Issues Faced by Accommodation Services in Australia

This essay discusses the range of issues faced by the accommodation sector in Australia, including competitive market, low skilled labor, and increase in operating costs. It also explores external political and social challenges.

HOTEL AND ACCOMMODATION
MANAGEMENT

Executive summary
Recently, the hotel trends of the Australia is assumed to be at strong condition that reflects
increase in the number of bookings from both domestic as well as international visitors. This
essay brings out a discussion on issues faced by the accommodation sector in Australia on the
basis of journals and articles. It has discussed the range of issues such as competitive market,
low skilled labour, increase in the cost of operating especially the fixed cost that reduces the
revenue streams, external political and social challenges faced by the organisation.

Contents
Executive summary....................................................................................................................1
Introduction................................................................................................................................3
Examination of the current issues faced by the accommodation services.................................3
Conclusion..................................................................................................................................5
References..................................................................................................................................6

Introduction
Australia’s accommodation industry is enabled with sophisticated services for both domestic
as well as international customers. It is important to evaluate some crucial range of issues in
the accommodation services in Australia such as digital disruptive, ownership structures, and
increased market segmentation. These issues have led to emergence of unnecessary fixed
costs, which has reduced the revenue streams. This essay will lay down number of issues that
have been discussed with the help of recent articles. The issues in the article are related to
piercing competition and other operation based management issues.
Examination of the current issues faced by the accommodation services
Technological disruption- As customers have started liking the Airbnb technology that have
increased competition in beverage spaces. Disruptive forces strike the hotel industry from
every perspective. It has been observed that growth of tripadvisors has heavily disrupted the
accommodation industry of Australia. According to the Guttentag, (2015), it is seen that
traditional hotels spend substantial or huge sum of money and it took years to construct and
control the brands. The hotels in this industry has focused on highly structured and focused
quality ratings. The increase in user-generated content that has moved above their control in
the community of the online users. This technological disruption has also devalued the
professional assurance quality and their mechanisms.
Increased competition- According to Guttentag, (2015), Australian`s accommodation
industry suffers from increasing competition where businesses have started popping up to
cater the customers. Some of the accommodation centres will have to sacrifice the quality in
their arguments for tourist dollar. Due to extensive offer for food, accommodation, and
entertainment services, it is hard to get a slice of the visitor spend. One of the major reason is
that majority of the businesses feature growing foodie culture that attracts Australians. Other

issue is the wastage of food that has turned to throw off food to gain the trust of the people
that they provide fresh and quality food to the customers.
Lack of competent staff- According to De Villiers, (2017), due to competitive salary to the
staff, it is difficult to find best cooks and hardworking team. Disruptive food quality and
services will lead to reputation and revenue loss. Moreover, the streamlining business and
other professional services can be the best way to combat the cost of operations. The increase
in cost of operations hinders the business, as it has to incur cost for its interior as well as food
in café, bar owners, and restaurants.
Ownership structure issues- Unethical issues or exploitation of environment for business
growth leads to increase in penalty rates (McCrohon, and Nyland, 2018). It is important to
know that most of the hotels in the accommodation industry operate through privatisation so
that its remaining portfolio decreases the cost and increase the quality of the services. This
problem of disruptive capitalisation lead to assumption that strategic partners are attracted to
purchase the enterprises with the help of public tenders (McCrohon, and Nyland, 2018). New
owner will start with the new investment ventures, which is necessary to increase the level of
competitiveness of those organisations. The amount of outstanding debts with the spoiled,
poorly and ruined maintained accommodation facilitates that resulted into no any other
imperative investment in future. It is seen that imperative interest of future owners is
decreased in terms of investment. Moreover, financial crisis decreased the flow of FDI
(Foreign direct investment) that has prolonged the interest of the competition of the
privatisation. According to Bitner, and Franz, (2017), Apart from this, unresolved legal issues
relates to ownership rights on tourist that includes court disputes and issues in public
administration. Another issue related to investors is the issue of concession fees and the
unresolved joint venture issues in the community. By studying the reports, it can be seen that

state enterprise in the hotel industry is slow and poor related to private and mixed enterprises
form the political point of view to privatisation postponed to the future period.
Changing demand of the customers is another expectation-; it has been increased in the
market. As the Australian population is composed of European immigrants and other
immigrants from other countries. Accomplishing with the expectation is not very easy in the
recent society where the margin is being decreasing. It becomes difficult because of huge
labour cost and visa issues that puts pressure on the existing staff. Further lack of skilled staff
will insert pressure in the market on the product quality. Hotel industry suffers from political
and security issues, which remained a top issue for the organisation. Although, government
has undertaken various legislations to support the organisation. Fear of terrorism have
changed the people travel throughout the world (Deloitte, 2018).
Findings
The market is diluted and competition gets tougher. In 2017, hospitality sector have surveyed
that 73% competition have increased as compared to last year. 55% of the respondents have
believed that increase in competition has resulted into revenue losses. Further, regulated GST
compliance and taxation system is huge burden to the respondents as reported by 46% of the
respondents. The main four segments of the hospitality industry are food and beverages,
travel and tourism, lodging and recreation. It is observed that state-owned hotels must pin to
process restructuring because it implies the layoff in the certain number of the employees in
order to reduce the salaries so that it can solve the problems related to outstanding debts and
recapitalisation. This industry have reflected that average vacancy rate of 7% that further
reflects that there will be current shortage of 38000 superior positions. It has been stated that
123000 workers will be needed in order to source the tourism industry by 2020 (Dowse,
Wiese, and Smith, 2016).

Conclusion
From the above discussion, it can be concluded that undoubtedly accommodation sector faces
number of issues and problems that signifies that it is very hard to operate in such a dynamic
environment. The disruptive technology has reflected the breakdown of many hotels, as they
were not able to recover the cost and the cost has been rising continuously due to lack
number of skilled people in the economy. It is important for the industry to stable its
economy so that it can maximise the number of profits as well as customers.

References
Bitner, G. and Franz, J., 2017. A problem shared: A critical review of the disparities in ageing
and disability accommodation models in Australia. The Journal of Aging and Social
Change, 8(1), pp.13-26.
De Villiers, B., 2017. Airbnb in Western Australia: New Issues for Policy Makers Arising
from a Disruptive Innovation. U. Notre Dame Austl. L. Rev., 19, p.1.
Deloitte, 2018. 2018 Real Estate Outlook The Australian Perspective. Available on:
https://www2.deloitte.com/content/dam/Deloitte/au/Documents/Real%20Estate/deloitte-au-
dre-real-estate-outlook-2018-australian-perspective-150218.pdf [Accessed on 20/04/19]
Dowse, L., Wiese, M. and Smith, L., 2016. Workforce issues in the Australian National
Disability Insurance Scheme: complex support needs ready?. Research and Practice in
Intellectual and Developmental Disabilities, 3(1), pp.54-64.
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), pp.1192-1217.
McCrohon, M. and Nyland, B., 2018. The perceptions of commoditisation and
internationalisation of higher education in Australia: an interview study of Chinese
international students and their lecturers. Asia Pacific Education Review, 19(1), pp.17-26.