Contemporary Issues In The Hotel Industry: Identification And Explanation

Identification of Contemporary Issues in Hotel Industry

Describe about contemporary issues in the hotel industry?

Chen (2014) presumed that hotel industry is one of the most fastest growth and dynamic corporate sectors in all part of the world. In accordance to Gibson (2012), hotel industry holds the employment generation, alleviation as well as the growth rate of economic of the majority of population throughout the world. On the other hand, Jones, Hillier & Comfort (2014) argued that though the hotel industry is one of the most popular and famous sector in terms fastest growing, from the point of view of international market share hotel industry is developing in very low consequence rate. The hotel industry in New Zealand estimated only 1.5% market share in the global hotel industry. For the New Zealand, the hotel industry holds the potential economy that creates a strong linkage for other sectors. N. McCool (2012) stated that f the hotel industry developed properly within the particular region, it can be a ray of hope for neglecting the society segmentation and people in the backward areas. However, it has been identified that, development of hospitality industry within the country, considers the huge rang of potential regarding natural environment.

This particular study aims to identify the contemporary issues of hotel industry with clear aspects and explanation of those issues from the point of view of core management areas and its impact on the hotel industry as a whole. Apart from that, this assignment also provides the management process of issues in hotel industry that identified.

Since earlier, hotel industry faces several issues such as sustainable development that especially calls the green hotel, labor costs challenges, multi cultural issues, higher education of employees, etc. However, the current challenges that faced by the hotel industry globally are Minimum Wage, Brand Reauthorization, hidden fees, frothy pricing, franchisor at joint employers, guest profiling, social media, etc (Xiao, 2012).

Figure 1: Contemporary issues in hotel industry

(Source: Dedeoaylu & Demirer, 2015, pp- 133)

However, following are the three main contemporary issues that discuses in this assignment in hotel industry –

Issue 1: Minimum Wage – Karatepe & Zargar Tizabi (2011) argued that minimum wage is one of the most recent challenges that faced by the hotel industry throughout the world. The union or the organization of labor is targeting to attack the hotel industry. According to Huang & Sun (2014), target of hotel industry by the organized labor is call living wage. Recently it has been identified that labor union target the hotel industry that badly affect their business and sometimes owner of the hotel forcedly close business. In the hotel industry, employee work for hourly basis. Therefore, the employer of the hotel industry must to pay no less then minimum wages to the employee.

However, minimum wage rules and regulation set by the government of respected country. As a result, continuous changes government creates different federal system regarding minimum wage. Therefore, periodically changes on minimum wage generally increase the pricing level of the hotel industry as well as also increase the cost of living. It has been majorly seen that employees are striking for high wages as well as health care. For example, the employees of Hilton Hotel in the region of UK demanded for $10 per hour. After five years, it increased and considered $12.50 per hour.

Explanation of the Identified Issues

According to Davis et al. (2013), that organize labor is one of the most affecting factor in hotel industry from the point of view of minimum wage. It decreases the opportunity to increase the business in future in the hotel industry. According to the review report of Baloglu (2010), approximately 20% of workforce of hotel industry is falling into the category of minimum wage regarding challenges or issues in hotel industry. Apart from that, Chen (2013) cited vast majority moves into the higher position within one year. Therefore, it is also an aspect of minimum wage that faced challenges to the hotel industry globally.

Issue 2: Demanding Customers – The population of the world increases day by day. Therefore, huge generation shifts takes place the community of guest in these days of hotel industry. Anderson (2012) argued that baby boomers were retired and their successors created the new exactions from hotel industry. According to the market review report or market sharing report of hotel industry, more than 73% Gen Y guest leave the hotel due to poor experience.

Apart from that, more than 85% of Gen Y guest tells that employees are not able to serve according to their need and demand either online or physically or both. On the other hand, delighted guest on hotel industry spend more than 50% in the ancillary revenue in term of getting satisfactory service from the employees of hotel industry. Furthermore, Dedeoaylu & Demirer (2015) acknowledge that there are more than 82% guests who demanding for poor service or they are unhappy with the service of hotel industry. Those guests never show their willingness to spend more or revisits to the hotel next time. Egger & Buhalis (2011) depicted that customer in these days are more demanding due to high increase of firm in hotel industry or increase of expectations from the employees in hotel industry.

