Last Updated 17 Aug 2022

PESTLE Analysis of Hospitality Industry

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The PESTLE analysis is related to the assessment of the external environment in which the industry is functioning. This analysis will assess the impact of the political, economic, social, technological, and legal factors on the industry. The analysis is presented below:

Political Environment

The influence of the political factors in the way of change in the regulatory measures and the attitudes of the current government will largely determine the growth and success of any industry and the players within that industry (Keim, 2001).

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If the government is stable and a staunch supporter of the industry then there will be ample chances for the industry to grow. In the case of Hospitality industry because of the revenue to the government from the tourism sector, there is the complete support for the industry and the political environment is conducive for the development of the industry. Read about political factors affecting Ryanair

Economic Environment

Under economic environment factor the elements like current taxation levels, prevailing inflation rate, the position of the balance of trade and exchange rates, the level of unemployment, the changes in interest rates and availability of finances affect the functioning of the industry. The economic environment refers to the nature and direction of the economy in which a firm competes or may compete (Fahey & Narayanan, 1986). Based on the application of these factors in the global context the economic environment cannot be assessed as more favorable for the development and growth of the industry.

Economic downtrend has affected the spending capacity of the people in general and this has resulted in the poor performance by most of the firms in the hospitality industry. The tourism and hotel business have been severely hit by the recessionary tendency all over the world.

Social Environment

Changes in the values and life styles, changes in values and beliefs, changing patterns of work and leisure, demographic changes, changing mix in the ethnic and religious background of the population – all will have their influence on the sustenance of the industry.

The growing gender, ethnic, and cultural diversity in the workforce creates challenges and opportunities (Barlett & Goshal, 2002) invariably to every industry. In the global context, all these factors presently work to the disadvantage of the hospitality industry as the changes in life style and values of customers show a declining trend, which in turn has adversely affected the hospitality industry.

Influence of Technological Factors

The technological developments change the ways in which various services are provided and especially with the introduction of the broadband connectivity, the commercial world has undergone a wide change. All these technological developments have their impact in the functioning and growth of the hospitality industry globally. The advanced systems of Enterprise Resources Planning (ERP), Customer Relation Management (CRM), and Supply Chain Management (SCM) have contributed to the systematic enlargement of the industry. Read also about hotel reservation system

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