Savoy Hotel: External Environment Analysis and Business Impact

This report provides an analysis of the Savoy Hotel in the UK, focusing on its business operations, size, and financial aspects. It examines the external environment, including political, economic, social, technological, legal, and environmental factors (PESTLE analysis), and their impact on the hotel's performance. The report highlights opportunities and threats faced by the Savoy Hotel in the last three years, particularly the impact of the COVID-19 pandemic, and assesses the hotel's responses to these challenges. The analysis covers the hospitality industry's recent changes, including technological advancements, government policies, and societal shifts, concluding with the importance of adapting to a changing external environment and implementing effective strategies to ensure business success. The report also references the hotel's sustainability initiatives and competitive landscape.

Business in the 21st
Century

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
This report outline about Savoy hotel UK with information about the business nature, size
and finance. Also, a description of the external environment and its impact on the business of
Savoy hotel is provided. Further opportunities and threats faced by Savoy hotel in last three years
and how it links with the external environment is given (Kruk, 2019). An analysis is been made
to find out how the company responded to the change in the external environment and the Savoy
hotel is been successful or not.
MAIN BODY
In the recent past years the hospitality industry is been severely hit by the emergence of
the new policy changes, climate and technological change, availability of funds, etc. The recent
outbreak of COVID-19 virus has also created a great impact on the hotels and tourism industry
of UK (Needle, D., 2015). One of the hotel that has seen the changing external environment is
the Savoy hotel. The hotel is one of the deluxe and luxury hotel and is located in London UK.
The Savoy hotel is recently awarded by Forbes travel guide for the exceptional service delivery.
It is managed by the Fairmont hotels and resorts Canada. The hotel has 16 royal suites and 267
rooms. The hotel is gone through the major renovations in the year 2007 and opened its doors for
its guests after 3 years. It is the part of the hospitality industry of UK and its business function is
to provide its customers hospitality services. These services include deluxe hotel rooms to get
accommodation in and other leisure services. Savoy hotel has currently more than 250
employees and £50 million. Savoy hotel had reported a loss of £10 million in the year 2018 due
to repayments of the loans. The Savoy hotel has installed £2.5 million worth of technological
upgrades that has expected to reduce annual expenditure of electricity bills and carbon emission
significantly.
External environment are the factors that influence the existence, performance and
functionality of the businesses. These factors may be direct or indirect and the analysis is made
in the context of macro environment. Macro environment contains those factors that affects the
business from the external source viz. Political, Economic, Social, Technological, Legal and
Environmental (Ghotge and et.al, 2020). Companies perform PESTLE analysis to found out the
impact of the factors on the performance. These factors hindered the normal functioning of the
businesses of the companies. The change in the government policies of the UK make Savoy

hotels to implement change to stop food wastage due to disruption of supply and to follow
compulsory hygiene guidelines due to COVID-19 outbreak. Government of UK has
implemented lock-downs in the country which stops the transition of the population in the
country which greatly impacted the hospitality industry and as the part of hospitality industry the
Savoy hotel's business also affected. Also, new laws like national minimum wage that impact the
business of the Savoy hotels reduces the profits and creation of impact on the rights of the
employees. Recent health and safety regulations provides Savoy hotels to provide training and
development of the employees according to the guidelines which increases the operation costs.
The economies around the world is severely effected and fell drastically by the COVID-19
outbreak (Thakur, V., 2021). UK's economy is no exception and with it the business of the Savoy
Hotel is also impacted. Societies perceptions started changing due to such a challenging
situation. People started to spend less on the hospitality and leisure services and those who are
ready to spend demand for the satisfactorily evidence that the services provided by the Savoy
Hotel is safe. The recent contingencies arise brings the change in the behaviours of the societies,
and they tend to spend less on consumption of leisure services. The interest rate of the
borrowings are increased in the past 3 years due to which Savoy hotels have to borrow capital at
a much higher rate as the hotel is gone through major renovations it requires more funds. Also,
the rise in the unemployment due to interruptions in the business creates threat for the Savoy
hotels as the core element of the hotel business is the human interactions and hotels did not
produce enough revenues to keep up their businesses to pay properly to its employees.
Demographic change is highly seen in the past 3 years UK has seen the age shift more people are
of old age than the young one and more people are saving for their retirement than spending in
leisure activities. The businesses are started to implement the new and emerging technologies to
provide services to the customers. Use of artificial intelligence and data analytics are the ongoing
technological trend that are adopted by the companies that are part of the hospitality industry of
UK. The use of research and development to find out the new techniques and methods to provide
satisfactory services to its customers is not new. Innovation has the major impact on businesses
and it will help to create competitive advantage for the companies (Metcalfe, 2018). Because of
this change, competition in the industry is increasing and Savoy hotels also has to introduce
changes in the company that create impact and also increases operational costs. The legal
environment of the country is also changing. The regulatory bodies are providing stringent rules

