Hotel and Hospitality Management

1
Hotel and hospitality management
Name
Institution

2
Hotel hospitality sector
The chosen sector for the report is Hotel industry that is a major part of the hospitality
industry. Henderson (2011 p.237) defined hotel as an establishment that provides meals,
accommodations and other services to tourists and travelers. The hotel sector is segmented into
full-service Hotels, Select service hotel, limited service hotels and boutique and Themed hotel.
Full services hotels include 4 star and five star and resort hotels. Select service hotels include
airport hotels, inns, bread and breakfast, and several five-star hotels and four-star hotels. limited
service Hotels include one and two hotels, capsule hotels, motels and hostels. Themed and
boutique hotels include casino hotels, theme park hotels, cruise hotels and boutique hotels.
Hotels offer guest with services such as fitness, nightclubs, conference, banqueting sports and
facilities, sophisticated restraint casinos, bars and beauty spas. With increased in tourism
activities and every type of accommodation catering for every taste, the hotel sector is constantly
evolving and growing. Refining of the offering, creation of new and differentiating products,
improvement of experience and satisfaction of customer on a local and global level has enabled
the industry to expand and penetrate new markets. Different hotels offer different services
depending on management. Joining Hotel industry needs a deep analysis of external factors in
order to determine the future sustainability of the company. When joining the hotel sector,
competitive advantage between existing hotels and “market entry barrier” by new companies are
important things to consider. Therefore, the paper seeks to conduct an analysis of the external
business environment of the hotel sector.

3
Trends and factors that influence the demand for travel and tourism destinations, facilities
and services.
The trends and factors the affects the External business environment of hotel sector
include political, economic, social-cultural factors, technological, environmental and legal
factors (PESTLE). According to Kolios & Read (2013 p.5023), PESTLE is a useful tool that is
used by diverse companies to understand market decline or growth, potential, position and
direction of the company. In addition, PESTLE factors and trends are used in the assessment of a
market in which a business needs to venture.
Political factors
Political factors determine the degree to which government intervenes in the economy
(Bwalya, 2009 p.1-13). The political factors include trade restrictions, tax, foreign trade policy,
political stability or instability in overseeing markets, government policy and environmental law.
In the hotel sector, tensions between countries, terror attacks, trade restrictions and political
instabilities are the key factor that influences how the organization does business. In addition,
these factors can also influence the demand for travel and tourism destinations, services and
facilities in either a positive or negative way.
Political tension and instability in some countries or regions are associated with a
decrease in demand for food and services in the hotel sector. A research conducted by Dwyer,
Edwards, Mistilis, Roman and Scott (2009 p.63-74) indicated that when there is political anxiety
or tension between countries, demand for hotel services and products falls significantly.
However, when there is political stability in a country demand for tourism destinations, products
and services also increase. Hotel sector depends so much on tourist to generate revenues and
therefore whenever there are political tensions, tourists tend to minimize their movements for

4
their safety. For example, in 2008, Kenya experienced a post-election violence that significantly
affected the number of tourists visiting the country leading to a huge decline in demand for
hotels and services (Dercon and Gutiérrez-Romero 2012 p.731).
Increase and decrease in taxation also affect tourism destination and demands for services
and products. According to the research conducted by Durbarry (2008), an increase in taxation
leads to a decrease in demands while a decrease in taxation leads to an increase in demands of
products and services in the hotel sector. In addition, Rise in taxation contributes to high prices
of raw material that in turn contributes to high prices of products and services provided by
hotels. When the taxation is high .people tend to spend less and save more and therefore hotel
services and products fall.
Terror attacks also affect hotels operations significantly. When there are increased cases
of terror attacks in a certain region, the hotel sector in that particular region experiences a
significant decline in demands. For example, ever since the terrorist attacked the United States of
America in 2011, the demand for hotel products and services in that region have declined
significantly. Despite heavy security deployed in the region, tourists still fear for their safety to
spend more time in hotels around that place (Fletcher and Morakabati, 2008 p.537).
Additionally, the number of tourists from Islamic countries touring the USA has significantly
declined ever since the terror attacks due to higher surveillance.
Diverse political trends are circulating globally that might affect the tourism destination
and demand for products in the hotel sector. For example, the Qatar government is the current
trend in the market. The government is planning to increase taxes in order to raise more funds in
their preparation to host FIFA world cup 2018. The rise in taxation is likely to decrease demands
for hotels and service in that region. In addition, Italy is expected to conduct elections in 2018