Issue 3: Social Media – Not only the hotel industry but also the corporate sector, social media brings the forefront of revolution in terms of engaging customers with the service. In case of hotel industry, social media brings the wide revolution to engage customer via online, through social media network such as Facebook, Twitter, LinkedIn, WhatsApp, etc organization in hotel industry provides information about their facilities to customer along with the current offering scheme or discounts (Scholarworks.umass.edu, 2015).

In order to reach to the customers as well as attract them, each hotelier along with their marketing teams paid more time in social media. However, the hotel industry faced several threats from the social media such as online criticism like hacking information about customer along with bank details, negative reviews, fraud booking, etc that decrease business in the real world.

According to the blog USA blog report in 2012, majority of customer believes 3 time more in booking hotels for fooding and lodging instead of meeting face to face. However, social media marketing is challenge to the hotel industry, but if the organization in hospitality sector properly maintains the fortune, it can be the great aspects of engaging customer towards the hotel industry with least approach. Social media is the most largest platforms in these days of digital world (Fe Causin, Ayoun & Moreo, 2011).

Minimum wage in the hotel industry increased overtime. Following are the table that displays the increase rate history of federal minimum was under the act of Fair labor Standard act 1938 to 2010.

Year	Minimum Wage
1938	$0.25
1968	$1.60
1979	$3.10
1981	$3.35
1991	$4.25
1997	$5.15
2007	$5.85
2009	$7.25
2010	$10.10
2014	$12.50

Due to increase rate of minimum wage rate in the hotel industry throughout the world, organization in hotel industry faces various challenges within their workplace such as living cost, revenue cost, etc.

However, during the time of world recession in 2008, each country in the world faces wide range of issues. Therefore, the hotel industry in each country still not able to came out from the recession issues. Therefore, increase of minimum was rate make the marketers in hotel industry to put more money into the pocket of employees. However, in order to make profit after putting more money into the pocket of employees, hotel industry increases their products and service rate (Personal.psu.edu, 2015). Increase of labor cost is also a key aspect of increasing products and service rate. As a result, people do not show interest in taking service from hotel industry.

On the other hand, customer who takes the service from hotel industry with higher costs demand more facilities as well as expect quality service from the hoteliers. Jung Choi & Tae Kim (2012) argued that people cut back their plan for spending time on hotels during vacations or any special occasion due to increase rate of products and service within hotel industry. It creates great impact on the business of hotel industry. Lo (2013) stated that there is not any specific reason of clear idea of increasing the price of labor costs. According to Luo, Yang & Law (2014), small increase in labor costs may not affect most in the business process of hotel industry. However, high increase of labor cost substantially affect on the hotel industry because die to high increase of price people do not make any plan for vacations or buying extra products during vacations that are not essential.

Customers are the key of success in hotel industry. Increase rate of customer base displayed the success of hotel industry. Increase price in hotel industry leads the lower demand from customer regarding services and products. In respect to this way, the need of employees in hotel industry also becomes low. As a result, increase rate of unemployment is growth vastly in hotel industry (Digitalscholarship.unlv.edu, 2015). In order to make difference, the organization in hotel industry has to compensate with the employees or entire staffs including management, waiter, cleaners, cooking, management, etc.

Due to federal minimum wage and regular modification in the prices creates several issues they were very much controversy in respect to the business of hotel industry (Assaf & Magnini, 2012). Apart from that, plenty of conflict data were subjected in the hotel industry due to regular change of minimum wage by the government.

Affecting Factor	Impact	Result ($)
Lower Demand	Reduced revenue of annual guest room	$612300000
Lower Profitability	Corporate tax paid also lower	$146200000
Lower Demand	Lower guests room occupying resulting for suppliers in less money spent	$145600000
Lower Demand	Lower taxes collected from the hotel industry occupancy	$70400000
Lower Demand	Reduced revenue in food and beverage	$214300000
Lower Demand	Loss of jobs in housekeeping and full time employees	$320200000

 

Figure 2: Impact of extreme increase minimum wage in hotel industry

(Source: Jones, Hillier & Comfort, 2014, pp- 16)

Prayag & Hosany (2013) explained that extreme increase of minimum wage rate decreases the value as well as property of hotel industry and slow down the process of development or construction of hotel in local areas. Apart from that, extreme increase of minimum wage has been linked potentially with the value of hotel industry. Die to increase of minimum wage, impact on the overall business process of hotel industry such as low profit margin, new construction of hotels, market value, sold the products with lower prices, stunning the local economies, etc (Fakhraddin Maroofi, 2012). Moreover, increase of extreme minimum wage rate the hotel industry business model produces construction workers, guest room amenity suppliers, lower returns on investment, laundry companies, hotel workers, etc that hurtled as a trickle down affect on overall hotel industry.

In the hotel industry, the expectations and demands of consumers are increased day to day. The business climate for the hoteliers with the customers become tightens. It also affect in the stepping up the business as well as boosts up the sales or promotions. In the hotel industry, it is often seen that staffs or the management frazzled and busy in attending the customer and meeting their bargaining demand (Jung-Hui Liang, 2012). Therefore, hoteliers have to work hard in terms of upholding the quality of service with reasonable price as well as to protect the failure in service. Customers are the key of success in hotel industry.

Figure 3: Quality of guest experience impacts on hotel industry

(Source: Jung Choi & Tae Kim, 2012, pp- 1023)

Therefore, many organizations set their process that customers is the right within their workplace. It is the core approach in these days of business especially in the hotel industry. As a result, hoteliers have to pay more attention in the regular changing demand of their customers in terms of retaining the customers. However, the human nature and experience displayed that it is not fair.

According to Walker (2012), management of the hotel industry has to take responsibility in handling. Due to lack of knowledge, skills and experience of management, hotel industry in these days faces several issues for the demanding customers. Due to increase rate of product and service, hoteliers was not able to provide training to their staffs and they faces lots of complexities in handling demanding customers. Moreover, it has been also identified that demanding customers outraged the business process of hotel industry. Following table demonstrated the impact of demanding customers in hotel industry –

Factors	Descriptions
Heightened Expectations	Expectation of demanding customers in hotels industry is for the quality and velocity services in anytime, anywhere as well as in any locations. However, due to high labor costs, hoteliers were not able to employ more employees that fulfill the demand of customers. Therefore, demanding customers affect more in business process of hotel industry as a whole.
Yearning	Majority of customer demands for offering or special discounting or rewarding from the hoteliers when they are coming back to the hotel. The trend of reward is increased highly in the current business of hotel industry. Therefore, due to high price manufacturing costs and high suppliers demand along with labor costs, hoteliers was unable to provide rewards to demanding customers that decrease the customer loyalty (V. Tesone, 2013). Thus, it affect on the hotel industry as a whole.
Technology	In these days of customers in hotel industry demand for electronic gadgets in the hotel room such as Wi-Fi facility, cable TV service, free phone calls, etc is for purchasing order, tech toys in the guest room, experience of property etc. If the hotel industry does not able to provide electronic gadget to customers, they fails to satisfy them. Customer also never returns on that hotel. Thus, hotel industry decreases their customer base.

In these days of digital world, usage of internet becomes most popular. In hotel industry, social media networking also has an potential impact retarding providing information throughout the network in less time. However, majority of hoteliers involve or include social media network within their business in order to engage more customers via providing entire information along with products and price to customers. Through online, organization in hotel industry share sensitive information such as hotel booking via their own portal, allows customer for bargain for prices, connect other customers and shows their review report, etc.

The main issues that faced by the hotel industry from social media is faith and market value. Social media network leads unfair negativity, undue criticism and inaccurate information of customers when the guests are loyal and satisfied. However, in these days of cybercrime world, majority of people get a stance before input the information in a anonymous site that is the competitive edge for the hotel industry.

According to Quek (2012), issues that mainly faced by the organization in hotel industry that previous property of the guests stay on top. Therefore, due to lack of work force, hotel industry was not able to update the information of previous guest dedicatedly. However, Shaw (2012) argue that hoteliers invest more money as well as time in implementing social media but unable to gain nothing at the end of the day. Furthermore, Parte-Esteban & Alberca-Oliver (2013) suggested that customers can engaged with the hotel industry easily through continuous communication. It is most effective method of engaging customer for the small organization in hotel industry, however the big companies faces lot of issues regarding safety and fixed strategy.

