of industry revenues and also the
profitability. Further, Wi-Fi facilities, wireless network, LED TV in the guest room provide
more leisure to the tourists. Thus, it can be concluded that through using innovated
technology, industry can make easier to its operating functions in a great manner. Investment
in technology and technical support maximizes the efficiency and ensures industry growth.
Changing Demographics: Travel, tourism and hospitality industry provide services to
all kinds of customers at distinct place. Thus, these industries are very much affected by the
changes in demographic factors. Demographic changes possess both the opportunities and
challenges for the industry. The emerging and ongoing changes impact the tourism and
hospitality industry. Currently, population is growing with an increasing rate that leads to
increase demand for the travel services (Yu, 2012). All the customer’s desires vary from each
other as they are from different culture and their needs of products and services are also
different. Therefore, it is important for the policy makers to address the customer’s desires,
needs as well as wants and satisfy them through offering qualitative products and services.
The industry must cater the special needs of the ageing customers and young travellers.
Hotelier requires to serve customers with understanding their different habits, patterns and
wants. Satisfying customer’s need helps to make successful business. For instance, hotel
infrastructure, room interior, health travel services, medical facilities, sport facilities for
younger, internet access, high tech guest room help to offer better customer services (Bowie
and Buttle,2013). This in turn, industry can higher the tourist satisfaction level. Establishment
services will be praised by everyone that will help to higher the number of visitors. Thus,

industry can enhance their revenue as well as profitability and can compete effectively at the
market place.
Global Emerging markets: World Tourism organization estimates the increase in
number of travellers all over the world. Therefore, market for international tourism gets
changed. China is one of the fastest growing countries in the travel sector. As the level of
income gets inclined, the travelling demand is also moving in upward direction. Multi-
generational travel is common in Indian and South Asian Culture in which parents,
grandparents and children travel together (Vila, Darcy and González, 2015). The travel
pattern is completely different from the accommodation services that are provided by
Western hotel operators. Further, Diet requirement also tends to very due to some kind of
religious belief which bring challenges for the industry. It may arise challenges for the hotel
owners, restaurants and food service providers. Further, cultural diversity also impacts the
industry.
For instance, it may be arisen for building design that has segregated areas for
women, men and children. The language is another key issue that vary from country to
country (Topolšek, Mrnjavac and Kovačić 2014). On contrary, varying shopping behaviour
like some travellers may demand branded products while others may do not need it. As a
consequences, tourists demand different accommodation services, food and beverages as their
taste preferences are different. Thus, it is necessary for policy makers to address the market
changes correctly and provide products and services based on the consumer’s desires.
Travel Permit restrictions: International tourism has become more available in all
over the world. In many of the countries, travellers require permits for travelling in other
countries (Bharwani and Butt, 2012). Tourists need to take prior permission from the
concerned authority. For instance, tourists are required to take special permissions for taking
visas and work permits. The cross boarder policies are different from country to country
hence, it creates negative impacts on the hotel industry.
This is due to the reason that policies and the procedures of people differ over the
various dimensions as they are bounded with the lots of restrictions. There are various
possibilities in which travellers are restricted as security is the major issue that is considered
by the concerned authority in order to provide permission. There are different forms of
permits which are issued by the governmental bodies to facilitate travellers to visit different
countries (Bernini and Cracolici, 2015).

For instance, travellers have to encompass different set of agreement in order to make
entry into the boundaries of different nations. This is the major issue which is affecting the
functioning because if travellers would not be provided with the permit. This will result in the
downfall of the hospitality industry as the travellers are not able to visit in different countries.
Multi-culture issue: This is the issue which will hinder the performance of tourism
and hospitality industry. In the present scenario, modernization is introducing at a greater
speed which is affecting the cultural dimensions as culture differs from country to country. In
India, there are some states which does not even permit westernisation to adopt by the young
generation due to that many of the travellers avoid visiting to those place. This affects
hospitality industry as most of the income is generated from tourism (Mills and Law, 2013).
It may be arisen for building design that has segregated areas for women, men and children.
The language is the key issue that vary from country to country. On contrary, varying
shopping behaviour is also an issue like some travellers may demand branded products while
others may do not need it. This affects the entire functioning of hospitality and tourism
industry. With the development of globalization, multi-culture issue are faced to a greater
extent. It is the crucial issue which is faced by the industry and it is necessary to determine
that how much effect it causes over the functioning. In many of the Asian countries, people
are restricted to make eye contact with the guest as they feel uncomfortable and this affects
the potential aspects which determine the functioning within the specific industry (Dale,
Ritchie and Keating, 2012).
Competition: There are various other issues which will be hindered the performance
of international tourism and hospitality industry at a greater extend. This is due to the reason
that major income of the countries which are developed or developing is generated from the
hospitality and tourism industry as they are huge cash flows. Major flow of income is
generated out of the operations that are carried in order to meet the requirement of travellers
who visit in the country (Malik and Abdulla, 2013). In Singapore, most of the income is
generated from the tourists who visit their country for travelling or business purpose. In the
present scenario, competition is expanding at a greater speed so industry requires the ample
amount of resources to afford and meet the requirement of guest so that traveller’s
expectation can be achieved effectively. Marketing issues: There are different marketing
issues which affect the performance as well as functioning of the tourism and hospitality
industry. Now days, people are opening a wide chain of hotels to generate more profit by
offering services at a lower rate in order to build up their position in the market (Bowie and

