Contemporary Hospitality Issues

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Running head:CONTEMPORARY HOSPITALITY ISSUEContemporary Hospitality IssuesName of the Student:Name of the University:Author’s Note:
2CONTEMPORARY HOSPITALITY ISSUEIntroductionThe hospitality sector of the Australia has been growing rapidly with the recent recoveryof the economy. In this situation, it is crucial for the hotels to manage the operation cost in aproper way (Cetin et al., 2017). However, due to wasteful practice and high expenses, the profitmargin of the hospitality sectors decreases. This is a big concern for the hospitality sectors in therecent years. The hospitality sectors face many unavoidable operation costs such as labor cost,insurance cost, higher energy cost and the brand standards. In order to minimize the operatingcost, it is the prime duty of the hospitality sectors to track and manage the cost. This study dealswith the operating cost in the hospitality industry and its effect on the business. However, thefunction of the technology to reduce such cost will be addressed in this section.DiscussionEnergy costis a major operating cost in the hospitality sectors. However, energyconsumption is increasing in the hospitality sectors due to inappropriate management of theenergy saving process. However, a huge proportion of the profitability spends in managing high-energy cost in the hospitality sectors. Heating, cooking, lighting, hot water production, airconditioning, and ventilation are the major causes of high-energy cost in the hospitality sectors(Bokhoree, Balnac & Mohee, 2017). However, during the winter season, the heating cost is toohigh in the hotels, which affects the profitability of such business sectors.High insuranceisanother big factor that increases the operation cost in the hospitality sectors. However, in order toprotect the property, the hospitality sectors establish insurance policy. This insurance policyincludes property insurance, staff insurance, and income insurance. However, often the staff
3CONTEMPORARY HOSPITALITY ISSUEclaims for their health insurance if the safety is affected during their work. In the recent years,the insurance cost is too high that enhances the operation cost.Labor costis a big factor in the rising operation cost in the hospitality industry. As perthe statistical data, the labor cost in Australian hospitality sectors is increased from 32.3% to34.8% in the year 2009 (Dev, Hamilton & Rust, 2017). However, such rising labor cost affectsthe service of as well as the profitability. Often the hospitality needs to hire expertise from thedifferent countries to enhance their service that is another cause of the rising labor cost. Theorganization needs to provide payroll related expenses, which is considered as the employeebenefit. This cost includes paid time off, retirement plan and mill. Thus, it is difficult for thehotel managers to control such labor cost.Brand standardis another factor of the risingoperation cost in the hotels. In order to compete with the other organizations the hospitalityindustries invest for the brand standard. The hospitality industries try to maintain the luxurystandard and to locate their hotels in a crowded city, which increases their operation cost. Inorder to provide the luxury service such as food, beverage, banqueting, concierge service andparking the hospitality sectors invest more (King & Perry, 2017). As a result, they face the highcost of the brand standard.Electricity is considered as the major utility expense as it comprises 60% of the totalexpenditure in hospitality sectors (, 2017). Providing service and water is thelargest utility cost includes 23.8%. The service of the hospitality sectors and water supply isassociated with the consumption of the fuel and steam. The fuel consumes 10.6% and steamconsumes 2.3% of the energy in a hotel industry. For this reason, energy management isnecessary and it can be done by taking the energy conservation programs. Different energyconservation programs like avoiding the overheating corridors and the bedrooms. This will be
4CONTEMPORARY HOSPITALITY ISSUEhelpful to reduce the operation cost. On the other hand, the hospitality sectors must have goodcontrol over the heating process. The hotels need to ensure that the leaking taps are repaired in aproper way and the pipeworks are insulated properly. It is crucial for the hotel to avoid operatingthe cooling and heating system in a simultaneous process. Installation of the day light sensor alsoenables the hotels to conserve energy. Moreover, creating awareness among the staffs enablesthe hospitality sectors to reduce the high-energy cost (Lee, Oh & Hsu, 2017).High insurance cost leads the hotels towards the bankruptcy or closure of the industry.The hospitality industries need to accomplish unemployment insurance, medical insurance,disability insurance and business insurance. Apart from this worker compensation is associatedwith the medical insurance that the hotels need to cover (Hua & Yang, 2017). Food-borne illnessliability is another insurance that often affects the economy of the hospitality industries. Cyberliability occurs if the breach of information occurs during the management of data. Labor cost isthe big part of the hospitality industries that lead the organization to face high operation cost. Inthe recent years, the labor cost is increasing rapidly, which affects the profit margin of thebusiness. Apart from the labor cost maintenance of the brand standard, also affect the businessprofitability (Dev, Hamilton, R., & Rust, 2017).High energy cost, insurance cost, labor cost and brand standards have both negative andpositive impact on the hospitality industries. However, high consumption of energy in thehospitality sectors facilitates the high operation cost. In the recent years, the energy cost has beenincreasing in the hospitality sectors, which leads to the industry and the business practice to facenegative effect. Electricity and the water supply include the major utility cost in the hospitalityindustry. It has been found that the gas and fuel cause the major utility expenses. In the year2014, the gas and fuel expenditure is increased up to 5.2% (, 2017). The high
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