Apart from that, there are several other issues that faced by the experts in hotel industry in social media networking. Osman, Hemmington & Bowie (2009) assumed that participation is one of the most critical issue in hotel industry regarding social media because the nature of social media is dynamic. In order to take information of customer, experts in hotel industry has to take review of comments of customers that is too much time consuming. Therefore, knowledge, skills and training of staff is another two critical issues.

In hotel industry, majority of staffs may know to use the social media network for personal use but do not know to use social media network from the point of view of business. They must to be trained before launching company’s own page in social media network. Apart from that, security is also another major issue in social media network in hotel industry. This may affect in the core business process of hotel industry. Security issues not only decrease customer base for hoteliers in corporate sector but also closed the business in hotel industry.

In order to manage the minimum wage issues in hotel industry, hoteliers have to involve the following technique –

Time and Motion Technique – Management or the supervisor of individual group within the workplace of hotel industry has to look closely of the employee’s performance. O’Neill (2012) argued that close monitoring helps in identifying the accuracy of work force of the employees. It increase workforce of the organization and hoteliers are able to provide better service to their customers. Apart from that, spot opportunities will be more efficient in balancing the minimum wage issues in hotel industry. Minimum wage set by the government of the country. Therefore, Hotel Industry was unable to change the minimum wage are for employees.

Figure 4: Time and motion schedule for minimum wage management in hotel industry

(Source: Osman, Hemmington & Bowie, 2009, pp- 246)

However, if they provide spot opportunities to employees like extra pay for extra work will be efficient method. Moreover, management of the hotels has to play the major responsibility in managing minimum wage in hotel industry. Management has to provide guidance in order to make a change in the work process as well as scheduling of work of the labor. Furthermore, higher as well as lower level management has to take review about the production of individuals and compare it with the expected results. If the process successfully works, then need to repeat and rinse.

Involve automatic process instead of manual: As the minimum wage rate increase extremely and day to day, hoteliers has to involve the automatic process that need less man force such as check in facilities. It has been seen that in hotel industry manpower is very much required for serving customers such as taking order, serve purchased order, check the document and other aspect before entering to hotels, etc. In hotel industry need to involve automatic check in system that is automatically checking the aspects including document of coming customer in less time. It not only save the manpower but also satisfy the customer because this process take less time to check. Apart from that, intra land connection has to include within the hotel campus. For order customer make phone calls and make their order. In kitchen room, need to involve latest technology such as chimney, induction instead of using gas. Induction cooking mechanism allows the cooker in making dinner or lunch 5 time faster rather than gas oven.

Customers are the key of success in hotel industry. Therefore, hoteliers have to adopt several techniques in order to handle the demanding customers such as –

Allow customer to speak: Management or staffs of the hotels has to take patient when the customer complaining. Management has not to take any effort to interrupt the complaining customers because the customer already unhappy with the service and interruption may cause the higher anger. Management have to provide time in listening the complain of customer or unhappiness with the service of hotels. After complain management or staffs have to ask some open ended question in order to clarify the issues. This process may allows the management in handling the demanding customer in a smooth way.

Respect the guest: Within the hotel industry, staffs or employees have to shows respect towards customers and provide value as well as feel special. This may helps in satisfying the customers throughout al department of the entire hotels. Apart from that, management or staff of hotel has to meet the requirement of customers when they show their respect. It helps in leading the satisfaction of the customers.

Handle the customers smoothly: Management have to show their politeness towards the customer when they deal with them face to face or over phone calls. Apart from that, they have to provide full effort in understanding exact demand of customers like understand what they exactly demand, note down properly about their purchase, etc.

Responsibility towards resolving customer problem: Management as well as the employees of the organization in hotel industry has to take as much as possible in order to understand the problems of customers. Management of the hotels has to understand that customers comes to them with a expectation and it is their responsibility to fulfill the expectations. Apart from that, management has to avoid the nature of transferring problems to other. They have to show their effort to customer in order to solve the problems. Management or staffs if received any complain from the demanding customers have to try for resolving the issues own. However, when the customer says about the dissatisfaction, never cut the call or transfer it to the voicemail box. Because it make more irritate to customers.