Buttle,2013). Distribution of various information through internet has hindered the entire
functioning as there are various independent and small hotels that are competing in the cyber
space with the major brands of hotels. There are various means that are associated to make
industry flourish in accordance to serve the different travellers.
Climatic condition: As the climatic condition of different countries fluctuate at a very
instant speed and due to which, functioning of the tourism and hospitality industry hinders a
lot. Climatic conditions help to determine the necessary outcomes which have to be adopted
by the individual in order to attract more and more travellers by providing different facilities
(Gössling and et.al. 2012). All the customer’s desires vary from each other as they are from
different culture and their needs of products and services are also different. Therefore, it is
important for the policy makers to address the customer’s desires, needs as well as wants and
satisfy them through offering qualitative products and services. They should try to deal with
the issue by introducing various facilities which will serve to the travellers and make their
stay comfortable at an affordable price. This will make customers to visit the place again and
again and will help in resolving the respective issues which are encountered by the tourism
and hospitality industry.

REFERENCES
Books and Journals
Barrows, C.W., Powers, T. and Reynolds, D., 2012. Introduction to the hospitality industry
(No. Ed. 8). John Wiley & Sons, Inc.
Bernini, C. and Cracolici, M.F., 2015. Demographic change, tourism expenditure and life
cycle behaviour. Tourism Management, 47, pp.191-205.
Bharwani, S. and Butt, N., 2012. Challenges for the global hospitality industry: an HR
perspective. Worldwide Hospitality and Tourism Themes, 4(2), pp.150-162.
Bowie, D. and Buttle, F., 2013. Hospitality marketing. Taylor & Francis.
Brotherton, B. ed., 2012. International Hospitality Industry. Routledge.
Dale, N.F., Ritchie, B.W. and Keating, B.W., 2012. Understanding constraints and their
impact on school excursion tourism. Tourism Analysis, 17(6), pp.805-812.
Goodall, B. and Ashworth, G. eds., 2013. Marketing in the Tourism Industry (RLE Tourism):
The Promotion of Destination Regions. Routledge.
Gössling, S. and et.al., 2012. Consumer behaviour and demand response of tourists to
climate change. Annals of Tourism Research, 39(1), pp.36-58.
Malik, S.A. and Abdulla, D.P., 2013. ELIMINATING OLD PRACTICES IN MODERN
DAYS: AN OVERVIEW OF HR PRACTICES IN TOURISM INDUSTRY.
International Journal of Applied Services Marketing Perspectives, 2(3), pp.550-553.
Mills, J. and Law, R., 2013. Handbook of consumer behavior, tourism, and the Internet.
Routledge.
Riley, M., 2014. Human resource management in the hospitality and tourism industry.
Routledge.
Su, Y.P., Hall, C.M. and Ozanne, L., 2013. Hospitality industry responses to climate change:
A benchmark study of Taiwanese tourist hotels. Asia Pacific Journal of Tourism
Research, 18(1-2), pp.92-107.
Topolšek, D., Mrnjavac, E. and Kovačić, N., 2014. Tourism Management Perspectives.
Tourism Management, 9, pp.14-23.

Vila, T.D., Darcy, S. and González, E.A., 2015. Competing for the disability tourism market–
A comparative exploration of the factors of accessible tourism competitiveness in
Spain and Australia. Tourism Management, 47, pp.261-272.
Yu, L., 2012. The international hospitality business: Management and operations. Routledge.
Online
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