CHALLENGES FACED IN THE HOSPITALITY SECTOR

The hospitality industry is booming in India and the success in this business is about delivering guest experiences that is out-of-the-world, while keeping a keen eye on the bottom-line. It has been found that hospitality industry faces from challenges like operating issues, marketing issues, technological issues, etc. Let’s explore some of them in depth:

A. Operational Issues

A.1  Labor Shortages
Labor shortages and their impact on the industry in almost every geographic location are consistently among the most difficult challenges noted by hoteliers. In many communities, hospitality expansion is limited not by capital, but rather by human resources. A shrinking labor force is the number one challenge facing the global hospitality industry, according to the International Society of Hospitality Consultants.

Demography, wage levels, failure to adequately address worker satisfaction and a reputation for long hours and low pay are all cited as contributing factors. Creative hospitality professionals have begun to develop innovative strategies for capturing and keeping high quality workers.

A.2 Cost Containment

Hospitalities are increasingly challenged to find ways to reduce costs without sacrificing the quality standards imposed to consistently meet guest expectations.

A.3 Increased Competition

Hotels everywhere indicate that their community is overbuilt; there are too many available hospitality rooms relative to the guests desiring to rent them.

A steep fall in occupancy ratio in the wake of the global slowdown and tight competition among hospitality operators in a shrinking market has brought down hospitality room rents drastically across the country. The competition in Europe has resulted in low occupancies and as a result, the average room rate has taken a beating of almost 30 percent in all major leisure markets. Rooms are now sold not only for less but also bundled with packages, like breakfast, airport transfers or a day’s sightseeing. The competition calls for innovation in the hospitality industry.

B. Marketing Issues

B.1 Market Segmentation and Overlapping Brands
Market segmentation is increasing as lodging chains focus on a specific niche of travelers. Additionally, brands overlap. Some industry observers are concerned that franchises may expand their number of brands to the point that investors who purchase from the same franchiser will be in direct competition with themselves! Also, as the number of brands increases, the ability of consumers to differentiate between them decreases.

B.2 Increased Guest Sophistication
Consumers have become more sophisticated and, as a result, so have the types of products and services that they desire. Amenities, including business centers, exercise and recreational facilities, and guest-room innovations, increase costs but, if not carefully selected, may not appeal to many guests being served by a specific property.

C.Economic Issues

C.1 Dependence upon the Nation’s Economy
When the nation’s economy is good, business travel generally increases. Hospitality occupancy rates and rack rates increase, which results in higher profit levels. The reverse is also true: business travel slows when the economy slow. Then occupancy and rack rates decrease. Discounts to increase occupancy are offered, which yield lower revenues and profit decreases.

C.2 Globalization
Globalization impacts the lodging industry dramatically because it influences the extent of which people travel both within the country and around the world. Therefore, it is not only the economy of the nation, but also the economies of individual countries, that play an increasingly larger role in the financial success of lodging properties.

To compete, they must pay closer attention to the trends of globalization. The industry must reflect the requirements of the global village in many aspects of its operations, including food, services, amenities, staffing policies and training.

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