Growth And Challenges Of Hotel Industry Essay

Question:

Discuss about the Growth and Challenges of Hotel Industry.

Answer:

Introduction:

The Hospitality and Tourism Industry is the fastest growing industry which consists of various sectors like events planning, hotels, restaurants, tour operators etc. In Australia it is a major contributor to the growth of economy, GDP and generating employment. In this respect, Hotel and Resort Industry is the most important sector. It brings economic viability to the economy.

Park Hyatt is in the list of top hotels in Australia. The Hotel Industry offers a number a products and services, including, but not limited to various corporate meetings and individual recreational facilities. The Hotels use various strategies to target individual and business travellers. However, there are a number of legal compliance issues, sustainability issues, contemporary issues and challenges that the industry has to deal with. Triple Bottom Line Approach is a comprehensive way to deal with these issues effectively.

The report provides an in- depth idea of the Hospitality and Tourism Industry and the position of Hotel and Resort Sector in the Tourism Industry. Park Hyatt, one of the best hotels in Australia, has been focused on to give a detailed description on the products and services offered by this sector, the target market of the sector and ways to reach the target market. In this respect, the compliance and sustainability issues have also been discussed. The concept of Triple Bottom Line as an approach to deal with various challenges of the industry has been introduced.

The Hospitality and Tourism Industry:

The Hospitality and Tourism Industry is a hard- to- pin- down, broad and multibillion- dollar industry that actually includes a number of specific sectors including but not limited to restaurants, events planning, transportation and car rentals, theme parks, State and National Parks, cruise line, meeting planning, airlines, lodging and tour operators. Globalization has significantly contributed in this sector (Wetfeet, 2017). It is the fastest growing industry in Australia, which accounts for around 3.5 percent of GDP, 5 percent in terms of employment and one third of international service trade(Wetfeet, 2017). This sector supports remote and regional economies by creating employment for the unemployed communities.

Position of Hotel and Resorts Sector in Hospitality and Tourism Industry:

Hotels and Resorts Industry is one of the core sectors of the Hospitality and Tourism Industry. In Australia, it is the fantastic- five- growth sector and a major driver of economic progress. Australian Hotels contribute significantly to the viability of Hospitality and Tourism Industry. Around 300000 people are employed in 6000 hotels in Australia. There is wide scope of further growth of Hotel Industry in Australia. The substantial benefit generated by hotel industry in domestic economy activity is $12 billion to $ 13 billion per annum (Ibisworld.com.au, 2017). It provides employment to around 68000 people and annual growth of the sector during the period 2012- 2017 is 2.3% (Ibisworld.com.au, 2017).

Park Hyatt is one of the best hotels in Australia. It provides 5 Star Accommodation and has been awarded as the top hotel in Australia by ‘Conde Nast Traveller’s Reader’s Choice Awards’.

Products, services and facilities offered by Hotel Industry:

Hotel industry is concerned with a broad market segment, each having a different requirement. Thus, it has to cater to the needs of a business traveller who might be concerned with internet connectivity and video conferencing facility and at the same time a leisure guest who needs wellness and recreational facilities (Setupmyhotel.com, 2017). The major products and services offered by Hotel Industry are:

  • Guest Rooms
  • Banquet Halls
  • Food & Beverages
  • Health and Wellness Facilities
  • Conference Facilities
  • Recreational Facilities
  • Executive Lounge
  • Business Centre
  • Travel Desk Parking Facilities and
  • Express Check- in service and check- out service etc (Setupmyhotel.com, 2017).

Every hotel has limitation in terms of its capacity to serve the guests. The hotels have limited rooms and sometimes have to turn away the customers in case all the seats are occupied. Thus, a proper capacity planning is requires to reduce perishable cost and maintain its goodwill ( Rhee and Yang 2015).

Park Hyatt offers butler service, day spa, and venue for special events, meetings and conferences. It also provides arrangement for private dinner and weddings. It has 155 guest rooms and 75 deluxe rooms (Sydney.park.hyatt.com, 2017).

Target Market:

The marketing strategy of Park Hyatt is designed to serve the specific needs of existing customers (prezi.com, 2017). The Hotel aims to maximize its revenue by servicing the existing customers and expanding the customer base with quantitative strategies, sophisticated data tools and predictive models. The hotel targets at:

  • Individual travellers and families who need personalized service, privacy and other amenities as provided by small boutique type of hotel
  • Business travellers who need access to fast internet, scanners, printers, conference halls etc.

