Pestel: Hotel Industry Analysis

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Analysis of hospitality industry Traditionally PESTEL analysis was known as the PEST analysis and only in the modern times did the use of the word PESTLE came into being. Social part of the PEST is split into environmental factors too as those have a significant role in the strategic management these days. Along with that economic factors are split into legal factors for the same previously mentioned reason. Political Environment “These refer to government policy such as the degree of intervention in the economy. The Times of India by Rachna Singh, Jaipur, in a bid to attract international tourists is gearing up with a host of new properties across differentsegments. [Hospitality Biz India: Dec. 2009]Hotel industry as well as tourism industry has a basic backbone of the government support without which it won’t be able to sustain the competitive world. Government charges huge amount of tax from the star and luxury category of hotels and thus has a huge impact with thepolitical changes that occur.

Any small step taken by the government bychanging some law it would seriously affect hotel industry. The hotelindustry is getting huge incentives and the state governments aresupporting the development of the hotels and their growth. This infactanswers the question how are Indian Hotels are planning to expand in theeconomic crunch time. The Terror attack on the city’s [ Mumbai ] renowned hotels Taj and theOberoi’s had brought a concern on the faces of the hoteliers with asubstantial drop in foreign travellers to India taking the terror threat intoaccount.

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Economic “These include interest rates, taxation changes, economic growth,inflation and exchange rates. As you will see throughout the “Foundationsof Economics” book economic change can have a major impact on a firm’sbehaviour. ” [Online:2010]Mumbai being the financial capital of India has many foreign touristsarriving with the whole and sole purpose of meetings, conferences etc. thus Hotels in Mumbai try to capitalise on the foreign travellers who areseen to bring more money to spend along with increasing amount of expectations from the hotels.

As seen in the recent past the guests arewilling to pay for the services they get and the more the guests pay themore would the hotel and the industry would prosper. With the increase inthe paying power of the guests the need for the good and luxurious hotelsbecome massive. The per capita income in India also has rose to a newextent enabling the common man to goto luxurious hotels to have a lunchor a dinner. Economy of India faced one of the most minimal drop in the whole worldbecause of the controlled and sound financial system in the country.

Thishelped hotels to only concentrate on the foreign travellers which hadreduced and the local market being stable was much of a relief to theIndian Hotel Industry. Social “Changes in social trends can impact on the demand for a firm’s productsand the availability and willingness of individuals to work. ”Vits being situated near the airport sees the maximum amount of guestswho are in for the business meetings and conferences. There are very fewFIT guests seen in the hotel as compared to the BTC guests [ Bill toCompany Guests ] and the business travellers.

This explains the reason why the hotel could be seen having single roomguests or a twin bedroom guests more than the double bedroom guests. Being the Business hotel it has maximum males arrivals compared tofemale arrivals. The Vits could also be seen having layover guests many a times whichbecomes the revenue generator for the hotel in the slack period of time. Seeing the ratio of the various classes of guests of VITS it could be easilysaid that the Hotel must strive for the FIT and the group checkins bylinking the VITS to the travel agencies in and outside India.

This couldprobably balance the demographic ratio of the arriving guests. Technological As said before the technology used in VITS is way below the standardswhen it comes to Hotel management software and the Mini Bar system. Some Technologies used are quite old and need to be replaced with thenew ones in the technological market. For example: If a hotel used the printed KOT and BOT and the stewardshad to give it themselves to each of the departments. It could besubstituted with the direct computerized sending of KOT and BOT to thekitchen or the Bar.

Technology always has been seen to have reduced the manpower and theenergy required by the people. It would always be a boon to mankind andthe technological upgrades would also help to show the advances and theprogress of the property. VITS does not have the wifi installed instead they provide internetconnection to every room personally which should be made wifi whichwould reduce the guest complaints about the in room facilities complaintsand thus VITS could find many guests happy and satisfied with a thoughtof you get what you pay for.

Environmental: “The growing desire to protect the environment is having an impact onmany industries such as the travel and transportation industries (forexample, more taxes being placed on air travel and the success of hybridcars) and the general move towards more environmentally friendlyproducts and processes is affecting demand patterns and creatingbusiness opportunities. ” { Online: 2010 ]Being an environmental friendly hotel this factor becomes the mostimportant to the property.

Basically when we talk about the environmental factors affecting thebusiness of the hotel the only thing that comes into our minds is thefloods which Mumbai saw in 2005 and the heavy rains and showers acrossMumbai. The period from June – September is the only period of timewhen such factors play a role and there are very few things which couldbe done by the hotel about it. Generally what is done in such factors is to let the guests know thesituation outside and making them aware would help them from thetroubles they may face when they would be in those heavy rains.

Another environmental factor could be an earthquake or any other naturalfactor which directly affects the occupancy of the hotel and the sales. The solution or the rules of the hotels in India are that they do the drillsfor the emergency situations frequently to help employees understandwhat is supposed to be done in hard and emergency conditions. Legal Factors “These are related to the legal environment in which firms operate. In recentyears in the UK there have been many significant legal changes that haveaffected firms’ behaviour. [ Online:2010 ] This also includes the health and safety laws, the recent outbreak of the SwineFlue [ H1N1 virus] would have been the upcoming serious factors for the VIts andthe service they could have provided is the free checkup of the incoming guestsfor the swine flu. As of now India does not have age discrimination law but does have thedisability discrimination law and every star hotel is supposed to provide a room for the disabled guests and having special facilities for the blind deaf and the leg or hand impaired people.

This room is generally located on the first floor near the lift entrance and is always taken care of in a special way. 1. 1 Factors affecting the hospitality industry PEST analysis can be performed to determine the factors that affect any type of industry. External PEST factors may have both positive and negative impacts for an organisation, but as these factors are outside its control the organisation can only react by planning a strategy which might turn potential threats into opportunity. Political factor: In globalized environment Accor the largest hospitality group in Europe now operates in 140 countries based in Every Cedex, France.

Accor is highly influenced by the political and legislative conditions of these countries. In hotel industry, Accor French company still didn’t face any big threat because of their reduction in level of terrorism and also good relation with EEC country and others as well. Getting and giving favour through business channel they still do their business with whole world. Economical factor: Accor is a more profitable organisation, between 2006 and 2012 in chain hotels is expected to rise by 5. 7% a year, compared with an increase of 3. 7% a year for the market as a whole.

Economic factor are concern to Accor, because they are influenced on demand, cost, prices and profits. One of the most influence factors on the economy are acquisition, merger and demerger. In last year, Accor was increased its stake in Poland’s Orbis by 4. 9%,from 40. 58% to 45. 48% at a cost of ? 42 million. From there financial report their earning objective is so good around the year. Socio-Cultural factor: Current situation indicate that Accor provide good service for customer they using 7 language through the online and graphics and maps also adding value to booking experience, which is due to variety of social changes.

Demographic changes such as the aging population and  an increase the female worker because the company believes that men and women at the heart of its strategy. The company also focus on their employer and to make an increased  efforts more and more training place and of social advancement. Accor also provide franchises with added value and HR services and helping earth people they are involve in the Earth Guest programme with ECO and EGO and also developed corporate sponsorship for child aid, local aid, health, and cultural.

In future Accor will continue to respect generation, cultural and professional differences. Technological factors: Technology is the major macro-environmental factors which has influenced the benefits of both customer and company. customer satisfaction rises because the world moves so fast, goods are readily available and services are more personalized. so that Accor utilise the following technology- * Websites and Hotel Booking * Up to date information systems * Electronic media card (pre paid card) becoming more demandable.

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