Issues in Hospitality Industry Essay

What are the main issues in hospitality industry? The issues were discussed at the last meeting of International Society(ISSC). Asking from the guest their shortage, they gave some problems necessary for them. Main part: Capital available, Emerging market, Technology, Travel permit residence. Capital available: Capital provides asset liquidity and enables the development of new hotels.

Increasing institutional investment into the hotel sector is enhancing asset values and consequently lowering returns. Expectations of revenue and profitability growth are stimulating capital availability for new development.

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This environment is expected to continue as long as the hotel industry’s cyclical expansion continues. Signs of a cyclical plateau are starting to appear, and the implications of capital availability will be profound. Many factors affect the amount, timing, and availability of capital.

In the US the fractured economic conditions that existed after 2001 eroded operating results and values over the ensuing few years, but this in turn set the stage for the current cyclical upturn. Modest potential for new supply, together with the industry’s high degree of operating leverage, have now made hotels highly attractive relative to other commercial asset classes.

As a consequence, a large migration of institutional capital to the hotel sector was not long in coming.

Investors have bid up hotel prices and bid down required yields to relatively low levels. The momentum of the hotel investment market has been enhanced by significant liquidity in the mortgage markets. Emerging market: The World Tourism Organization estimates that global tourism visitation (as measured by arrivals) has increased from 770 million in 2005 to 983 million in 2011 and is expected to continue to increase reaching 1,561 million by 2020.

China alone is expected to generate 100 million outbound tourists by 2020 up from less than 15 million currently. As the number of international travelers increases, the beneficiaries (i. e. , countries and specific destinations) of international tourism will also change. In many cases, historically popular destinations may make gains in the aggregate number of visitors, but the proportion of total share is likely to decrease.

A growing interest in “new” and previously less accessible destinations (such as Vietnam and China) as well as the strong growth of more traditional destinations (e. g. , Singapore) is driving this shift as well as more practical considerations such as location and modes of transportation. What is driving this rapidly expanding outflow of visitors? Among the leading reasons, travel is being seen as luxury rather a consumer staple at most income levels and as incomes in emerging markets rise, so does the demand for traveling.

Regarding the increasing share of Asia it can be attributed to a large extent to the growth of China outbound travel which concentrates in Asia (in 2004, over 70% to Hong Kong / Macao and almost 20% rest of Asia) Demographics are also supporting this interest, again notably among emerging countries, where populations tend to be younger (as opposed to the western world where seniors and near seniors are the fastest growing age brackets) and the middle class is rapidly expanding.

Awareness of foreign destinations through electronic images, the rapid acceptance of new telecom products and international branding/marketing has a direct appeal to this younger, more affluent demographic. The four BRIC countries (Brazil, Russia, India and China) provide an interesting perspective of this demographic shift. Technology: The challenges of keeping up with the fast pace of technology is difficult and expensive. Guests can now use the Internet’s interactive reservation systems, and hospitality companies are sometimes criticized for the (alleged) large number of keyboard clicks required to make a reservation.

The number of reservations made via the Internet continues to increase. Surveys in the United States show that currently 20% of all reservations are made through the Internet, and this percentage is increasing every year. With such high percentage of reservations done through the Internet, a hospitality cannot afford not being connected. If the potential guest cannot book online, a reservation will be made at the competitor’s web site. Guest-room Innovations

Multiple telephone lines, interactive opportunities for ordering room service, and guest-room check-out are examples of amenities that guests increasingly desire, but that are very expensive to install and implement. Data Mining This technology allows marketing and sales personnel to find new ways to use guest-related data. (data mining: using technology to analyze guest and other related data to make better marketing decisions. ) Yield Management This computerized process allows managers to match guest demand with room rates (high demand means higher rates because of lessened discounts; low demand result in higher discounts. (yield management: demand forecasting systems designed to maximize revenue by holding rates high during times of high guest-room demand and by decreasing room rates during times of lower guest-room demand).

Yield management is critical to maximizing a hospitality’s profitability. The concept are applied to every revenue department and across department. The yield manager’s job is to maximize the revenue per available room by selling rooms to the right customers, at the right price, at the right time.

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