External Environment Of Hotel Industry

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1 INTRODUCTION In order for a hotel to have a competitive advantage over other sectors, it has to acquire information from its external environment and position itself for success. The image that a hotel portrays to the public matters a great deal. Hotels need to make effort to present a good reputation. Many prospective guests now rely on Word-of-Mouth to decide where to go and where not to go. Economic factors will always have an impact on hotel operation. These forces create growth and profit opportunities that will satisfy all the stakeholders – owners, employees and supplies Politically, governments all over the world make laws and enforce them. They may encourage new business formation through tax incentive and subsidies or through direct intervention. The hotel sector is generally labour intensive. It has to employ lots of people and this tends to affect its productivity 2.0 External Business Environment The British Hospitality Association (BHA) defines budget hotels as “a strongly branded offer with generally compact rooms, and a small food and beverage operation with limited facilities and services” (Foskett 2016). It is often chained and franchised and tends to be located in city-centres with highly standardized services. In spite of it operating economically, it needs to acquire information from its external environment and position itself for success just like the other hotels. This can be done through looking for early warning signals from the way
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