UK’s Hotel Industry is among the country’s top industry contributing to almost $34 billion to the country’s gross tax revenues, with an ability to employ more than 2.4 million individuals (Brotherton, 2012). In analysing its macro environmental nature, the use of PESTLE Analysis tool will be effective in analysing the business’s environment by considering all factors of political wave, economic status, social status, technological, legal and environmental (Berry, 2015). The essay is aimed at analysing and critically discussing each of the above elements within UK’s hotel industry.
Macro-Environmental (Pestle) Analysis
The UK has the world’s fifth-highest class hospitality industry. According to Brien, Thomas, and Brown (2017), the country’s hotels are grouped as the high-class hotels that accommodate visitors from the entire world. Regardless of its global acceptability, the industry is facing various political, economic, social, technological, legal and environmental factors that try to hinder its daily activities.
The political element of PESTLE forms one of the major factors facing the tourism industry which directly relates to the hotel industry. First, the country’s hotel industry faces the major political challenge of terrorism in popular tourist destinations (Tribe, 2011). For instance, the terror attacks in London 2005 on 7th July in which the suicide attacks left more than 750 people injured affected the general country’s rate of hotel activities. The hospitality is faced with the biggest threat of terrorist attack or a military conflict, which may lead to the general disruptions of international and local hotel activities hence, disrupting the normal travels (Swarbrooke & Horner, 2012). Political unrest for certain countries has greatly affected the rate of visits and travellers to the country. Consequently, the general effects on the country’s economy have directly led to limits and financial constraints to citizens from having enough money for spending in the hotels.
One of the long-term economic threatening factors in the UK is the increasing rate of income inequality and stagnation of most of its middle-class wages, which have consequently reduced most of the individuals’ ability to stay in hotels and travel. The country’s economy based on taxations changes, the exchange rates, and inflation have a great contribution to the country’s hotel industry (Kumar, 2015). For instance, for the 2012 Olympics affected the country’s economy in many ways which lead to an increase in occupancy rate. Social factors within the UK make the country’s Hotel industry to look great. This is evident from Beránek & ?ech (2014)’s research on travellers, where the number of international travellers has increased always been increasing by 2% each year. Moreover, the number of individuals planning to spend within the country for the past 5 years has also been increasing. This reflects that more individuals are willing to travel and pay more for the experience.
Cultural changes have considerably contributed to the UK‘s hotel industry growth. Over the years, local travellers have dominated the industry, with less opting to spend within the hotel but with cultural changes, the number has grown both from China, Asia, and Africa. Within the UK’s hotel industry the care of social responsibility and environment are considered as the major stages of customer’s expectations and preferences (Evans, 2015). The strong emphasis of CRS is among the major primarily competencies of the Hotel industry. The industry has established a Corporate Social Responsibility strategy “Good Together.” This is a strategy that aims at reducing the running carbon emission 30% by 2030 and ensures that 90% of the hotel’s wastes are diverted from landfill, which will in turn reduce the rate of the industry’s water consumption by 30% by 2030. Also, the Industry within its Corporate Social Responsibility framework, it provides six key priorities such as health, community, sourcing, environment, customers and people (Knowles, Diamantis, & El-Mourhabi, 2011).
Over the years, the nature of technology has been influencing most of the country’s industry. Within the hotel industry, technology is the key to success, which positively impacts the hotel business in the form of online retailing, online booking and online delivery of goods and services (Bowie & Buttle, 2013). It’s through technology most of the hotels are advertising their hotel rates such as websites. Through online most hotels is also organizing oversee travelling. Increased level of technology has highly influenced the promotion and marketing of the industry’s products. This has been effective through change in communication programs within its premises.
On the other hand, the UK government increased its minimum wage by 15% a great push in growth of the operating cost budget for the hotels. This will as well increase the cost of production that obstructs the internal policy of offering reasonable prices to its customers (Rodríguez-Antón at el, 2013). On the other hand, as the way of avoiding legal issues and maintaining high standards the hotel industry has established a Responsible Sourcing. This Responsible resourcing strategy specifically identifies the lowest principles and principles of collaboration that hotels anticipate from business partners, contractors as well as the suppliers.
