PESTLE Analysis of Hospitality Sector in the UK

This report presents a detailed PESTLE analysis of the hospitality sector in the UK, examining macro factors affecting the industry such as political, economic, socio-cultural, technological, legal, and environmental factors.

Individual Essay
(PESTLE Analysis)

Table of Contents
INTRODUCTION...........................................................................................................................1
PESTLE Analysis............................................................................................................................1
Political factors (The government factors).............................................................................1
Economic factors (Currencies, economic cycles, investment opportunities etc.)..................2
Socio-cultural factors (Customer habits, trends, incomes, culture, tradition etc.).................3
Technological factors (Social media, blogs, customer reviews, online booking etc.)...........4
Legal factors (Innkeeper laws, customer rights and food safety laws etc).............................4
Environmental factors (Nature, Weather, Climatic conditions etc.)......................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
There are many business environment factors that affect the growth and success of a
particular industry in a certain geographical location. PESTLE analysis is a strategic tool that is
used to analyse the extrinsic business environment factors that prevail within a given economy
and affect the activities of a business (Alanzi, 2018). PESTLE analysis can be used by the
businesses to analyse political, economic, socio-cultural, technology, environmental and legal
factors that affect the businesses within an economy. The report will present a detailed 'PESTLE
analysis of the hospitality sector in the UK' which will focus on examining certain macro factors
that affect the activities of the hospitality sector. Hospitality sector has diversified categories of
businesses that include entertainment, travel and tourism, food and beverages, leisure &
recreation and restaurants. The hospitality industry is affected by many business environment
factors, and the PESTLE analysis of the UK describes these aspects.
PESTLE Analysis
PESTLE analysis is a strategic tool that is used to analyse the extrinsic business environment
factors that prevail within a given economy and affect the activities of a business (Alanzi, 2018).
A detailed 'PESTLE analysis of the hospitality sector in the UK' which will focus on examining
certain macro factors that affect the activities of the hospitality sector is given below.
Political factors (The government factors)
The political factors can be explained as those government influences that affect the
business environment of a particular industry within the UK market. The government affects the
hospitality industry in many ways and influences its activities in the UK. For example, the
taxation policies, preservation of historic and cultural monuments, investment in developing real
estate, business regulations, travel tourism policies etc. affects the business environment.
The hospitality industry is also affected by the initiatives of the government like financial
support, tax rebates, business development etc. which supports growth (BURKE, ROBINSON
and Choi, 2020). The support of the government is necessary for the businesses in the hospitality
sector to grow. Within the UK, the hospitality sector was ruined due to the negative impacts of
government policies regarding Covid-19 pandemic imposing travel restrictions, social distancing
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etc. The UK government has also supported the growth of the hospitality industry by providing
tax rebates and relaxations on the businesses so that the businesses can recover from the losses.
Instability of politics or the prevailing government within an economy may also become a
huge problem for the hospitality industry. Within the UK the government policies regarding
Covid-19 pandemic have also affected the revenue of the businesses in the hospitality industry. It
was due to the restrictions imposed by the government that discouraged them to travel, eat/drink
in the bars, hotels or restaurants, involved in any leisure activities. It has been historically proven
that the hospitality industry is also affected by government interventions, political warfare and
other instabilities. Within the UK the hospitality industry is supported by the policies of the
government for business development and growth, focus on service sector industries, increase in
travel and tourism activities etc.
Economic factors (Currencies, economic cycles, investment opportunities etc.)
The economic factors have direct impacts on the activities of the hospitality sector,
because it affects the international and domestic travellers to make expenses on hotels,
restaurants, leisure, travel/tourism etc. The hospitality industry also supports the growth of retail
businesses, pharmacies, local businesses etc. that provides the growth of the overall economy of
the UK. There are various economic aspects like the employment rate, GDP, foreign exchange,
investment opportunities, economic cycles, inflation/ deflation etc. that affected the hospitality
sector within the UK.
Economic cycles affect the hospitality industry in many ways, because the process of
going through an economic cycle depends on the organisation to successfully extract itself
(George, 2021). The economic cycle within the UK provides positive growth of the hospitality
industry within the UK because of balanced employment, increased travel expenses, growth
opportunities etc. According to the statistics of ons.gov.uk, millions of employment opportunities
are created by the hospitality industry across Europe. The hospitality industry within the UK also
provides a larger opportunity for women employment which provides greater chances of growth
to the industry. The hospitality industry contributes up to 5% of total GDP, 10% of total
employment and 6% of total businesses which shows a large contribution of the hospitality
industry in the UK economy.