To meet the needs of the targeted guests, Park Hyatt has designed a comprehensive marketing Strategy (Hyattdevelopment.com, 2017). The worldwide marketing and sales teams drive the revenue by identifying the most profitable customers and leveraging different facets of marketing. Different channels used by Park Hyatt to reach its customers are:

The major sales and marketing effort of Hyatt is use of electronic channels. Hyatt.com is a distribution channel with excellent booking efficiency, which facilitates online purchase. It has dedicated teams and sophisticated analysis tools that enhance the functionality, design, efficiency of the online site, digital marketing and e- commerce performance.

Park Hyatt has central reservation system located in major cities of India, Japan, United States, Australia, UAE, Germany and China. These centres contribute significantly in the world- wide performance of hotel system.

Hyatt has developed relationship with the international and regional airlines as an extensive marketing strategy (Hyattdevelopment.com, 2017).

Park Hyatt has distribution partners like online travel agencies, traditional travel agencies, and opaque agencies. Apart from these there are a number of user- generated websites that automatically link to Hyatt.com.

Attributes and qualifications of Staffs at Park Hyatt:

Hyatt is one of the fastest- growing companies that has plan of expanding globally. The culture of the company is shaped by guiding principles of integrity, respect, empathy and humility. The staffs of the hotel are expected to be passionate, agile, motivated and enthusiastic. The staffs have a sense of fun and apply their creativity and innovation in every day functioning of the organization (Hyatt.jobs, 2017). They are service oriented and have the potential of becoming the leaders in future. They are keen to acquire additional knowledge and develop new skills to change their status quo. They think strategically, inspire other and try out new things (Torres and Kline 2013).

Legal Compliance Issues of Park Hyatt:

Park Hyatt conducts its business in accordance to the provisions of applicable regulations and laws, highest moral, ethical standard and with integrity and honesty. The Hotel has designed a code of Business Conduct and Ethics to promote compliance with such laws and ethical standards. This code applies to all officers and directors including executives and general managers. Park Hyatt is subject to the United States Laws as well because the Hyatt Hotels Corporation is incorporated in the U.S (Thrive.hyatt.com, 2017).

Sustainability Issues of Hotel Industry:

Sustainability requires management of resources in a way that satisfies the economic, aesthetical and social needs of present, while maintaining the essential ecological process, life support system, biological diversity and cultural integrity and ability of the future generation to meet their needs (Study.com, 2017). Various sustainability issues are universal in the hotel industry. To deal with this, the industry has shifted its focus on waste, water, carbon and energy usage. There is increasing responsibility to manage the social aspect of environmental sustainability. Some of the elements of sustainability in Tourism and Hospitality Industry are eco- efficiency competence management, innovations, financial management, product performance, stakeholder management and operational performance ( Jhamb and Singh 2016).

Past Trends:

The concept of sustainability in the hotel industry was introduced over a century ago when the hotelier integrated social concerns and environmental elements into the resort experience. During 1960s and 1970s, human awareness was created regarding environmental disasters and the impact of pollution on human health. The hospitality sector became more concerned about energy supply, utility costs and energy conservative strategies and social responsibility (Kevin A. Goldstein and Primlani, 2012). In 1992, the Rio de Janeiro Summit encouraged green initiatives and environment certification program specific to the hospitality industry. In 2000, the sustainability efforts were incorporated into the Corporate Social Responsibility approach of the companies. It is a measure to control the operational and utility cost. The concept of Corporate Social Responsibility was introduced to govern the functioning of the hotel industry in tune with the welfare of society (Kevin A. Goldstein and Primlani, 2012).

Current Trends:

Current trend in hospitality management is concerned with CSR initiatives to gain customer loyalty, reduce social problems, conserve environment for the development of communities (Kevin A. Goldstein and Primlani, 2012). In this regard, three elements of environment can be cited: water, energy and waste:

  • Energy: Hotels focus on reducing consumption of energy in cooking, lighting and other operations through the use of engineering and technical approach.
  • Water: Hotels reduce consumption of water in domestic as well as facility operations through the use of rain water, improvement of plumbing system, fixture retrofits etc.
  • Wastes: Hotels reuse, reduce and recycle waste to minimize processing costs. They process the waste into natural gas and other alternative energy sources.

Triple Bottom Line in connection with Future Trends of Hotel Industry:

To achieve sustainability, a comprehensive approach integrates reporting on social, environmental and financial issues. This reporting approach is called Triple Bottom Line. There is increasing pressure on hotels requiring their commitment to this approach (VanNatta 2014). Extensive reporting process, especially on environmental issues, results in improved performance of the hotel industry as well as better outcomes for the stakeholders. The organization needs to change their attitude and behaviour to implement Triple Bottom Line approach. All three steps of the approach need special emphasis to achieve sustainable development.