due to the recent outbreak of the COVID-19 in the country. Non-compliance of the rules will
results in the legal actions upon the businesses. Rules regarding food wastage and providing
protection to the environment has got strict. Savoy hotel has to develop strategies that help to
influence its customers to follow rules regarding not to waste food. Also, climate change is the
major issue that concern the whole world. Companies have to adopt innovative methods and
techniques to reduce the impact on the climate (Roberts, J., 2018). While the outbreak of
COVID-19 is the one of the environmental factor that has created a drastic impact on the
economies and businesses of the world. Replacing plastic and recycling of waste are the
initiatives that the companies have taken to reduce the pollution. Incorporation of the sustainable
techniques to reduce waste and pollution gives the companies green identity which helps the
Savoy hotel to attracting more customers as they see the company as environment friendly and
create goodwill in the market. Competitors posses great threat to Savoy hotels as they move the
customers away and reduce the revenue of the company. It has been observed that the external
environment analysis is crucial for the Savoy hotels as the economic, cultural and technological
environment is changing rapidly. It helps Savoy hotels to prepare strategies to cope up with the
changing external environment (Vasilev and et.al, 2017). One of the opportunity for the Savoy
hotel to change the hotel structure and appearance with the changing global perception of the
people about to create sustainability by reducing waste and pollution. Savoy hotel had made
installation of green technologies to reduce pollution and waste of energy. It help Savoy hotel to
create good corporate image within the country. This will not only provide Savoy hotel to
decrease carbon emission but also to attract more customers which in turn increase the revenue
of Savoy hotel. But the greatest threat for the Savoy hotel is the significant impact in the external
environment due to outbreak of COVID-19. The outbreak did not obstruct the economic
activities but also block the human movements. As the core business activities of the Savoy hotel
is depended upon the human engagement and interactions the company is greatly impacted by
the recent trouble. The governments of the countries around the world took strict actions to
prevent spread of pandemic and imposed stringent regulations that the companies specially those
companies that offer hospitality and leisure services to follow these strict guidelines. The recent
economic downturn and outbreak of COVID-19 has changed the entire functionality of the
Savoy hotel and the management had to make sure compliance of the regulations properly
followed. To overcome the challenge Savoy hotel perform sanitisation of the entire hotel,

provide training to the employees how to use precautions and use of necessary tools to provide
safety and satisfaction to its customers (Needle, 2015). Savoy hotel is known for its luxury and
world-class services. So, to maintain the reputation of the hotel the management has to adopt the
safety and precautionary measures in such way that it will not harm the goodwill of the Savoy
hotel.
CONCLUSION
From the above analysis it has been concluded that the external environment is dependent
upon various macro factors like political and legal environment, economic and social activities,
technological and environmental changes. These factors create great impact on the business of
the Savoy hotel in UK. Also the recent changes in the external environment in past 3 years like
fluctuations in economy of UK, Brexit step-out, policy changes, food safety and waste
regulations, employees wage security regulations along with outbreak of COVID-19 imposes
great challenges to Savoy hotels (Averchenkova and et.al, 2020). The management of the Savoy
hotels develop effective strategies and precautionary measures along with training and
development of employees which leads the hotel company to success.

REFERENCES
Books and Journals
Averchenkova and et.al, 2020, November. External environment modelling in the control system
of the regional socio-economic system. In Journal of Physics: Conference Series (Vol.
1679, No. 3, p. 032054). IOP Publishing.
Ghotge and et.al, 2020, January. A Global Analysis on Microgrids through the PESTEL
Framework. In 2020 IEEE International Conference on Power Electronics, Smart Grid
and Renewable Energy (PESGRE2020) (pp. 1-5). IEEE.
Kruk, D., 2019. Productivity or the external environment: which is more important for growth in
emerging markets?. Entrepreneurial Business and Economics Review, 7(2), pp.119-139.
Metcalfe, S. ed., 2018. Evolutionary theories of economic and technological change: present
status and future prospects (Vol. 44). Routledge.
Needle, D., 2015. Business in Context: An introduction to business and its environment.
6thedition, Cengage.
Roberts, J., 2018. Multinational business service firms: development of multinational
organization structures in the UK business service sector. Routledge.
Thakur, V., 2021. Framework for PESTEL dimensions of sustainable healthcare waste
management: Learnings from COVID-19 outbreak. Journal of cleaner production, 287,
p.125562.
Vasilev and et.al, 2017. Internal control in the system of innovation management in the modern
business environment. International Journal of Economic Research, 14(15), p.409.
Online
ABOUT US, 2020. [Online]. Available through: <https://www.thesavoylondon.com/about-us/>
External factors, 2021. [Online]. Available through:
<https://www.bbc.co.uk/bitesize/guides/zgfrpbk/revision/1>
UK hospitality industry calls for 'urgent' support, 2021. [Online]. Available through:
<https://www.bbc.com/news/business-53297651>