Eight factors of the international environment that affect a hotel’s operation.
The are many different factors that affect a hotel’s operation, and their analysis is multifaceted. In a number of articles, we will look at various aspects of the subject but in the following article we will focus only on some of the key players in the international environment. Let's see some of them.
The are many different factors that affect a hotel’s operation, and their analysis is multifaceted.
1. Political developments:
General political circumstances at international level can affect the operation of a hotel business. Particularly in cases of terrorist attacks, war conflicts, refugee crises and immigration flows, in general, they play a key role in the buying interest of a tourist destination. For example, a possible military conflict in Turkey will lead tour operators or even state authorities, to issue instructions that prevent travelers from visiting Turkey for security reasons. As a result, there will be a reduction in interest in the destination and a corresponding reduction in hotel bookings. Respectively, the same political situation, if properly utilized by the professionals in the countries that compete with the tourism product of Turkey, they will absorb the specific losses.
2. Economic environment:
Changes in the international economic environment and especially in the countries that are the target group of a hotel business can directly affect it. Inflationary trends, rising unemployment, rising fuel prices, rising commodity prices, wage cuts and pension cuts are just some of the factors that can lead to a reduction in the number of customers of a hotel business but also to a reduction in purchasing power of customers who will choose it. For example, a hotel in Dubai that cooperates with Greek travel agencies will be affected by the international financial crisis as its effects on the Greek economy will lead fewer Greeks to visit this hotel and those who will visit it, will spend less money on activities, within the hotel, during their stay.
3. Weather phenomena:
Severe weather phenomena such as earthquakes, floods, tidal waves (tsunamis) and tornadoes, in addition to the hotel units that will literally destroy, can also affect a hotel business abroad. For example, an earthquake in Japan could cause the loss of a home, a job, or in any way a loss of income for the Japanese. As a result, there is a lack of interest for holidays but also a a wave of cancellations of hotel reservations in the destination countries for those who have already planned their holidays.
4. Technological environment:
The constant changes of the technological environment at the international level are one of the main factors that affect the operation of a hotel unit. The ever-increasing degree of ease of access to information is constantly changing the data and requirements both in terms of the quality of the product and services provided as well as in terms of marketing (nowadays digital, mostly) and customer relationship management. Social media also plays a catalytic role. Finally, the constantly changing technologies in terms of equipment and software (PMS, channel managers, etc.), help greatly to improve the operation and proper control in every part of a hotel unit. For example, as the number of OTAs (Online Travel Agencies) and review platforms, increases, and their quality and usability increase as well, the more direct the prospective customers gain access to all the details concerning a hotel business. As a result, this company should invest in the best possible promotion, making the most of the latest technological achievements but first, to improve as much as possible, its products and services as it should take into account that traditional booking methods in unknown accommodations have been definitive and irreversible, passed in the past. Finally, it must take care of the proper management of its online reputation, in order to cope with the environment that becomes more competitive.
5. Cultural changes:
Changes in habits and the way of thinking and seeing things around the world, constantly create new needs. Both in the tourism industry in general and in the hotel companies, in particular. The decriminalization of cannabis use, homosexual marriages, swinging of sexual partners, legal prostitution, etc. can characterize a country, city or region as a tourist destination which is suitable for customers of this travel type. A hotel business may need to modify its operation, in order to fill the new gaps in the market, created by such changes. For example, a hotel in Amsterdam may have had to change the way its coffee shop operated and the products on offer and adapt to market needs when cannabis use was decriminalized a few decades ago.
Global pollution and the wasteful use of energy and natural resources have created severe problems, climate change and the need for alternatives. The ecological consciousness that is being formed at international level can only affect the operation of the hotel business. Every new achievement concerning energy saving, whether for heating and cooling, water heating, lighting or general operation, finds immediate application in hotel establishments. The same applies, of course, to the way of operating in terms of recycling materials, reducing unnecessary waste of paper and other natural resources and the use of recyclable materials. For example, as bioclimatic building methods evolve and become more compatible for widespread use, existing hotels will need to be refurbished for three main reasons. Firstly to help conserve energy resources, secondly to keep up competitively with new construction and thirdly because they save a lot of money on energy.
7. Market trends:
International market trends are constantly changing and open new horizons for the tourism professionals who pay attention to them. The fields of thematic tourism are increasing and becoming more and more specialized. For example, religious tourism can now be monastic or ecclesiastical, etc., gastronomic tourism can be exclusively for wine lovers, or foodies, etc. Of course, hotel businesses are affected by these changes. For example, a hotel unit built on a plateau can take advantage of its surroundings by creating a golf course, but if the trend of the season is trekking or mountain bikes and its geographical location allows it, it should adjust its operation. incorporating these trends in its services to attract new target groups.
Perhaps the most important factor influencing a hotel is monitoring the business behavior of its competitors in the international environment. This includes the quality of the building infrastructure, the quality of the overall product and the services provided, the prices, the marketing methods and the customer relationship management methods. For example, a five-star hotel business in Spain cannot ignore all the above in the respective luxury accommodations of Greece and Turkey, which are considered countries of its international tourist competition in order to stay alive in this game, both in terms of services and prices. Monitoring the competition exclusively at a local level, can deprive a hotel of customers looking for holiday offers on the internet without having yet clarified the choice of destination country, but also cut it off from the international reality in terms of the standards of the time, in the field. After all, we live in the age of globalization. Let's not forget that.
* Manos Lιgerakis is a financial advisor & strategic planning consultant with a long professional experience in hotel management.