Globalization has been the current trend within most of the organization and companies in the world. The rate of globalization has encouraged international trade and international relationships. UK hotel industry being one of the major destinations of external visitors, faces significant economic factors such as the slowing of economic growth in China as well as the current ongoing economic turmoil in Europe (Tribe 2011, p. 76). By the nature of activities, in which the stock market of China has collapsed, would lead to a debt crisis in Europe which would greatly reduce most of the individual’s being powers and their ability to travel. High exchange rates for US dollar overseas has also been one of the major economic factors, which have greatly discouraged free movements, travelling and foreign tourists from visiting the country (Tan & Perleth, 2015). High exchanges rates also contribute to discouraging business travels.
On the other hand, the rate of technological development is largely influencing the promotion and the marketing if its products (Knowles et al 2017). The nature, channel, and ways of communication are changing to a web-based method. Thus, most hotels are propelled to changing their ways of communication to effectively fit within the systems of technological development. To most of the hotels, this technology has been received with doubted levels, but they have been widely affected. Also the current rates, technology has influenced the nature of booking by facilitating online reservation facilities (Cook, Yale, & Marqua, 2011). Through technology developments, a hotel can maintain a database of customers and continues sending messages to their clients concerning any new product offering and promotional campaign.
Political factors contribution has also been the major sector affecting the industry’s performance. Security is the key part towards promoting the country‘s hotel development. For instance, a stable political background provides an external peace relationship that ensures security hence encouraging foreigners to the country. Hotel Industry is an industry where both local and foreigners have great contributions to the industry. Thus, a country’s security forms the major reason why most individuals will opt to visit the country (Cook et. All 2011). For UK, its current political stability has enhanced its top level security assurance that enhances the nature of performance of the Hotel industry. Other external political activities such as involvement in trade unions, agreements based on industry’s success, and tax policies creates a suitable background for the industry’s development.
Economic change is uncontrolled factors that has an advance effect to the industry‘s activities depending on the direction it shifts. Hence, the world’s economic status and the country’s economic status determine the best background for the industry’s performances (Brien et al 2017). As for the country’s economic status, other industries play a major role in either enhancing its growth or increase. The country‘s economy may be affected by a number of changes such as political welfare and climatic changes (Cook et.al 2011). But, political changes for instance war, has greatly limited the country’s rate of exportation, importations, and travelling hence limiting the number of travellers. Climate changes also tend form a major source of determining the country’s economic status. This may be directly associated to the rate of travelling or the nature of the country’s agricultural activities. Within a stable food availability country, economy tends to be stable keeping other conditions constant. However, favourable climate changes as well form one of the major attractions features which will affect the country’s hotel industry.
One of the major external challenges facing UK is the factor of Brexit. The decision of Britain exist from EU would have great impact to the country’s hotel industry. For many us UK has enjoyed of stellar performance but on the Britain’s decision of existing EU would have both short term and long term effect (Kumar 2015). First, under the short term, a fall of sterling pound will be experienced. The exchange rate being the key driver impacting the UK’s hotel industry, its weakening against the other core currencies would make the country a more attractive destination pricewise for foreigners. But this is only benefit UK to limited visitors from the US, London’s biggest inbound market, now that they will have a healthy 10% discount on their travel (Geerts, 2016).
In addition, Brexit contains other primarily treat of limiting the activities of the supplies. Commercial contractors to the hotel industry would opt to be leaving UK. This is because some of the clauses that are related to restriction of free trade across a single market needed to be amended (Bowie & Buttle 2013). Conventionally, UK will be functioning under the guidance of different principles of EU contract; which may limit some of the suppliers from contracting with the country’s industries due to a possible rise of imposed taxes. On the other hand, the country is expected to experience a satiation boom. This is because it would not be all gloom and boom for the hotel industry (Geerts, 2016). Since, for the country’s less wealthy individuals who spend on low cost package holidays to Europe, there is an expected 20% decline in the pound, which would be a hindrance to people who wish to take abroad holidays. However, this will as well be advantageous to hotel industries that are domestically located as most people will opt for domestic holidays.