Ask customer to suggest an appropriate solution: It will be the key technique to handle demanding customers. Okumus et al. (2014) cited that asking for appropriate solution of raise problems to demanding customer can helps in defusing the situation. However, if the solution is reasonable, management of hotels has to take immediate action on that act. On the other hand, if customer provides unreasonable actions it is duty of managers to describe in details why hotels do not apply the actions. Tajeddini (2009) suggested that, management have to apologized first in order to resolve the problems.

Follow up the problems: In hotel industry, it is important to follow up the solution when one problem is resolved. Management has to take total responsibility to take review about the customer satisfaction after resolving the issues. Thus, hoteliers are able to know the problems is actually mitigate. Tisdell (2013) described that follow up can help in building customer loyalty and motivate them in revisit to the hotels.

As customer is important for business growth or achieves higher profit in hotel industry, social media technology is one of the most effective and efficient way in increasing customer as well as increasing brand awareness. If the social media executes well for business it will create solid community for the organization in hotel industry. Thus helps in growing business and enjoying success. However, social media create several problems in hotel industry. Following techniques have to adopt by the hoteliers in order to solve the social media problems –

Understand properly the social media for business: Hotels have to organize training for the staffs in order to use the social media for business purpose. In-depth knowledge on social media helps in making solid plan in hotel industry. Employee has to remember in not only provide service but also have to take the conversation. In order to present actively in social media, hoteliers have to provide regular updates with images or videos about their hotels, details of hotels facilities, etc. Apart from that, in order to make long-term strategic plan for promoting hotels in social media network, hoteliers have to get traffic immediately. Moreover, they have to be closer with the convert visitors and audiences.

Consistence contribution to the Social Media Network: In hotel industry, it has en often seen the risk of losing visitors as well as the potential customers. Therefore, hoteliers have to make sure that they schedule properly with a very specific social media marketing. In order to make sure the social media marketing scheduling, hotels have to hire technical staff for that particular field. In order to post and regular updates of the hotels, need to hire content writers as well as curator.

Face to face relationship with customers: Majority of hotels only track the information of the customers via chat. They ever encourage the people in face-to-face interview in terms of providing information or answer them about their dissatisfaction. Several social media networks allow video calling facilities to user. Management or the responsible person of hotels has to encourage customers for face-to-face conversation through video calling. This process will help in satisfying the audience and also helps in tracking information and dissatisfaction including the emotion of customers. Moreover, video calling conversation also allows the hotels in avoiding fraud case. Moreover, hoteliers have to collect feedback as well as personal information of visitors or the customers through social media. It will help the hotels in building strong and trustworthy relationship between the hotels and customers. Yu Yeh (2013) suggested that personalization is also important or crucial in terms of success in social media marketing in hotel industry.

This particular study concludes the contemporary issues that faced by the hotel industry in these modern days. Several issues are identified that arise in the hotels industry. However, this study specifically describes the three main issues that recently identified in the hotel industry throughout the world. The most recent issues that faced by the hoteliers in hospitality sector is minimum wage. Rapid changing rules regarding minimum wage for the employees make several issues for hotel industry such as increase the products rate, decrease customer base and loyalty, etc. Therefore, analysts describes that minimum wage is not able to change because the rule of minimum wage set by the government. In order to handle minimum wage issue in hotel industry need to involve the method of time and motion. It helps in close monitoring of employees performance as well as spot fixing the with clear specification. It increase work force for hotels and helps in making more profit as well as build relationship with the customer. The other issue that identified in this study is demanding customers. Due to increase of products and service prices, expectation of customers also increases high. Customers in hotel industry are now become more deadening. However, analyst described the solution of handling demanding customers in a specific way. The given solution will make sure the hoteliers in resolving issues that relates with the demanding customers. The final issue that explained was social media issue. It is the most popular technology in engaging customers. However, hotel industry faces several challenges from social media involvement with the business. In order to resolve the problem of social media, training will be the key method for hotel industry. Social media will be the efecitve and efficient technique inengaging customers and building trustworthy relations.

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Digitalscholarship.unlv.edu,. (2015). Retrieved 3 March 2015, from https://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1694&context=thesesdissertations

Personal.psu.edu,. (2015). Retrieved 3 March 2015, from https://www.personal.psu.edu/~users/j/w/jwo3/Hotel%20Work-Family%20Issues%20Article%20for%20o’neill.pdf

Scholarworks.umass.edu,. (2015). Retrieved 3 March 2015, from https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1259&context=gradconf_hospitality