Introduction to Drivers and Barriers
In the present scenario, hospitality industry has become one of the leading and most potential industries in the world. Further, it can also be explained that this sector has a significant impact on the economic growth and development of a country. It also provides aid to local economies and supports them to overcome from issues such as unemployment. The present report explains identification and analysis of important drivers and barriers which affect the hospitality industry. Along with this, it also highlights the comparison between hospitality industry of UK and USA. Two different models which are cage model and the Yip model has been used in this study to become aware about the key drivers and major challenges which has been faced by the hospitality industry.
Identification of drives and barriers affecting development of hospitality indusrty
Hospitality industry provides a wide range of products and services to people in the market. It includes restaurants, hotels, amusement parks, country clubs, resorts, cruise ships, etc. One of the main purposes of businesses operating in this industry is to gain high degree of customer satisfaction. This is the only reason why hospitality organizations make frequent changes in their products and services in order to meet the needs and demand of people in the market. In last few decades, the entire industry has grown significantly as more private organizations have entered in it. Parsa, (2015) has explained that the entire image of a country get affected by the operations and activities of hospitality industry. In simple words, it can be stated that better products and services will enhance the overall image of a nation whereas poor services will result in degradation of the same.
Key drivers in hospitality industry
In UK, hospitality industry contributes a lot in the overall development of the country. However, Lee-Ross and Lashley, 2010 has argued that like other sectors, hospitality industry is also facing various kinds of issues and challenges. The nation is having more than 10000 hotels which are operating with the purpose of satisfying needs and demand of tourists. As per the views of Sloan, Legrand and Chen, (2013) key drivers include marketing, sustainability, technology, etc. It can be stated that marketing has started to play an important role in the success of businesses that are operating in hospitality industry. The growing rate of internet and mobile users has provided organizations with more potential and cost effective platforms to advertise and promote their services. Nowadays, businesses are able to interact with customers with the help of social networking sites such as Facebook and Twitter.
Organizations are able to display their new products, services or any offers with the help of these sites. According to Pizam and Holcomb, (2010) one of the major benefits of using social media to market products is that it helps the firms to reach at mass audience easily. Another key driver linked with hospitality industry is sustainability. Further, it can also be explained that with the increasing rate of pollution and scarcity of resources, businesses are now required to utilize resources in an appropriate manner. In addition to this, they are also required to ensure the fact that their operations and practices do not have any kind of negative impact on environment as well as on society under which they operate.
Barriers to hospitality industry
At the time of operating in global business environment, businesses in hospitality industry are facing various kinds of barriers. As per the views Brotherton, (2012) of, one of the key barriers in success of organization is the shortage of skilled and talented workforce. It can also be stated that the rate of employee turnover is very high in hospitality industry. In the present scenario, managing and hiring effective and talented personnel has become very challenging. The reasons behind lack of skilled human resources are low pay and inadequate work timings. Jauhari, (2014) Has argued that businesses operating in hospitality industry are required to take corrective measures to retain the workers and to lower down the rate of employee turnover. This can be done with the help of providing motivation and rewards to workers at regular intervals.
Another barrier which is affecting the success of businesses is related to customer satisfaction. Nowadays, people in market want these businesses to deliver high quality of products and services at low or convenient prices. Management of these businesses is required to upgrade their technology at regular intervals in order to lower down their cost of operations. In addition to this, they also need to respond quickly to the changing needs and demand of people in the market. As per the view of Madera, (2011) one of the major barriers in the success of businesses in hospitality industry can be termed as its high degree of competition. In today’s era, it has become very difficult for the organizations to retain their old customers and to attract the new one. People have a wide variety of alternatives that are available to satisfy their needs and demand. This has made it very difficult for businesses to increase their sales and profitability. Pizam, Okumus and Hutchinson, (2013) has asserted that organizations are now required to offer something new and unique to meet the demand of people in market and to gain competitive advantage over other market players.
According to Taylor and et.al., (2011) hospitality industry is also facing challenges related to up-gradation of technology. In order to operate in a cost effective manner and to survive in the long run, businesses are required to invest large amount of human and financial resources in their technology. This is having a direct impact on the overall cost of operations of these businesses. The threat of substitute has become very high for organizations which are operating in this industry. Further, majority of businesses offers same kind of products and services at similar prices. Now, the major challenge for these businesses is to encourage customers to choose and buy their services over other players in market. Warren, (2010) has explained that the bargaining power of customers in this industry has become very high. Major reason behind this is the development of online businesses. It can be stated that the need of travel agents and tour operators has been decreased to a great extent. Customers have options to search and book services via online.
This has resulted in increasing the overall bargaining power of customers. People in market have enough power to drive away the price of products and services which are offered by businesses in this industry. Other than this, it can be also stated that the competition among the firms operating in hospitality industry is also very high. Due to low investment required there are many small and large firms which are having tough competition among themselves to steal market share and customers. High degree of competition has also resulted in affecting the sales and profitability of all the businesses which are operating in this industry. Other than this, bargaining power of suppliers is very low with regards to the hospitality industry. Organizations have wide range of suppliers available which can provide them with better and quality products and services. This means that supplier do not have adequate power to drive away the prices of the products and services which they have supplied. Therefore, organizations are required to take care of various opportunities and threats which can have direct or indirect impact on their entire operations.
Yip framework to identify key drivers of hospitality industry in UK and USA
It can be stated that there are several driving forces associated with The development of hospitality industry of UK and USA. This includes market drivers, cost drivers, government drivers and competitive drivers. It can be stated that the need and demand of customers in both the market is same. The customers of hospitality industry wants that better and quality services are provided to them at more convenient prices. Along with this, customers of UK and USA wants the hospitality services should be highly creative and innovative. The market drivers has helped in addressing the need, demand, taste and preferences of people in both the countries. Further, cost drivers are the one which helps in standardizing those identified need and demand of customers in UK and USA. All the rules and regulations which has been developed by government and other regulatory bodies are covered in government drivers. By taking all regulations into consideration, businesses are able to operate more effectively and smoothly in the long run. This also supports them to ahicve higher profits and sales.
On the other side of this it can be also stated that the globalization of need and demand of people in these two markets has also affected the economy of hospitality sector. On the other side of this, government drives such as trade policies, technical standards and policies developed by host government has also affected the operations of hospitality industry. The government of both UK and USA encourages growth and development of the entire hospitality industry. Policies related to trade in these countries are more fair and transparent. This results in increasing the sales and profitability of businesses operating in hospitality industry for both the nation. At the time of operating at both local and international level, there are many key drivers which supports businesses in hospitality industry.
This can be explained by the fact that with the help of driver such as internationalization, the industry has been able to develop because the need and demand of people in both countries are same. Along with this, various kind of economies of scale supports businesses in both UK and USA to lower down their overall cost of operations. Government drivers has supported organization to operate freely by discouraging any kind of unfair practices and policies. It can be also stated that with the help of technology, businesses in this industry are able to lower down their cost of operations. This has also supported them in getting competitive advantage over other businesses. The hospitality industry of both UK and USA are interdependent which each other. This means that increase in demand of hospitality services in one country will increase the demand of in other.
CAGE framework to identify and discuss the barriers (challenges) to industry development in the two selected countries/regions
After applying the cage framework, it can be stated that there are many challenges or barriers which are being faced by hospitality industry in UK and USA. The four major barriers includes cultural distance, geographic, administrative and political and economic/ wealth distance. It can be argued that religious norms and language in both the countries are different. This has become a major barrier in development of hospitality industry. On the other hand, there is lack of social connection between both the countries.
Therefore, with the help of the above explained two models, it can be stated that there are lots of barriers which the hospitality industry of UK and USA are facing. The industry in both countries are considered as highly potential and effective. Furthermore, it can be explained that its key drivers are the one which has supported in the growth and success of the entire industry. On the other side of this, it can be argued that the hospitality industry at local as well as at international level is required to eliminate all barriers which it is currently facing. The government of both the countries which is UK and USA needs to develop effective plans to overcome cultural distances between both the countries. Along with this, the government is also required to overcome deal and lower down administrative, geographic and economic distance. With the help of CAGE framework, the scholar has been able to view the distance and differences more clearly. It has also supported in getting aware of differences between the countries which has resulted in creating barriers in growth of their own hospitality industry. It can be also stated that differences such as geographical affects the overall cost of the transporting services from one country to another. On the other side of this, the cultural differences has resulted in differentiation of customer demand in both the countries. The model has also supported in comparing the hospitality industry of home country which is of UK to another country which is USA.
From the above study, it can be concluded that the hospitality industry is facing lots of issues and challenges which are required to be overcome as soon as possible. Along with this, it can be also concluded that market, cost, government and competitive drivers are some key drivers which has resulted in the growth and development of the entire industry. From the above study, it can be concluded that there are various challenges and obstacles which has restricted the growth of hospitality industry. All the businesses and government of home country are required to take corrective actions and develop effective plans to overcome from all the major barriers. Therefore, it can be stated that hospitality industry needs to work upon various factors to develop in long run.
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