Impact of Business Environment on Hospitality Industry

impact of business environment on hospitality industry

Hospitality includes the provision of accommodation and food and beverage services within a wide range of establishments and occasions. Paul Morrison, editor of the Australian Journal of Hospitality Management, has noted that these include hotels, motels, clubs, casinos, restaurants, fast food outlets, bars, special event catering, and other services, farm and bed and breakfast establishments, but also in-flight, shipping, rail, school, hospital, college and armed forces catering services (Morrison, 1996). He also suggested that while some patrons are bona fide tourists, the majority are undertaking leisure or commercial activities. This definition of the coverage of the hospitality industry led him to state that it is the hospitality industry not the tourism industry that provides most of the employment and creates the associated wealth attributed to tourism.

The business environment for those firms, government departments, and associations engaged in the hospitality industry is, as might be expected, similar in its generic aspects to that faced by any other industry, while containing a few specific components relating to the nature of that industry (Ansoff, 1987). These generic aspects are the macroeconomic environment, market opportunities, the political environment concerning enterprise and competition, policies towards foreign investment, trade, and exchange controls, taxes, and financing, and the social environment including labor markets, physical and social infrastructures, and national and regional cultures (White and Rudall, 1999; Hope, 2004).

The internal business environment for the larger contemporary hospitality organizations includes inter alia production, marketing, facility management, purchasing, finance, information technology, and human resource management divisions, while as with other industries smaller firms may not be as internally differentiated. For any hospitality business to perform effectively however, interdependent individuals and groups within them must establish working relationships across those boundaries that exist. Individuals and groups depend on one another for information and support facilities so that action can be coordinated and complementary (White and Rudall, 1999, 13).

The external business environment of the firm is most often largely uncontrollable by management. Factors such as demography, economic conditions, level of competition, industry structure, social and cultural forces, political and legal forces, and technological level impact on the ability of the firm to provide its services to its intended clients and to sustain its internal business environment. Equally, external microenvironmental factors of the market, suppliers, competitors and intermediaries all influence the behavior of the firm in the business environment. External factors perceived as causing

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