The first step of Triple Bottom Line in Hotel Industry concerns economic viability. A hotel cannot be sustainable without profitability. Thus, the business should be conducted ethically, with a focus on natural resources and roots. Sustainable development will certainly result in reduced cost and higher turnover, ultimately creating value for shareholders.

The second step is social responsibility. The hotel should be concerned about the employees and the community at large. The hotel industry needs to support worthwhile causes for the community and be a fair employer to its employees.

The most important component is concern for the environment. The environment has been continuously degrading and the society needs to adopt and enforce measures for effective environmental protection. It is the challenge of time and a key priority to address the environmental sustainability at all the levels. The co-operation of policy makers, stakeholders, industry and general public is required in this matter.

Park Hyatt has been quite successful in addressing sustainable development issues. Through CSR initiatives, it has made significant progress towards their commitment the people and community. The hotel operates its business with responsibility and ‘care for people is the foundation and guiding principle of the company. As a result colleague satisfaction has risen by 62% and it is now recognized as a great place to work for (Thrive.hyatt.com, 2017).

Contemporary Issues and Future Challenges:

At present, Hotel Industry is going through radical changes. The industry is facing a number of challenges and issues. The labor market condition is changing constantly and the cost of labor is also rising. Escalation in the energy cost and insurance cost has reduced the operating cost (Benavides et al. 2014). The cost of renovation and construction is rising continuously, giving a tough time to the industry. The expectation of customer and the environmental protection is also a matter of concern. Thus to maintain the brand name and sustain in the future the industry has to adopt new technologies to address all these issues (Hall and G?ssling 2013).

Conclusion:

In conclusion, it can be stated that the Hotel and Lodging Sector of the Hospitality and Tourism Industry contributes significantly to the development of the community. The services and products offered by the industry are of immense importance. The industry has been quite successful in addressing the needs of individual travellers as well as business travellers. Park Hyatt has designed a legal compliance framework to conduct its business ethically and honestly. There is an increasing focus on the sustainability issues. Park Hyatt has taken an active step to be committed to Triple Bottom Line Approach. This will result in improved performance of the Hotel and bring better outcomes for the customers and all the concerned stakeholders.

References:

Benavides-Velasco, C.A., Quintana-Garc?a, C. and Marchante-Lara, M., 2014. Total quality management, corporate social responsibility and performance in the hotel industry. International Journal of Hospitality Management, 41, pp.77-87.

Hall, C.M. and G?ssling, S., 2013. Sustainable culinary systems: Local foods, innovation, and tourism & hospitality. Routledge.

Hyatt.jobs. (2017). Hotel Housekeeping Jobs | Hotel Maintenance Jobs | Hyatt Jobs. [online] Available at: [Accessed 8 Jan. 2017].

Hyattdevelopment.com. (2017). Hyatt Development: Competitive Strengths - Sales and Marketing.[online]Available: [Accessed 8 Jan. 2017].

Ibisworld.com.au. (2017). Hotels and Resorts in Australia Market Research | IBISWorld. [online] Available at: [Accessed 8 Jan. 2017].

Jhamb, R. and Singh, G., 2016. Corporate Social Responsibility in Hotel Industry: Issues and Challenges. Corporate Social Responsibility in the Hospitality and Tourism Industry, p.1.

Kevin A. Goldstein, K. and Primlani, R. (2012). Current Trends And Opportunities In Hotel Sustainability. 1st ed. [ebook] pp.3-4. Available at: [Accessed 8 Jan. 2017].

Torres, E. and Kline, S., 2013. From customer satisfaction to customer delight: Creating a new standard of service for the hotel industry.International Journal of Contemporary Hospitality Management,25(5), pp.642-659.

prezi.com. (2017). Park Hyatt Sydney. [online] Available at: [Accessed 8 Jan. 2017].

Setupmyhotel.com. (2017). Marketing Mix - Hotels | Resorts | Restaurants. [online] Available at: [Accessed 8 Jan. 2017].

Study.com. (2017). Sustainability & Environmental Issues in the Hospitality Industry | Study.com. [online] Available at: [Accessed 8 Jan. 2017].

Sydney.park.hyatt.com. (2017). Rooms & Suites | Park Hyatt Sydney. [online] Available at: [Accessed 8 Jan. 2017].

Thrive.hyatt.com. (2017). Hyatt Thrive. [online] Available at: [Accessed 8 Jan. 2017].

Thrive.hyatt.com. (2017). Responsible Business. [online] Available at: [Accessed 8 Jan. 2017].

VanNatta, S.M., 2014. Triple Bottom Line.

Wetfeet. (2017). Industry Overview: Hospitality and Tourism - Wetfeet.com. [online] Available at: [Accessed 8 Jan. 2017].

How to cite this essay: