Introduction to the Hospitality Industry - Essay Example

Effect of Economic Climate on Hospitality Industry Effect of Economic Climate on Hospitality Industry Economic climate can be defined as changes experienced by a country’s economy over a certain period of time. These changes may be positive or negative, depending on the situation the country is in. Over the recent past, many countries have been hit by economic changes that have affected many industries. They have not been affected in the right way as every growing industry should be affected. They have been left grappling at the bottom, trying to sustain themselves due to these economic changes. The global recession that has hit the world has been the cause of all these. The many industries that are involved in the boosting of the economy have suffered heavily as a result of all these changes. This paper will review some of the industries most affected by the recession, and how they have handled the situation from the moment they have had to bear the brunt. One of the main industries that have by far been hard hit by the recession is the hotel industry. This industry has faced the rough waters and has, at some point, hit rock bottom. The question whether it has recovered from the escalation of the recession is answered by measuring where things stopped being worse. For example, room occupation rates in many hotels dropped drastically (Barrows 2008). The tourism industry, which goes hand in hand with the hotel industry, has had to bear this huge burden too. With the rise in fuel prices and transport, it is hard for tourists to travel far and wide to their travel destinations. During economic hardships, individuals, irrespective of where they are, still think of ways to fulfil their basic needs. Some expenses, for example, vacations and holidays take a back-burner. This means that the hotel and tourism industry is likely to be affected greatly by these changes (Dimitri & Debbage 1998). This is because there will be a drop in the services provided by the hotel industry, meaning that employees at these hotels will have to be let go. The same rule of supply and demand applies everywhere. As the demand for these industries decreases, so does the supply. This means that the economy continues to suffer heavily. One effect of the recession could be the high cost of living being experienced. This implies that the ordinary people cannot afford to spend far from what they earn. This could affect the hospitality industry since even getting to enjoy a decent three course meal in a restaurant becomes difficult. People only think of the expenses they will incur if they indulge themselves in luxury. As the cost of living continuously goes up, the prices of basic commodities often goes up as well. This situation does not seem to favour the key players in the hospitality industry (Travel Industry News 2010). The above condition means that the food prices will also have to rise. This makes it difficult for the consumer demand to continue trickling in normally. This often indicates that the hotel industry would be losing a huge percentage of their consumer demand due to the recession (Commission of the European Communities 2009). Also, with the recent cry for many industries to take care of the environment, consumers are keen to note the steps the industry is taking to deal with the global issue of environmental preservation. This implies that, with a falling economy, it is hard to keep track of all that while trying not to go under due to the recession. Another effect would be the decline in the interaction of people due to these economic changes. People do not get to travel around as they were once used to. During these times, basic living is the only thing on people’s minds. The social factor is often forgotten. Only those living above the poverty line and with very high incomes can still afford cruises to different destinations for a vacation. Almost every country was affected by the recession. However, a selected few did not feel the full impact of the recession. These included countries like China and India (Dhawan 2007). Their economy, however, depends on foreign visitors hence, to some extent, the recession could be felt. The major effect was the fall in profits experienced by the players in the industry. It was a difficult time for the hotels since they could not record any significant boost in the sales of services and products they offer. Later on, this caused a reduction in air travel expenditure which affected the country’s economy even more (Commission of the European Communities 2009). The reason this is happening is because of the poor set strategies to help in the growth of the economy. The government and other non-governmental organizations do not effectively implement policies that seek to help the hospitality industry. Without these strategies, it is only a matter of time before all the big fish in the industry tumble down. This may help or go a long way in determining the manner in which the industry is treated since it is considered the number one earner of capital in most country. Another reason the recession may have occurred was due to lack of proper investment. The hospitality industry has failed to come up with plans to ensure that its products and services are available and being consumed by the public. It is imperative that there be investment into the industry like never before for the sake of the growth of the industry (Commission of the European Communities 2009). Getting to develop and build hotels at the present time is the best possible solution for the industry. It could work to further improve the industry in general. This means that it would only grow bigger and better. The building and construction of these hotels could mean that there is investment being carried out. It does not necessarily have to come from the government. There should be non-governmental organizations involved and the private sector should also get into this industry. With the right funding and footing, the step in the right direction is likely to be attained. The private sector should also be willing to help in the development of this industry (Knowles 2004). If all the players in the game join hands, it is very easy for the growth of this industry to reach its peak. No single economy in the world can boast of having been secure throughout its existence. It is a matter of taking a chance with all the factors involved. The turbulent nature of the economy can cause anxiety in any country. This means that, at any moment, there could be a rise in the economy and an equal drop of the same economy if not well handled (Daub 1987). The privatization of some of the big hotels could mean that there will be more capital produced to the government due to tax. It is their job to ensure that the capital accrued will go into ensuring the economy is well balanced. As a student, it can be very easy to understand how the economy in any country behaves. This means that learning of such expected or unexpected behaviour could help predict the future of the hospitality industry. Knowledge gathered from past experience over the falling of the economy could help prepare those involved for a fight over survival (Knowles 2004). Survival to keep their business afloat over the looming economic crisis that might render them crippled. One of the main areas a student can focus on is the way to price their commodity levels during such a period. To prevent the industry from pushing consumers away, it is imperative that they adapt with the times. Nobody aims at making a loss as they go into business. In this case, however, a loss is guaranteed, but it depends solely on how much one is ready to lose. A student could help this industry to understand that it is just a temporary set-back, thus helping to normalize the situation. This could go a long way in maintaining the position that the hospitality industry held. After consumers get the desired feeling of satisfaction, it is guaranteed that they will always come back. The hospitality industry can go on surviving in the harsh economic times while waiting for the relevant authority to do what they are supposed to do (Frumkin 2004). The part can be played by all those in the society. However, it is the job of the relevant authorities to do what they are supposed to, to reduce the high cost of living that has brought down many economies. In conclusion, society should note that there are many industries present in the world today. Society needs to be aware of the role played by these industries in the growth and development of the economy. The hospitality industry is one such industry. Its growth and development is crucial for economic development. Without this industry, not much can be achieved. It is only fair that this industry be applauded for standing through the test of time. Harsh economic times have seen it almost destroyed, but it has still managed to thrive despite the hardships. With the right efforts aimed in the right direction, the hospitality industry will soon be leading in economic growth in every continent. References Barrows, CW 2008, Introduction to the hospitality industry, Routledge, London. Commission of the European Communities 2009, European economy: recent economic trends, Sage, London. Daub, MA 1987, Canadian economic forecasting: in a world where all’s unsure, Hart Publishers, Canada. Dhawan, J 2007, The changing face of Indian economy, Butterworth Publishers, New Zealand. Dimitri, L. & Debbage, KG 1998, The economic geography of the tourist industry: a supply-side analysis, Macmillan Publishers, New York. Frumkin, N 2004, Tracking America’s economy, Free Press, New York. Ghassan, A 2009, The economic situation and its impact on hospitality. Cambridge University Press, Cambridge, MA. Knowles, T 2004, The globalization of tourism and hospitality: a strategic perspective, Bantam Books, New York. Strawser, CJ & Meghan, MR 2008, Business statistics of the United States: patterns of economic change, Oxford University Press, Oxford. Travel Industry News 2010, Current effect of the world economy on the hotel industry, Free Press, New York. Read More