The hotel industry, otherwise known as the hospitality industry, spans across a large range of service sectors. It is not only crucial towards the tourism industry but it also helps travelers within a country. The hotel industry has existed for centuries. The modern form of hotels can be found in every corner of the globe. And thus, there are various global factors that affect this industry.
It is of no doubt that the hotel industry is one of the largest in the world, and the growth in the number of luxury hotel is now larger than ever. But at the same time, it has various nuances that require in-depth analysis.
In this article “PESTLE Analysis of the Hotel Industry”. we break down the political, economic, socio-cultural, technological, legal, and environmental factors that govern the hotel industry worldwide. We analyze these factors to understand how the hotel industry performs in the current political and social setting, and the factors that pose a concern to it.
Table of Contents
Political Factors
The hotel industry in any country is largely dependent on tourism and thereby on the government regulations of the country. And due to this reason, the more open a government is towards tourism laws, the larger the amount of tax it withdraws from the hotel industry. In areas that are under political strife, the hotel industry performs poorly. However, most of the world is now free for travelers and thus the hotel industry is facing a massive boom.
Many governments are still carrying out policies that benefit their hotel industry. But a recent factor that has posed as a threat to this industry is terrorist attacks in high profile hotels. This is something that world governments must pay immediate attention to. Otherwise, open borders and a welcoming political nature helps the growth of the hotel industry.
Economic Factors
Any major economic change massively affects the hotel industry. A large part of this industry is composed of luxury hotels. Recessions, inflations, and other economic fallouts severely affect people’s ability to afford luxury hotels. But at the same time, they also lead to a higher demand for budget hotels thereby increasing certain verticals of this industry.
Foreign exchange rates are another economic factor that affects the ability of foreign travelers to employ hotel services. But since the general global expenditure scale is on a rise more people are being able to travel and make use of the hotel industry. Developing countries must concentrate on growing their budget hotel industry to welcome more foreign guests and expand their economy.
Socio-cultural Factors
The current generation has shown a strong trend towards traveling. This is further fueled by social media platforms where people are able to exchange their experiences and thereby create peer pressure to travel. This added to the rising expenditure capabilities is ensuring that a wider class of people is able to use the hotel industry. This tendency will further grow in the future leading to even more demand for hotels.
Hotels are also becoming more accepting of different classes of people and are ensuring they are better equipped to serve the necessities. Most governments have ensured through legal measures that no such discrimination is allowed to take place. Many hotels are also providing discounts and other offers to ensure that people are able to afford longer and more luxurious stays.
Technological Factors
Hotels have become more and more technology-friendly in recent times. Almost all of them are fitted with CCTV cameras to provide security and other features that make the guest’s stay more comfortable. Wifi services, lifts, intercoms, etc. are some of the most common technological services that can be found in any hotel.
Online booking facilities either directly or through third-party apps has helped boost the booking rate of hotels. Guests from other countries are now able to book a hotel with the touch of a button. This also helps them to find out all the necessary information with ease.
The ability of guests to write reviews has also ensured that hotels provide better services and no act of discrimination takes place.
Legal Factors
The legal environment of a country is extremely crucial to the growth of the hotel industry. Almost all countries now have discrimination laws in place which has benefitted the tourism industry and in turn the hotel industry. Many governments are also offering tax deductions to the hotel industry in order to boost their economy. Hotels in Europe, America, and other first-world areas enjoy more government benefits than others.
There are also compliances that all hotels need to meet. These include safety and health laws among others. Hotels are also becoming more strict in terms of the identification before allowing a guest to use their facilities. This is considered to be progressive keeping in mind the rise of crime and terrorism across the world.
Environmental Factors
Countries that have severe weather conditions have a difficult time flourishing their hotel industry. Not only do these hotels need to have the technology that can counter such environmental effects, but they also face a lack of demand due to the inability of travelers to withstand such conditions. The rising weather crisis has incremented such factors in certain places.
Hotels are now being put under a lot of pressure by both governments and environmental activists to ensure a minimal carbon footprint. Since this industry uses a massive amount of disposable items it can be the cause of serious environmental concerns. Various international hotel chains are shifting towards more biodegradable items to counter the climate crisis. Hotels that are still continuing to use environmentally harmful materials are facing a downfall in demand.
Conclusion
This PESTLE analysis of the hotel industry should provide you a clear look into the hotel industry and how it performs globally. The hotel and hospitality sector is facing a larger boom than ever. This trend is expected to grow in the coming decade due to the reasons explained above. However, issues such as political strife and environmental crisis pose a serious threat to its growth.
