PEST Analysis

Topics: Hotel, Tourism, Hospitality industry Pages: 36 (15844 words) Published: July 12, 2015
2.1.1 POLITICAL
The hotel industry had evolved very rapidly since the opening policy in 1978, after that the economy has gradually transformed to a market-oriented one. The reform has created a much better business environment for the hotel industry development (Hornsby, 1990). According to Kotler (1996), The political environment is strongly affect hospitality industry, political environment is made up of laws, government agencies and pressure groups influence and limit the activities of various organisations and individuals in society. Furthermore, The EU has proposed plans to sponsor holidays for the travellers who have not enough money to travel. According to Travel Weekly (2010), these plans assist many customers who facing financial problems or personal circumstances to have a vacation. For example, young person aged from 18 to 25, disable people and pensioners etc. The idea for help these people to travel was put forward by Antonio Tajani who is the EU commissioner for enterprise and industry, declaring that having a holiday is a human right. Therefore, this proposal actually could stimulate consumer and offer them more opportunity to holidays. Perhaps this might be good news to the hotel industry to fight in the recession. 2.1.2 REGULATORY

Regulation environment is protects companies from each other. While most businesses praise competition, they try to counteract it when it affects them. Another way is try to restrict companies dealing any unfair and guilty transactions. Furthermore, regulation also aims at protecting consumer from unfair business practices. If unregulated, firms might make unsafe or low quality product and services, be untruthful in their advertising, or deceive through packaging and pricing. VisitBritain, the body which aims to promote the UK tourism, has launched a £6.5 million advertising campaign outside the UK to promote the affordability of Britain as a destination. However its calls for this investment to be matched by the UK government have not so far been successful (Mintel, 2009). Moreover, hotel taxes and restaurant taxes have become popular source of revenue for local government. In many case, hotel taxes are supposed to be used to support tourism, however the spending of this money has been subject to liberal interpretation. Therefore, hotel manager should make sure that those taxes designated to promote tourism are used effectively. 2.1.3 ECONOMIC FACTORS

One factor that complicates the situation somewhat is the pound's weak status against the Euro and Dollar. Sterling has lost value rapidly over the last year or so. In July 2008, one pound would still buy $2, but by November 2008 it was worth only $1.48, the lowest point for 6 years. Similarly at one point £1 was almost equal in value to 1 Euro. While this is bad news for people buying goods or travelling outside the UK, it also means that the UK goods and services become more attractively priced from the point of view of Eurozone or USA travellers (O'Grady, 2008) However, economical environment could be included by following elements: Wage inflation - in the recession, the wage of labour might not be increased, it is depend on the decisions are decided to cut the wage or increase the wage by manager. Therefore, hotel manager should pay more attention to income distribution as well as average income. Price inflation - because the recession, if economic decline, the commodity price will rise. It will influence the decision customer make to travel or not. Gross domestic product per capita - the most important economical element are the customer purchasing power and spending patterns, GDP can Indicate these elements, because total purchasing power depend on current income, price, savings, and credit, hotel manager must be aware of major economic trends in income and changing consumer spending patterns. Exchange rates - because the UK economic is fall down, the exchange from a pound to Euro is decrease, therefore, customers might...

References: Recession has being the major influence factor during 2004 to 2009. As noted by Keynote (2010), the number of visits peaked in 2007. However, there was a fall in 2008. During 2007 to 2008, the number of visits fell by one million.
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