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Trends in Hotels and Restaurants and Their Challenges

Executive summary

This paper discussed the current trends being witnessed in the hospitality industry and in particular, the hotel industry globally, and specific cases in India and United States of America. The report utilized data mostly from secondary sources which included books, journal articles as well as website articles. The trends were intensively analyzed, with the challenges arising and offered possible solutions. Various trends which were discussed included; the rapid rise of lifestyle hotels, the issue of profitability against quality of foods and services offered, automation systems, labor issues and customers expectations. Challenges and problems experienced in the hotel industry were also discussed in depth. Among the problems discussed were; Global economic recession, difficulties in satisfying customers, competition, human resource challenges and scarcity of qualified skilled laborers. For the industry to achieve substantial developments and profitability, the challenges and problems had to be curbed. The report went further and provided remedies for the above challenges and gave its recommendations, before it concluded the discussion.

Introduction

Aim of the Report

The objective of this report is to enlighten those people aspiring to invest in the hotel industry on various trends in the industry, the possible challenges and problems and how they can be solved.

Scope and Limitations

This report mainly covered trends in hotels and restaurants and their challenges in India, Ireland and U.S.A., between the years 2000 and 2008. It studied both small and big hotels in cities of the two countries, and even went further to study the global trend in the industry.

The main limitation of the study was in data collection, where primary sources which could give more reliable information were not intensively incorporated, due to constraint in time and financial resources.

Background to the Study

Hospitality is a multi-billion global industry, which involves all businesses that are concerned with provision of services such as catering and accommodation, food and beverages to people especially travelers (Gray & Liguori, 1996). It can be described as the kindness in welcoming guests, or the relationship between a guest and a host. It’s the service or the act of receiving, hosting, welcoming and entertaining guests. Hospitality industry is an overall study of hospitality including tourism and the economics of tourism. Hotel industry is one of the sub-sectors in the greater hospitality industry which offers all the above services. In India, hotel industry is experiencing some trends which are bringing forth a certain number of challenges and problems which are discussed in the report.

Procedures

Data collection

The compilation of the report was limited to secondary data collection methods i.e. through Library books, the internet articles, trade journals and magazines. Primary data collection was not considered due to limitations in time and financial resources.

Data analysis

Emerging trends in the hotel industry

Lifestyle hotels

Mushrooming of lifestyle hotels is an emerging tendency in the industry where many people seeking services in these are left puzzled, as they can barely figure out what the hotels really offer. According to Craig (2009), some hotels are adopting bizarre names in reference to conventional positions. For instance, a receptionist might be referred to as an ambassador of happiness or a housekeeper being referred to as a comfort specialist. A study conducted by Malkani (2004) on developments of hotels in Indian cities indicated that there was a tremendous increase of modern hotels. This is shown in chart on appendix 3.

In U.S.A, the growth of lifestyle brand hotels was considerably high, as it is evidenced by the increased room count in some specified hotels. The trends in the hotel’s room count in U.S.A. from 2007 to 2008, as illustrated in the chart below.

IHG Americas Hotel & Room Count 2008

IHG Americas Hotel & Room Count
Source: Intercontinental Hotels Group.

Profitability versus health

Focusing more on the profits than the quality of services and healthful foods is an emerging trend in hotels. The discovery of fast foods like Chips, Cheeseburgers and Kit Kats which are highly profitable to restaurant, are taking the position of traditional foods where health is factor of much consideration. Much of these fast foods are linked with health cases such as obesity, kidney and heart problems In India (Craig, 2009).

Automation of services

Employees are being replaced by automation of services in hotels. Automated packages such as customer check-ins, hotel bookings over the internet and guests ordering meals via the internet is a trend which is helping hotels cut cost, as they maximize their profits.

Labor issues

Labor shortages in the hotel industry are manifesting their consequences in the quality of services being offered in hotels. For instance in the 2008 crisis on labor shortages, poor quality services were blamed on employee shortages, which gave rise to another crisis in 2009, caused by lack of jobs. Hoteliers blamed poor services on rigid labor budgets (Craig, 2009).

Environmental issues

Hotels are increasingly adopting programs that are threatening the environment. The craze of cheap plastics which are unfriendly to the environment is also hitting on the hotel industry. Poor disposal of cheap plastics being used in storage of foods and beverages offered in the hotels is alarming to the environment (Craig, 2009).

Customer expectations

Customers are becoming more demanding for greater services at cheaper rates. Craig (2009) argued that the hotel industry is in a dilemma. The ever increasing customer demand for deeper discounts and more services is a trend which is causing many hotels to loose their grasp in the clientele base.

The above trends indicate that the hotel industry is changing from the old fashion to the modernized lifestyle business enterprises, which are investing highly in automating their systems. This automation trends are having a negative impact on the job market as more manual jobs are being replaced by automated machines.

Main Problems and Challenges

Global economic recession

The issue of costs incurred in providing services by these institution, is an issue of concern. Reduced global economic activities are greatly affecting the hotel industry; in terms of costs incurred by the hotels as well as the customers. The hotel industry is witnessing a decline in domestic and international travels, due to rising economic costs. A great number of travelers are finding it hard to pay for accommodation fees, food and other services offered in the hotel as their rates and prices have skyrocketed to very high levels. A survey conducted by Malkani, (2004) shows that there was upswing and downswings in Indian hotel rates and occupancy between the years 2002 and 2004 (charts in appendix 4). Trehan & Ceddicci (2009), noted that the once booming hotel industry, is now being faced by substantial economic recession, which is adversely affecting hotels both big and small, and in some cases leading to closure of the business ventures. A survey conducted by Darson (2008), on hotel rates in some of the most expensive cities in the world, showed that rates for hotel had shot up due to economic crises of 2006 and 2007. The chart in appendix 1 shows the variance of hotel rates from 2006 to 2007.

A case study of the effects of the 2007 & 2008 global economic recession on room and bed space occupancy in hotels in Northern Ireland revealed that there was a decline in sales from 2007 to 2008, as shown in the chart in appendix 5.

Scarcity of skilled laborers

Among the greatest challenges and difficulties plaguing the hotel industry is the scarcity or unavailability of skilled workforce. The industry is failing to maintain quality professional at various skill levels, resulting to provision of under quality services. This is negatively affecting hotels profitability as well as maintaining their customers (Craig, 2009).

Difficulties in satisfying customers

Customer expectations are on the rise as the hotel industry is registering an influx of travelers globally. Hotel companies are focusing on means of meeting their customers’ needs which are diverse due to their different cultures (Anderson, 2009).

Competition in the industry

Parties in the industry are experiencing stiff competition with increased customer needs in terms of quality services, changing systems of operations and the influx of “modern hotels”. For instance in India, intense competition in the hotel industry is being witnessed as a result of entrance of new modernized hotels offering quality new products and working with new automated systems. The image of a certain country in the international community is also a factor contributing to competition in the industry. Countries like India and others in the third world, characterized by poverty, wars and political instability, their hotel industries are losing customers to developed countries. This is a great blow to the industry and the larger hospitality industry (Trehan & Ceddicci, 2009).

Human Resource problems

Problems in the human resource departments in hotels are on the rise. Hotel managements are being faced with difficulties in the recruitment of qualified workforce. A case study of hotel industry in china shows that recruiting personnel in the hotels criticize those applicants applying for jobs in the hotels for being uncommitted.(Craig, 2009). According to Trehan & Ceddici (2009), it is quite difficult to get applicants who possess all the necessary qualities required in the hotel industry. Such qualities are; positive attitudes, courtesy, commitment, enthusiasm to learn and work hard.

Solutions

Customer relationships

Hotel Industry experts maintain that hotel management is the key pillar in addressing the current problems and challenges being experienced in the industry. Managers are expected to devise strategies which will present opportunities in the industry, make sure that guests and employees’ grievances are dealt with appropriately and effectively. Following are some of the remedies hotel managers can offer to the challenges discussed above. Managers should ensure that their employees and staff are well motivated. This can be done by providing a conducive working environment, appraising their efforts, good remunerations and encouraging team work. All these will boost their morale in their jobs; hence promote the quality of services offered. This will counteract stiff competition from other service providers in the industry globally (Craig, 2009). Hotels should also focus on managing the existing customer relationships by strategizing on effective marketing and selling channels. The chart on appendix 2 demonstrates the strategy of maintaining customers through the customer life cycle (Pratt, 2009).

