[FULL ACCESS] Hotel Industry Analysis and Trends

The assignment provides a detailed analysis of the hotel industry using PESTLE (Political, Economic, Social, Technological, Legal, Environmental) and SWOT (Strengths, Weaknesses, Opportunities, Threats) frameworks. It focuses on Hilton Hotel as a case study, identifying its strengths, weaknesses, opportunities, and threats. Additionally, it explores current trends in the hospitality industry, such as personalized care, network matters, eco-friendly practices, and real-time damage control, which can either enhance or degrade brand image.

THE CONTEMPORARY
HOSPITALITY INDUSTRY

Table of Contents
INTRODUCTION...........................................................................................................................1
LO3..................................................................................................................................................1
P6 PESTLE Analysis Factors That Affect The Development Of Organizations Operating
Within Hospitality Industry.........................................................................................................1
P7 SWOT analysis of hospitality business (Hilton Hotel)..........................................................3
LO4..................................................................................................................................................5
P8 Current And Potential And Development Affecting The Hospitality Industry.....................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Hospitality industry is a sector which provide services like event planning, lodging,
travelling or any tourism facility. It is an industry which is completely dependent on disposable
income or leisure activity expenditure. This report will lay emphasis on how different factors of
PESTLE Analysis will affect the organizations operations within hospitality industry. It will also
explain all the internal and external factors through SWOT analysis of hotel organizations like
Hilton. Hilton hotel is a global brand which provide hotel services with presence in more than 85
countries. This report will also lay emphasis on implications of current and potential in the
hospitality industry with different examples.
LO3
P6 PESTLE Analysis Factors That Affect The Development Of Organizations Operating Within
Hospitality Industry
PESTLE analysis consist of political, economic, social, technological, environment and
legal factors. These factors affect the development of any organization or an industry specially
hospitality industry weather it is political factor or environmental factor or any other factor they
all deeply affect the organization.
 Political Factor: These factors have a deep and direct effect on hospitality industry
weather it is any act or changing government or any other factor they always has a direct
effect on hospitality industry. Political stability is always a good factor for hospitality
industry. Europe performs well in hospitality industry because of their political stability
however, Brexit was a major political event happened recently which had a huge impact
on hospitality industry(Sonia and David.,2012). UK's revenue is hurting because of
Brexit and terrorism. All these political factors should be considered as they have a huge
effect on their revenues and profit also military and security status of a country also
affects the hospitality industry's revenue and profit.
 Economic Factor: Economic factors also affects the hospitality industry organization.
Factors such as inflation rate, taxation charges,interest rates, economic growth and
exchange rates all these factors affect the organizations business significantly i.e. these
factors can be a reason for high demand of a hotel's business or low demand of a hotel.
As consumers are growing and their spending capacity is growing,labour market is also
continuously growing. Nowadays average hourly income and disposable income of
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customers has also grown which is a positive sign for hospitality industry. All these
factors helps a hospitality organization to flourish and grow. Global economy si also a
factor which affects the hospitality industry as recession is going on it has a huge effect
on economic condition globally. This economic condition has also affected the spending
power of customers i.e. they are spending less on their leisure activities. This economic
slowdown has affected the industry and costumer's pocket. These results force hotels to
cut down their prices and reduce their profits. Exact opposite will happen if conditions
are reversed.
 Social Factor: Social factor changes effects the demand and supply of any services and
products. All the social factors affects the hotel industry business. Customers preference
and taste in hotel industry has changed a lot in last few years. According to recent reports
customers nowadays prefer private accommodation with security and hygiene. Customers
nowadays prefer hotels which provide all the facilities like food facility, room service,
cab availability, hygiene, luxury etc. There are many other factors which affects this
industry as customers preference is very important in this industry(Yoon, Hae, Do, 2018).
If customers sentiments are in favour of their organization then they will flourish and
gain profit.