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Economic factors such as inflation and deflation also have a huge impact on the hospitality
sector within the UK. The stability in the prevailing market conditions provides opportunities for
growth to the hospitality industry (Ceil, 2018). The rate of unemployment within the UK is
becoming high which shows that the investment of people in travel and tourism, recreation/
entertainment, etc. may decline. The growth of travel and tourism opportunities for the people
throughout the globe provides higher opportunities for the hospitality sector in the UK to take
advantage.
Socio-cultural factors (Customer habits, trends, incomes, culture, tradition etc.)
Within the PESTLE analysis, the social factors are the next that affects the activities of the
hospitality industry. It is true that the customs, traditions, cultures, customer trends etc. affect the
activities of the hospitality industry (Helmold, Terry and Hummel 2020). The behaviours of
people across various places are different from one another like the people may be willing to go
on holidays once in a year, they like eating outside etc. Therefore, the hospitality industry offers
various services to the customers at different-different locations.
The changing customer trends are one of the most important aspects of social-cultural
factors that are greatly impacting the activities of the hospitality sector within the UK. The
customers in the UK have a busy lifestyle and they prefer to reach out to those hotels where fast
services can be accessed like Subway, Burger King, McDonald's etc. Most of the people within
the society prefer cheap, comfortable and private places which has created opportunities for
developing hospitality businesses like Airbnb.
Some of the social factors have also affected the hospitality industry adversely (Sousa and
Castañeda-Ayarza, 2022). Within the UK the perception of people regarding employment within
the hospitality industry is negative due to which, hospitality businesses sometimes suffer losses.
Within the UK the hospitality industry jobs are considered as a low reputation job due to which
high turnover of employees can be seen within the UK industry.
The opportunities for the hospitality industry increases within the UK during the times of
celebration which brings enormous amounts of people to travel eat/ drink outside and seek for
accommodations. Within the UK, the people have busy schedules and lifestyles due to which
they prefer to take every advantage of travelling, exploring and going out that has enhanced the
chances of growth for the hospitality sector.
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Technological factors (Social media, blogs, customer reviews, online booking etc.)
In the era of technology the businesses throughout the world have seen many changes and
it has also benefited the hospitality industry (David, 2021). Due to the increase in the use of
digital technology, big data, social media, search engine optimization etc. the hospitality industry
has found new ways to serve their customers in beneficial ways. The hotels are using information
technology, and big data for providing better customer experience like online booking, customer
feedback, digital payment options etc.
The technological advancement has also played a very significant role in improving the
promotion activities of the hospitality businesses across the UK. In the UK almost 80% of the
adult users have access to the digital devices. This has increased the reach of hospitality
businesses to the maximum number of customers. The customers who are connected through
social media also provide the access to the hospitality businesses to reach them with their
products and services. This has provided great opportunities for the hospitality sector to attract
maximum customers from various places for their products and services (Jafari and Othman
Soleiman, 2020). The instant sharing of news and information on the internet has intensified the
growth opportunities for the hospitality industry within and across the UK.
The digital payment systems and customer reviews has also improved the experience of
customers that helps the hospitality businesses to provide customised products and services that
fulfil customer demands. The use of big data helps the businesses throughout the UK to develop
tailored services and products for the customers. The advancement of these technologies has
provided huge opportunities for growth of the hospitality sector businesses across the UK.
Legal factors (Innkeeper laws, customer rights and food safety laws etc)
Within the UK, the hospitality industry needs to follow various legal rules and restrictions
for ensuring food safety, customer privacy, health & hygiene standards, etc. For the hospitality
industry there are various rules and regulations that must be followed to establish and operate
amusement parks, restaurants, hotels etc. within the UK. For example the food and beverage
restaurants/ hotels must follow food hygiene standards, licensing for bars, protecting customer
rights, health and safety etc.
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Within the hotels and restaurants it is important to comply and resolve the rules and
regulations like food hygiene standards that vary from country to country. The UK is among
those countries that have some of the strict and intense food safety rules and regulations that
must be followed within the hospitality industry. It is compulsorily important for the businesses
within the hospital industry of the UK to comply with these food safety laws.
Within the UK, the hotel and restaurant businesses must compulsorily follow Health and
Safety at Work Act 1974, privacy and welfare protection of customers, Gas Safety 1998, etc.
