P.E.S.T.L.

E Analysis in Hotel and Hospitality Industry

POLITICAL FACTORS:
The Hotel and Hospitality Industry heavily relies on a country’s Government. The
appointed government authorities and agencies are tasked to design and execute
policies, initiate promotions and programs, provide financial support, and implement
regulations, for the industry to be secured, supported, and sustained.

This reliance is manifested in the following circumstances:

● Government regulations may include increasing or decreasing tax rates which directly
affects the taxes charges, especially on luxury and star category on hotels on their costs
and quality of accommodation.
● Government policies and laws ensure safety in high-profile hotels prone to terrorist
attacks and other harmful or damaging threats. (e.g., Taj and Oberoi hotel Terror attack
in 2008)
● Government reliefs are given to many restaurants, hotels, and other businesses in the
hospitality industry that need assistance since they are experiencing destruction due to
calamities or closures caused by the pandemic. (e.g., The American Hotel & Lodging
Association requested $150 billion in U.S. government relief.)

The political environment of a country, which involves various government affairs and
political events, also brings about a huge impact and influence on the activities and
endeavors of the Hotel and Hospitality Industry. Different political changes arise due to
the political decisions being made and this can create either political stability or
instability, directly inevitably affecting the growth and development of the industry.

The political impact is evident in the following circumstances:

● In Castillo’s (2001) “In-depth study on the Hotel and Restaurant Industry in the
Philippines", he pointed out that, “In the past two years, for example, declining
disposable income resulting from the Asian currency crisis and political instability
resulted in a 3% contraction in tourist arrivals in 1998 and a 1%increase in 1999.”
● Moreover, her study also showed that visitor arrivals, visitor’s length of stay and
occupancy rate in hotels during the year 2000 went down and reduced in comparison to
year and 1999, which was caused by the various political issues uprisings in the
provinces, kidnappings, and the current scandal involving the president.
● With this, it is apparent that political changes and political instability can cause
discouragement to investors and tourists who are considered the lifeblood of the hotel
industry.
ECONOMIC FACTORS:

Significant impact on the hotel industry

While all businesses are affected by economic changes, the hotel industry is one of the most
susceptible to its influence. It goes through economic cycles first and comes out first. Whether it
comes out successfully depends on a few primary factors, including unemployment rates, job
growth, and travel spent.

Economic Fluctuations

The strength of currency can bolster the industry.

The strength and weakness of currency can affect the attractiveness of a vacation spot. For
example, if international currencies are stronger than the American dollar, people outside of the
United States will want to visit. This should entice them to visit these countries resulting in more
demand for hotels.

Economic Volatility

Recessions and other economic difficulties impact people’s selection of hotels. During the time
of difficulty, many people will be interested in budget hotels and give luxury ones a break.

SOCIAL FACTORS:
Customer satisfaction and service quality are important for the hospitality company to flourish.
Quality of the service, it turns out, is one of the most essential aspects in gaining a lasting
strategic advantage and consumers' trust and confidence in a competitive market in the
hospitality industry. The factors listed below are used to assess service quality and customer
satisfaction.

Employee engagement

This is the topmost priority of large industries in their customer assessments to determine their
willingness to engage and satisfaction. Having a good approach is essential for creating a more
pleasurable and comfortable environment. This is also done to encourage guests to return and
become satisfied.

Cleanliness
The most important aspect of client satisfaction is cleanliness. According to assessments, of all
the problems encountered by guests, untidy rooms had the largest influence on satisfaction. So
it is up to cleaning personnel to prioritize maintaining guest rooms clean, restrooms, blankets,
towels, and other basic amenities.

Amenities that are relevant and meaningful

According to a survey, in addition to parking and breakfast, customers anticipate free Wi-Fi,
making it a must-have commodity. It argues that unlimited Wi-Fi must be a normal technology
facility and that if customers are forced to pay for it, they would be disappointed. Rather than
focusing on non-essential aspects, such as valet parking, it is preferable to embrace the
necessary amenity.

Customer follow-up

Lastly, don't forget to say 'thank you for visiting.' As a result, communicating after the visitor has
left a hotel is a wise approach. It would be an excellent chance to seek client feedback and
assess their experience. Eventually, this will reinforce positivity about their hotel stay, resulting in
a higher strong possibility of coming back.

TECHNOLOGICAL FACTORS:
Online booking Facilities
● It gives convenience to customers to book a room without calling or visiting the
hotel to check if there are rooms available.
● Customers can book rooms anytime they want because the online booking
system works 24/7.
● Hassle-free management (unlike before the hotel would only wait for calls or
walk-in customers)
● With online booking facilities, the customers can view the rooms and see reviews
of the hotel. It also provides the customers with some information about the hotel
and their available rooms.
● Guests from other countries can easily book a room with this
● Can easily make early reservations

Offers wifi services

As of today, most people are finding hotels that have wifi in order for them to enjoy their vacation
and to still keep in touch with the people they love using social media.
Smart room keys
● Most hotels today use smart room keys. This key could let customers unlock their doors
by just swiping their card on the doors’ keypad.
● This key could be also used in going up or down the elevator.
 ● Can be used as a remote to switch on all electricity inside the room.

LEGAL FACTORS:
In a number of nations, the legal structure and institutions are insufficient to protect an
organization's intellectual property rights. Before entering such markets, a company should
carefully consider its options because doing so could result in the theft of the organization's
secret sauce and, as a result, its overall competitive advantage. Some of the legal
considerations for Hospitality Properties Trust leadership when entering a new market are as
follows:

Anti-Trust Laws

Unfair competition, as well as agreements and combinations aimed at restricting trade or

preventing free competition in the market by artificial means, are prohibited.

Discrimination Laws

Discrimination is prohibited, that is, treating a person differently based on traits such as race,
gender, physical disability, or any of the other protected grounds stated above.

Consumer Protection Laws

Adopts broad-reaching legislative safeguards to protect consumers, including hotel guests, from
market exploitation and abuse, and establishes substantial obligations for hotels.

Copyright and Patent Laws

The value of food plating, trending hashtags, and online advertising efforts has expanded rapidly
as social media usage has increased. Copyright can be used to protect anything that
demonstrates intellectual invention, originality, and a minimal level of effort.

Business Laws

Before entering a new market, Hotel Ownership must examine what the business laws are and
how they differ from the home market.

Health & Safety Laws

What are the country's health and safety laws, and what does Hotel Ownership need to do to
comply with them? Because different countries have distinct attitudes toward health and safety,
Hotel Ownership should perform extensive research before entering the market.

Employment Laws

What are the country's employment regulations, and are they compatible with the hotel
ownership business model.

Data Protection Laws

If a hotel employs a product to process its data, that product must follow all of the same rules as
the hotelier. Every vendor who receives personal data from a hotel must share a Data
Processing Agreement (DPA) with the hotelier to confirm compliance with the GDPR laws.

ENVIRONMENTAL FACTORS:
The importance of the local climate

Hotel guests stay in hotels for a variety of reasons, such as when visiting family, friends, on
business, or vacationing. When vacationing, customers want to stay somewhere warm and
relaxing. The weather in the local area is the deciding factor for whether someone chooses to
stay at a certain hotel. This isn’t something hotel owners can control, but they must understand
the seasonal differences before pricing their rooms — and adjust accordingly.

Waste Management

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.

Use of Resources

Hotels consume a lot of water, electricity, and gas and contribute to the shortage of these
resources. Therefore, they come under pressure from governments and NGOs to use them
responsibly. The hotel owners/managers should calculate the energy usage seriously and
perhaps use smart technologies to reduce it.