 Technological Factor: In today's world technological factors are very important
specially in this industry. Weather it is their hotel's marketing or booking tickets or
providing Wi-Fi facility and online booking facility or any other, all these use of
technology flourish hotel industry. This use of technology has bridged the
communication gap between customers and hotel industry. Nowadays maximum
customers search of hotels online and prefer to book them online by searching and seeing
all the facilities that hotel provides and then do the final booking. If any hotel
organization rises or grows then an extra credit can be given to technological factors as
nowadays hotels business are using technology for serving their customers. Recently use
of digital check-ins and kiosks are increasing(Sonia, David.,2012). Even use of social
media is also increasing . As use of mobiles is increasing it has affected the bookings or
check-ins etc. Reviews given to a hotel on social media or any website also affects the
business and its reputation. This use of technology can either work in favour of hotel
business or can affect their business in a negative way. This use of technology is shaping
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customers experiences and also affecting hotel industry both in positive way or negative
way.
 Legal Factor: Legal factors also plays a vital role is growth of a hotel industry. This
factor specially includes safety and heath laws as it concerns for both public and labour
security. Other than public security and labour laws there are many other laws too that
affects the hotel business majorly but these two are the main concern. Each hotel in every
country has to follow these laws. Mostly people get attracted towards hotels which are
legal i.e. follows all the laws are regulations and provide safety service. If there is any
change in law then hotels need to obey those laws. These legal pressures also affects the
industry the most both in positive and negative way(Gajanand and Rajesh.,2016).
Specially for brands who operate in many countries, it is important for them to know and
follow all the local laws of that country. Hotels are needed to give their hotel staff special
training to avoid any legal issue.
 Environmental Factor: Environmental factors have a direct impact on hotel industry
business. These environmental factors are important to be considered specially for hotel,
restaurant and tourism industry organizations. Most environment factors which affects
the hotel industry are like waste management, natural hazards, weather etc. Hotel
industry need to take proper measures to avoid any troubles. Staff should be given proper
training to avoid hazardous situations as costumers mostly prefer cleaner, healthy and
greener environment.
P7 SWOT analysis of hospitality business (Hilton Hotel)
SWOT analysis gives an overall brief about strength, weakness, opportunities and threats
of any organization. Here all the internal and external factors of hotel industry are explained with
the example of Hilton Hotel.
 Strengths: As one of the leading Hotel organization Hilton has many strengths such as.
They have a good customer relationship management which has achieved high level of
customer satisfaction with goof brand equity. Due to their worldwide presence they have
a large scope for their business operations and they can get benefited form economic
scale and grow their business. They have a strong brand portfolio which is beneficial for
them to expand into new products and service categories(Chandana and et.al.,2013).
Their supplier base is strong who provide them raw materials so they can overcome any
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supply-chain bottleneck. They have build a strong culture where their dealers
themselves promote hotels products and services infract explains their sales team how to
explain their customers to buy the product or services they are providing. They also
provide strong technical innovations to improve customer's experience and continuously
upgrade their business process for customers. They try to provide almost all the facilities
to customer's who decide to stay in their hotels. They also have good employee retention
and good reputation and brand value in market which attracts the customers. They always
try to enhance their customer's experience. It is also an open sector which can create job
opportunities for people with less education. Their restaurants, catering and room
services are also their strength which boost their business and increase their customer
base and satisfaction. They also provide board rooms or meeting rooms to professional
guests so that they can prefer their hotels and their customer base can be increased(Paul
and et.al., 2013).
 Weaknesses: Their major weakness is their overall dependence on their local market that
makes them highly vulnerable and increases their competition in their hometown.
Inventory days are higher as compared to their competitors which forces them to invest
more in the channel this can affects Hilton worldwide holdings. Their attrition rate is high
in workforce as compared to their competitors, they have to spend more on development
and training of their employees as compared to their competitors. Financial planning
done by them is not proper, if their current assets ans liquid assets' ratio is seen then they
can do even better than they are already doing. Their contribution percentage and profit
ratio is below industry market average. Even because of their worldwide presence they
have limited success outside their core business they have faced many challenges in
moving to other products or services and have failed to move with present culture. Their
operations have been affected globally because of many different government parameters
and policies. One of their major weakness is that they are highly dependent on tourist
which makes them highly sensitive to any changes(Zalengera and et.al., 2014). Also they
are highly dependent on seasonal tourism which can affect their business. Hilton
organizations are reactive instead of proactive is can affect their business like when it
comes to their climate and CSR.