These legal obligations greatly affect the hospitality businesses, but these are also very important
for ensuring the smooth flow of business activities without potential harms to anyone (Silva,
2021). The legal factors that include laws, rules and regulations to be followed in the hospitality
industry help the businesses to avoid any losses or critical harms.
Environmental factors (Nature, Weather, Climatic conditions etc.)
The environmental factors such as the changing climatic conditions, natural causes, weather
patterns etc. greatly affect the activities of hospitality businesses (Gheibi and et. al., 2018). The
hotels, bars and restaurants are increasingly affected by environmental factors because they have
a significant impact on the environment due to their needs for energy, water, etc. The increasing
awareness of people within the UK towards the changing climatic conditions and their effects of
eating habits on the environment have affected the hospitality industries. The consumers are
focusing on transitioning their dietary habits from non-vegetarian food to vegetarianism and
veganism to reduce their negative impact on the environment. Due to this the restaurants and
hotels need to choose wisely, to offer to the customers.
The activities of the hospitality industry create a lot of wastage and it is important for them
to manage it effectively so that it does not create harmful impact on the environment. There is a
significant impact of government, environmentalists and pressure groups on the hospitality
industry due to which they need to use more sustainable practices. Sustainable practices could
enhance the growth of hospitality businesses across the UK.
There is a significant impact of weather conditions on the travel and tourism activities within
the hospitality industry because the weather conditions and natural factors impact the mood of
customers to go to new places. It is important that hospitality businesses must be developed at
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the places where the natural environment and weather patterns are suitable to enhance travel and
tourism.
These business environment factors have a significant impact on the activities of hospitality
businesses throughout the UK (HIREMATH, 2021). Therefore, it is important for the hospitality
businesses to watch over these aspects and work accordingly to achieve higher growth
opportunities.
CONCLUSION
It has been concluded from the above report that the business environment factors such as
economic, political, technological, social, legal and environmental factors have a great impact on
the hospitality industry within the UK. Various aspects of political, economic, socio-cultural,
technological and environmental aspects have been discussed in the above report that affects the
overall hospitality industry. It has been obtained that political factors including the government
influences on the industry may lead to various advantages and damages to the hospitality
business. Moreover, it has been discussed that social aspects within the UK have enormous
opportunities for growth of the hospitality industry. It has been discussed that technology factors
have a very positive impact on the hospitality businesses within the UK. Along with this it has
been discussed that the businesses in the hospitality sector must follow the legal aspects to
operate their business effectively and efficiently. Finally, it has been discussed that the
organisations in the hospitality industry must adopt sustainable practices to lower their impacts
on the environment.
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REFERENCES
Books and Journals
Alanzi, S., 2018. PESTLE Analysis. Project Management.
BURKE, K., ROBINSON, P. and Choi, M., 2020. Developing meta-strategies for hospitality
experiences. Managing Hospitality Experiences, p.141.
Ceil, C., 2018. Exploring Internal and External Environment to Find Recommendations for
Tarmac. Available at SSRN 3520576.
David, Joe., 2021. "PESTEL analysis of France (France country profile)."
George, R., 2021. Tourism and Hospitality Marketing Planning. In Marketing Tourism and
Hospitality (pp. 149-182). Palgrave Macmillan, Cham.
Gheibi, M. and et. al., 2018. Controlling air pollution in a city: A perspective from SOAR‐
PESTLE analysis. Integrated environmental assessment and management, 14(4), pp.480-
488.
Helmold, M., Terry, B. and Hummel, F., 2020. 11 Tools for Negotiations. Successful
International Negotiations: A Practical Guide for Managing Transactions and Deals,
p.173.
HIREMATH, S., 2021. PESTLE ANALYSIS OF ORGANIZED RETAILING IN INDIA.
Jafari, H. and Othman Soleiman, K., 2020. Assessment of effective environmental factors in oil
and gas industry policies using PESTLE & SWOT analysis (case study: Kurdistan,
Iraq). Environmental Sciences, 18(3), pp.134-151.
Silva, J.H.B.B., 2021. Business plan: Lost Doc, an efficient way to find and deliver lost items to
their owners (Doctoral dissertation).
Sousa, G.C. and Castañeda-Ayarza, J.A., 2022. PESTEL analysis and the macro-environmental
factors that influence the development of the electric and hybrid vehicles industry in
Brazil. Case Studies on Transport Policy, 10(1), pp.686-699.
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