What is the hospitality industry and where it is heading
by Beonprice - 7 October, 2022
The hospitality industry includes a range of areas within the service industry relating to food & beverage, travel & tourism, lodging, and recreation. This obviously includes hotels, but it also includes event planning, theme parks, travel agencies, and restaurants and bars, amongst other sectors. Although many of these sectors are interconnected and reliant on each other, they are also created around very different business models and rely on vastly differing revenue generation strategies. However, they do have one thing in common: they have all been severely impacted by the pandemic and the subsequent economic downturn.
So, what is the hospitality industry, and where is it heading? What issues is the industry facing, and how can you, as a hotel manager, address these concerns and grow your business?
Let’s find out.
What is the hospitality industry?
Let’s start with the basics: what is the hospitality industry?
The hospitality industry is an umbrella term that covers a range of different businesses and service providers. Hospitality services include hotels, bars, restaurants, cafes, and other places of entertainment. Although these seemingly different sectors are likely managed using very different business strategies and business models, they do share one common trait: they are built around the concept of taking care of guests in a friendly manner and making sure that their needs are met. They are also built around the notion of disposable income. Hospitality is there to make life more enjoyable.
Where is the industry heading?
The hospitality industry has experienced a number of dramatic changes over the past few years. This is largely due to the crisis that the tourism sector has experienced as a result of the Covid-19 pandemic. Challenges include new legal requirements, changing customer habits and behaviours, global travel restrictions and the economic fallout. However, the biggest challenges that have been identified in the hospitality industry as a result of the pandemic are labour shortages and fluctuations in demand. Both of these factors can be addressed by focusing on digitisation: internal processes automation and offering an improved guest experience.
Let’s take a look at these challenges in a bit more detail to help us understand where the hospitality industry is heading.
One of the biggest changes we have seen in the hospitality industry since the pandemic is the huge number of labour shortages it is experiencing, also known as The Great Resignation.
The Great Resignation, also known as the Big Quit and the Great Reshuffle, is an ongoing economic trend in which employees, primarily in service industries, are voluntarily resigning from their jobs, citing low pay and unsavoury working conditions as the primary driving force behind their en masse resignations.
As a result of these labour shortages, companies working in all sectors of the hospitality industry are struggling to guarantee the staffing levels they need in order to provide the service levels their customers expect. And this is a big problem.
Another notable impact of the pandemic that has had a major impact on the way the hospitality industry is headed is market fluctuations and unpredictable customer demand. The initial impact, when we were still experiencing government calls for national lockdowns and travel restrictions, was low demand. This summer, with the world beginning to open up, the hospitality industry has been experiencing “revenge travel” where, as a result of spending so much time in confinement, pent-up demand for travel is surging.
However, despite this pent-up demand, fluctuating and unpredictable demand has been further exasperated this summer by the sheer number of airline delays and cancellations which have scuppered travel plans for people all around the globe. And all this makes it very difficult for businesses in the hospitality industry to effectively forecast, anticipate and prepare for demand peaks and lows. This makes it more important than ever to have the right revenue and pricing strategies in place in order to appeal to the right customers at the right time and remain competitive in the industry.
How can you address these issues?
So, what does all this mean for the hotel industry, and how can you address these issues effectively?
Both of these factors can be addressed by focusing on digitisation. In other words, by focusing on internal process automation and offering a digital guest experience.
The best way to overcome these challenges and continue to grow as a profitable hotel is to use the right tools and software in order to improve your customer experience, incorporate the latest trends and developments, and ensure that your guests are content and that their needs are being met. And the key to this is having access to the right data about your market, your customers and your competitors.
For example, a revenue management system enables you to analyse your market and collect all the data you need in order to make informed strategic decisions that generate maximum revenue for your hotel. The right system enables you to track performance data in real-time and create realistic and accurate forecasts so that you can anticipate demand and make the necessary adjustments to your pricing and sustainability strategy in order to maximise the revenue that your hotel is generating.