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 Opportunities: New environmental policies have created many opportunities for Hilton
to drive advantage in new technology and can increase they market share in new different
product categories. If inflation rates are lower than it can bring more market stability
which can also enable credit at lower interest rate for customers. Which will attract more
customers for Hilton worldwide. Government's free trade agreement and new technology
adaptation can be a great opportunity for Hilton for entering into new market segment.
Lower shipping charges and transportation chargers can also help them to bring down
their cost and provide new opportunity for them. Stable free cash flow also provides an
opportunity to Hilton to invest in different product segment. With more cash Hilton can
invest in new segments of products and new technology. This opens an opportunity for
them to invest in new products. As customer's spending increases, growth rate of industry
also increases which increases the opportunity for them to increase their customer base
and increase their market share. As Hilton has spent huge amount of money on their
online platform their sales opportunity has increased and because of this their customer
base can also increase and they can serve their customers in a better way using big data
analysis this also increased their potential in new market emerging(Amelia .,2018). They
can also try to enter their business in developing countries as they have greater business
opportunity there. They should also try to establish their business in hotel sectors with
mid-level budget. Also, increasing globalization has also increased international customer
base specially from countries with emerging economies. High quality demand can also be
a opportunity for Hilton organizations worldwide. They can also increase their takeaway
orders from customers as many customers are in a hurry, it can also boost their business
and increase their revenue and profit margins.
 Threats: Threat of political instability in different nations has affected their product
standard which is continuously fluctuating and cab be a cause of facing lawsuits in
different markets. Nowadays environmental regulations are changing which can be a
threat for their existing product categories. As the competition is increasing with more
number of competitors has increased pressure on them for not only focusing on profit but
also on increasing their sales. In some global market there is shortage of skilled labour
which will affect the growth of Hilton hotel in those markets. Change in labour pay
policy can also affect the business of Hilton hotel and can pot pressure on their
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profitability. In the emerging market same product with lower price and quality are
available which can be a threat for Hilton organization. Many international brands are
entering in different markets which can give tough competition to Hilton organization
and can also affect their business. Hilton can also face many issues related to Ethics in
their hotel business. Major changes in macro-environment climate can also affect their
business and can be a major threat.
LO4
P8 Current And Potential And Development Affecting The Hospitality Industry.
Current changing trend is affecting hospitality industry in both positive and negative ways such
as:
 Millennials new power segment: Interaction, exploration and emotional experience are
the main factors of young generations which is the fastest growing customer segment in
this industry. With the growth of this segment Hospitality industry need to be
technologically updated and more transparent which strongly focuses on connection with
the customers. This customer segment expects technology in payment, check-in,
shopping, eating, using Wi-Fi etc. they also need to get in touch with social networking
sites. They also need connection with tourism services, restaurant services in a very
reasonable price.
 Service automation: This can include everything like auto check-in, face recognition to
unlock guest rooms doors also providing basic facilities like providing towels, paste etc.
With all these service automations staff can provide more meaningful experience to
customers so that a hotel can work at its peak efficiency with lesser amount of people.
Artificial intelligence can be a major component in this automation and can be helpful in
learning customers preferences like their preferred room temperature, their favourite
drinks etc.
 Location based services: Location based services can be helpful hotel industry by
making efforts like providing special offers or coupons to customers when they are near
hotel restaurant or by providing them with greeting services like providing them with
water bottle when they arrive back to hotel or by providing immediate room cleaning
service so that they can be served at any time and at any place in or near the restaurant.