Technology is a primary variable that straightforwardly manipulates the industry’s services. IT enhances smooth running of the industry across the region, and helps in developing centralized supply chain managements systems (Swarbrooke & Horner 2011, p. 65). A Hotel Industry is a digitalized system that possess modern and improved services both in receiving and providing services. Hence, the technological factor of macro environment needs to be a great consideration. Technology is the world’s current trending factors which need to be implemented within any given industry (Theobald, 2012). Through technology, a simple task is easily handled able. For instance, thorough a loyalty customer program, which is the current trending system requires updates systems to keep track of a hotel’s customer for feedback. This is essential in improving the nature of service provision and also in observing the customer’s trends. This involves the adoption of advanced systems of Supply Chain Management, Customer Relation Management, and Enterprise Resources Planning.
Political factor is a major factor that has a great contribution to the industry’s success. Political pressures have greatly affected most of the travelers within and outside of the country. International relations have been affected by set travel regulation limiting easy movements of people outside and within the country. Political factor contributes and determines the country’s stability regarding security, and International Relations (Clarke & Chen, 2011). As well it through political stability that exchange rates are determined. Within a stable political background, better exchange rates are determined by an alternative increase in the country’s economy which directly increases the nature of living hence promoting both the local and the foreign travelers, visitors, and tourists (Brotherton 2012. In addition, political stability covers other sectors of taxation policies, international relations, and cooperation between governmental agreements. For instance, the major economic crisis brought by Brexit was among the political oriented actions that will adversely affect the industry’s activities. Brexit is expected to reduce the number of visitors to the country, increase the tax levies which will highly hinder resource allocations and other external oriented activities
References
Beránek, M., & ?ech, P. C.(2014). ‘Compliance Qualification Requirements And Real Qualification In The Hospitality Industry.’ Hospitality & Tourism , vol .10 no. 23, pp. 34-47.
Berry, E. (2015) PESTLE Analysis: Understand and plan for your business environment. CreateSpace Independent Publishing Platform, Prentice Hall, London
Bowie, D., & Buttle, F. (2013). Hospitality Marketing, Taylor & Francis, New Jersey
Brien, A., Thomas, N. J., & Brown, E. A. (2017). How hotel employee job-identity impacts the hotel industry: The uncomfortable truth. Journal of Hospitality and Tourism Management, vol. 31, pp. 235-243.
Brotherton, B. (2012). Introduction to the UK Hospitality Industry: A Comparative Approach, Routledge, New York
Clarke, A., & Chen, W. (2011). International Hospitality Management: Concepts and Cases. Routledge, Washington,DC
Cook, R. A., Yale, L. J., & Marqua, J. J. (2011). Tourism: The Business of Travel. Prentice Hall, New York
Evans, N. (2015). Strategic Management for Tourism, Hospitality and Events. Routledge, New Jersey
Geerts, W. (2016). The Long-Term Impact of Brexit on the UK Lodging Industry, Prentice Hall, New York
Knowles, T., Diamantis, D., & El-Mourhabi, J. B.(2011). The Globalization of Tourism and Hospitality: A Strategic Perspective. Continuum.
Kumar, S. (2015). International Tourism and Hospitality in the Digital Age. IGI Global, London
Rodríguez-Antón, J. M., Alonso-Almeida, M. d., Rubio Andrada, L., & Celemín Pedroche, M. (2013). Academic Papers: Are university tourism programmes preparing the professionals the tourist industry needs? A longitudinal study. Journal of Hospitality, Leisure, Sport & Tourism Education ,vol. 12 no.1, pp. 25-35.
Swarbrooke, J., & Horner, S. (2012). Business Travel and Tourism. Routledge, New Jersey
Tan, A.-G., & Perleth, C. (2015). Creativity, Culture, and Development. Springer, Washington, DC
Theobald, W. F. (2012). Global Tourism. Routledge, New York
Tribe, J. (2011). The Economics of Recreation, Leisure and Tourism. Routledge, New York
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