Running a profitable business in these tough economic times is getting increasingly difficult. This is especially true for hotel providers who offer a relatively ‘non-essential’ service that most people can easily opt out of in order to save money. In addition to fewer clients, hotels face a myriad of other challenges that they need to prepare for in order to survive through 2017.
Global Threat of Insecurity
Terror is no longer limited to certain areas in the world. It is a serious global issue that affects businesses all over the world, including hotels. Tourists are less likely to travel to particular destinations following attacks, and governments are increasingly issuing travel warnings to their citizens, further limiting the number of travelers to traditional tourist destinations.
However, this is not at all bad news for all hoteliers in the world. Tour companies are increasingly offering tour packages to non-traditional destinations, which are safer and more affordable for the tourists. In addition, these places offer a more authentic cultural experience than traditional destinations, since they have not been modeled after a particular market.
For hotels within high-risk or traditional areas, hosting events such as a home and garden show could be one way to bring in revenue in these bleak times.
Global Financial Crisis
Living in a global village means the issues faced by one ‘household’ affect all the others. For instance, the effect of market crashes and spiking oil prices in one end of the globe will be felt by small businesses on the other end.
The current global financial crisis will affect the industry a number of ways, including:
- Fewer tourists as individuals and households cut costs.
- Increased cost of commodities, especially food.
- Increased energy costs, which will increase overhead costs.
Essentially, running a hotel will become very expensive, particularly since there aren’t enough guests, and it would also be self-defeating to hike prices as it would drive these few guests away.
This will require owners and managers to get creative in order to stay afloat. For instance, they could cut down on energy usage, or employ more energy efficient practices that could help reduce overheads.
Competition and Technology
These two go together because they affect each other. For instance, technology has made it possible for people to have more options than ever before, at their fingertips. So, with the click of a button, a guest can find a place perfectly suited to their needs.
On the other hand, the availability of technology is fast making the difference between booking one hotel or another. Hotels without secure, fast and reliable internet connections in the rooms are being overlooked, even if they exceed expectations in other areas of service provision.
As such, there is greater competition and a requirement of additional facilities that are now considered essential. This will mean spending money on social media campaigns to attract and retain clients, as well as retaining a reliable Internet Service Provider, at a fee of course.
In order to ‘stay in the fight’, hotel providers will need to get creative in their offers to clients, service delivery, partnerships with other businesses, and in cutting overhead costs in order to weather through these difficult times.