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 Connected meting rooms: Nowadays number of business travelling customers are rising
hotels are expecting more business trip customers. The line between leisure and business
travel is blurring as many business trip customers expand their business trip for leisure or
any customer working on their leisure trip are increasing so it has become important for
hotels to provide Wi-Fi facility or printer facility to customers for work has become
necessary. For all this type of customers hotels need to specify all the technological
facilities they should provide all the details on their website or application that travellers
will get in as better way as possible. They should also provide videoconferencing,
projectors or whiteboard facilities to business trip travelling customers or whatever
required technology they want.
 Mobile application and chatbots: Mobile applications nowadays are very important as
today many applications are available to make customers work more easy like digital key
application provided by Hilton hotel through which customers can unlock their doors
using their mobile devices, mobile payment, online spa booking appointment or
transportation arrangements etc. All these applications have made customers experience
and work more easy. Through these applications customers can control their room
entrance, payment etc. with just one click. Hotels should provide customers with Wi-Fi
facility so that they can easily connect and avail all the facilities provided by hotels.
With all these facilities Chatbots are adding value to these programs. Chatbots uses
artificial intelligence and predictive analysis to provide customers with a personal touch.
They can also be used to solve customers queries or with the help of this they can request
service or information or listen music by the hotel connected with front desk team at any
location even off property.
 Taking control of personal well being and health: Nowadays providing health
facilities in a hotel have become more important. Hotels can stay connected to customers
by providing them with personalized care, higher quality services etc. More advance
devices can be provided to customers to remain connected to doctors. Also, not only
water purification but also air purification should be provided in customers room to
enhance their stay.
 Network matters: The increasing next generation technologies in hotels for making
customer experience better they should first certify that their technologies can handle
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increasing bandwidth or traffic. If they face any delay in response time of any technology
used by customers then it will give a negative impression to customers. To avoid such
situations IT department should be present in the hotel so that if any issue arises it can be
handled.
 Eco-friendly practices: Nowadays many hotels are installing solar panels for air
conditioners, lights, water heaters are automatically switched off as the guest leaves their
room to avoid electricity wastage or water wastage as nowadays many areas are facing
shortage of water or water scarcity so many hotels are focusing of re-enable resources for
generation of electricity and many other things.
 Real time damage control: As nowadays use of social media is increasing customers
can easily express their travelling experience on social media which can either enhance
or degrade brand image. If a customer is dissatisfied with a hotels service they can easily
complain on social media and affect the brand image. So, hotel organizations must be
very quick to respond to customers complains. They need to engage with customers and
quickly respond to their needs for maintenance of relationship with guest and increase
future booking.
CONCLUSION
From the above study it has been summarized that there are many different factors which
affects the hospitality industry and all those factors had been explained through PESTLE
Analysis, there are many internal factors like strengths, weakness of a hotel and external factors
like opportunities and threats which had been explained above through SWOT Analysis of
Hilton hotel and at last different current trends and potential trends of hospitality industry had
been explained which can either enhance customers experience and improve brand image or
degrade brand image.
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REFERENCES
Books and Journals
Sonia B. and David M.,2012. "Risk identification and analysis in the hospitality industry:
Practitioners' perspectives from India". pp.410-427,
Yoon S. K., Hae C. R., Do. G. L., 2018, "Business environmental analysis for textual data using
data mining and sentence-level classification"
Sonia B., David M.,2012, "Risk identification and analysis in the hospitality industry:
Practitioners' perspectives from India"
Gajanand G., Rajesh P.,2016, "A SWOT analysis of reliability centered maintenance
framework", pp.130-145,
Chandana and et.al.,2013, "Trends in the international hotel industry", pp.151-163
Paul and et.al., 2013, "Trends in hotel investment and financial management in Canada",
pp.190-204
Zalengera and et.al., 2014. Overview of the Malawi energy situation and A PESTLE analysis for
sustainable development of renewable energy. Renewable and Sustainable Energy Reviews. 38.
pp.335-347.
Amelia T.,2018, Luxury Hotels, in Liping A. Cai , Pooya Alaedini (ed.) Quality Services and
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