Customer maintenance

Hotel management should strive to maintain the guests they already have. This can be done by refocusing on the services they offer to their guests, to of the best quality as well as giving them the satisfaction they deserve. Once the customers are satisfied, they will act as ambassadors and salesmen to other potential guests. Managers are also adopting new sales strategies which are proving effective and efficient in attracting and developing relationships with new guests (Anderson, 2009).

Going Green

Anderson (2009) noted that quite a considerable number of hotels and restaurants are increasingly adopting and implementing “green business practices” in their operations. These practices ensure that their operations are concerned and friendly to the environment. For example, many hotels are initiation environmental projects in their social corporate programs, such as participating in social clean-ups, planting trees and creating awareness to the society on its importance.

Recommendations

  • The hotel industry should focus on services being offered to guests, to be of the best quality so as to satisfy every stake holder in the industry. The changing global trends in the industry should make hotels adopt systems which are efficient, effective and wich are up-to-date with the current technology.
  • Leadership and management in hotels and restaurant should be streamlined and polished to avoid any crises and conflicts which might arise within the hotels. Issues regarding to employees and human resources department should be dealt with effectively by the management to make sure that operations in the hotels not hampered.
  • The “green business practices” should be exercised by virtually every hotel venture so as to promote a positive co-existence between the hotel industry and the environment.

Conclusion

The greater Hospitality industry is witnessing a lot of changes, and the hotel industry is no exception. This industry is in a dynamic trend from old fashioned hotels and restaurants to modern lifestyle ventures. Automation of services in hotels is proving to be effective and more efficient as compared to the traditional manual systems. These changing trends are being accompanied by challenges and problems which are mostly linked with the increasing global economic recession. The issue of profitability against health of products and the quality of services being offered by hotels is another challenge in the industry. Loss of jobs due to automation of services in hotels, scarcity of qualified personnel and human resource issues are among other challenges, giving the industry an uphill task in its progress. Measures to curb these problems and challenges mostly lie in within the hotels management and leadership organs.

References

Anderson, V. (2009). Crisis or Opportunity for the hotel Industry? Web.

Craig, Edward.(2009).Emerging Trends in the Hotel Industry: A Lighthearted Approach. Web.

Darson, Lauren (2008).Global Hotel Rates, Demand Continue to Rise. Web.

Gray, W & Liguori, S, C, (1996), Hotel and Motel Management and Operations, Third Edition, Singapore: Prentice Hall Simon & Schuster (Asia) Pte Ltd.

Malkani, Deepika. “Hotels in India – Trends And Opportunity”. Hotel Online Special Report – HVS International New Delhi (2004).

Pratt, Madigan (2009).Marketing to Succeed in Difficult Economic Times. Web.

Trehan, R & Cedicci, J. (2009) The Hotel Industry and a slowing Global Economy. Web.

Appendix 1

Most Expensive Cities Hotel rates, 2007.
City Rate (GBP) Variance from 2006
Moscow £247.99 +11%
New York £191.93 +2%
Paris £171.22 +8%
Dubai £164.52 +11%
Milan £164.24 +8%
Stockholm £160.73 +12%
Mumbai £160.40 +37%
Bangalore £159.40 -5%
Hong Kong £154.63 +1%
London £153.91 +4%

Source: HRG survey based on a combination of industry intelligence, actual room nights booked and rates paid by HRG’s U.K. clients during January to December 2007, compared to the same period in 2006.

Appendix 2

Managing Customer Relationship

Appendix 3

The Development of Branded Hotels in Major Indian Cities

The Development of Branded Hotels in Major Indian Cities.

Appendix 4

Hotel Occupancy Rate for Ten Key Cities in India, Between 1999/2000 and 2003/04

Hotel Occupancy Rate for Ten Key Cities in India, Between 1999/2000 and 2003/04

Average Rates for the Hotels in Each of these Cities, Expressed in Rupees

Average Rates for the Hotels in Each of these Cities, Expressed in Rupees