Hospitality industry is very wide and prosperous. All the businesses providing accommodations, catering, transportation, for people away from their homes are considered as hospitality organizations. The growth and the challenges of this industry are not solely dependent on the organizations and companies involved in it but also on the business environment.
Business environment can be explained as set of external factors and forces, i.e. social, economic, political, technological, which have direct or indirect effects on the business organizations (P. Ward, R. Duray, 1995). The analysis of the business environment can be conducted by means of PEST, which is a tool to find out the external influences such as political, economic, social and environmental, on the business environment (Hone, 1994). By this method the management team of a company manages to examine the effects that the events or impacts from outside may have on the performance of the company. Moreover, it also allows us to face the global and local impacts of the external factors (P. Ward, R. Duray, 1995).
Hotel Ritz-Carlton being one of the leading hotels in the world will be taken as an epicenter of the investigation to reveal the results of the influences that the above-mentioned factors cause. The Ritz-Carlton New York, Central Park hotel is located in the heart of Manhattan welcoming guests to enjoy the elegance of the 5star luxurious hotel and the beautiful landmark. The property offers 259 guest rooms and 47 attractively designed suites (Ritz-Carlton Company, 2013). The combination of the personalized service and absolutely relaxing atmosphere make the hotel stand out among its competitors. Ritz-Carlton hotel chain has 100 years of history, thus the managerial and operational success is a result of the improved strategies for decades.
* Political Environment
The political environment of the hospitality industry touches the areas of relevant laws and regulations that the companies are obliged to follow and obey. The familiarization to the new laws and policies are important since they are to keep the legal aspect under control as well as bring benefits to the firm. The general political situation of the destination can have a crucial role on the hospitality industry. Instability of the government and legislation as well as the wars, strikes, revolutions will obviously have negative impact on the tourist inflow and consequently on the industry. The airline companies in the hospitality industry usually have a direct bullet from the political influences. The air-alliances, regulations and agreements between countries have a major effect and unstable political relationships may cause dramatic changes in the industry.
In regard to the investments on setting up new businesses in the hospitality industry, the government regime and the sequence of the documentation is dependent on a specific country or location (Cathy A. Enz, 2010).
Every country has its unique laws and regulations. In our particular case The United States is very flexible in terms of the rules for the new and existing investors. The Graham-Leach-Bliley Act in the 1990s in the United States repealed the New Deal era Glass-Steagall Banking Act. According to the new law the companies and firms were given the opportunity to expand their services with fewer taxes (Vessenes, Peter, 2003).
* Economic Environment
In order to find out the impacts of the economic factor, it’s necessary to be familiar with economic state and regulations of the destination. The sales and the revenue generating process of the industry is dependent to many economic factors such as the gross domestic product, interest rates, inflation rate and the speed of the economic growth (Cooper, Fletcher, 1998). The foreign-currency can influence sales both positively and negatively in the hotel industry dependent on the current exchange rates of the location...
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The Ritz-Carlton, 2011. The Ritz-Carlton Magazine. New York From Top to Bottom, vol 7, no 3, 17-21
Vessenes, Peter, 2003
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