Challenges Faced by Five-Star Hotels in the Hospitality Industry

Henry NguyenProfessor GidneyCOMM 100W2/25/2019Challenges Faced by Five-Star Hotels The hotel industry mainly the five-star hotels generate revenue for the government through landing fees, exercise duty, customs, license fees, and value-added tax. Revenue collected is used to grow both the local economies of the regions from which is raised as well as the global economy. The hotel industry which is in the field of tourism and hospitality has faced several challenges and thus halting its progress. The imbalance between supply and demand has negatively affected hoteliers (Korstanje & Anthony 29).

In addition, the market for five-star hotels is growing sluggishly, which has further limited for the growth of five-star hotels. Therefore, this paper will discuss the setbacks faced by five-star hotels in the course of their operations. Five-star hotels are known to be luxurious and expensive. These hotels promote corporate citizenship and are dedicated to portray conduct through their actions and behavior. However, five-star hotels are significant as they reduce malnutrition, support local artists, and offer employment opportunities (Korstanje & Anthony 49).

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They provide a rare occasion that makes it possible to transform raw skills into a highly skilled workforce which end up helping the hoteliers. Similarly, five-star hotels support community-based projects that focus on food production, customer service, housekeeping, and spas to economically empower individuals from underprivileged backgrounds (Korstanje & Anthony 43). The hotel sector is worth discussing since it has an excellent previous record and the potential to contribute to global economic performance. Nevertheless, the industry is facing many challenges, and the good thing is that solutions to these challenges are available.

Moreover, the dedication observed in the hotel sector towards creating employment opportunities, enhancing security campaigns, promoting economic growth, and maintaining environmental sustainability is vital in establishing careers in the field. Research on Romanian five-star hotels revealed that forty percent of such hotels have inadequately skilled employees. Dan and Chivu, (1209) argue that in the next ten years, talent shortage will increase by 15 percent in five-star hotels. If this happens, five-star hotels will have hard times due to inadequate human resource. The problem is not the absence of highly skilled and talented persons to work in hotels but the inability of the hotels to attract such individuals (Dan & Chivu 1209). Inadequate skilled workers are also negatively affecting the products and services offered by these hotels. This is adversely affecting the ability of such hotels to make profits (Simon, Dan, Chivu, 440). The issue of the ability of these hotels to satisfy the customers has also been adversely affected by the lack of enough workers. The areas that experience shortage are the positions of receptionists, pastry cooks, cooks, and waiters (Korstanje & Anthony 19). The World Travel and Tourism Council have noted that 10500 jobs are publicized each year which means that vacancies in five-star hotels are continually increasing (Simon, Dan, Chivu, 437). One of the factors contributing to the labor shortage in five-star hotels is emigration as it has led to a shrinking population. Also, there is a deficit of human capital in five-star hotels due to the absence of a national framework to boost the growth of human resource in the hotel industry. A skilled workforce is essential for five-star hotels since it helps them remain competitive. The lack of employee development and training continues to be a significant hindrance in the running of five-star hotels (Leslie 64). The continual designing and implementation of employee training will lead to improved performance in the hotel sector. The role of the human resource unit is to make the organization more attractive by training the employees who will then improve on their current performance which is then translated into the overall organizational performance. However, inadequate development activities have limited acquisition of new skills and knowledge and thus limited career improvement. Economic recessions have also contributed to the slowing growth of the hotel sector which has further reduced the productivity of employees. Terrorism is a global issue that distresses both the developing and developed economies and has led to substantial economic downturns. As mentioned earlier the hotel industry is a source of government revenue and employment for many people employed as cooks and waiters around the globe (Korstanje & Anthony 11). Surprisingly, most government in the world has not been able to secure this important source of revenue against terrorism. As results, the five-star hotels have adversely suffered from the activities of terrorism. For instance, terrorism leads to the closure of hotels and loss of jobs due to the absence of people to serve (Zervas, Davide, and John 17). The impact is more felt in developing countries since they rely on foreign tourists who choose to obey warnings issued by their governments concerning visiting such countries (Korstanje & Anthony 32). For example, on several occasions, the U.S has issued travel warnings to its citizens against visiting Kenya and Nigeria due to frequent terrorist attacks experienced in those countries. The five-star hotels in these countries incur losses since they depend on foreign tourists as their services are not affordable by the locals (Korstanje & Anthony 19). Moreover, domestic tourism has been discouraged since these tourists reside in these countries. Even the people who can afford these services do not go for them for fear of terrorists. Tourism suffers whenever there are activities of terrorism since five-star hotels are targeted as they accommodate high-class individuals who the terrorist seek to kidnap to be paid ransoms (Korstanje & Anthony 19). Therefore, insecurity as a result of terrorism is one of the challenges facing five-star hotels. The government generates revenue by taxing the hotel sector. However, the tax system slows the hoteliers down. 71% of those in the industry said that government fees were the leading challenges facing their businesses. Besides, 46% felt burdened by paying regulatory fees (Zervas, Davide, and John 12). These costs amount into a high operating cost and hence cutting down on the profit margin realized by five-star hotel owners. The increase in the number of five-star hotels around the globe has raised competition in the industry as they compete for the few clients available (Simon, Dan, and Chivu, 432). As of now, luxurious hotels are built as high as 180 floors with many rooms and made available at reduced charges (Zervas, Davide, and John 22). The high competition in the industry has forced some operators out of the industry while others have opted to merge and still, some have experienced acquisitions. The five-star hotels have resulted in acquisitions and mergers to achieve and maintain a competitive advantage. These have become the dominant strategies for remaining relevant in the market which and thus the initial individual objectives are not met. Five-star hotels are faced with numerous challenges in their day-to-day operations. As discussed in this paper, the main difficulties are terrorism, competition, operating costs, shortage of skilled employees, and inadequate training (Zervas, Davide, and John 21). There is a need to train employees and develop strategic objectives if five-star hotels have to survive despite the challenges they face. Also, the governments in the world need to take five-star hotels as an important source of revenue and secure hotels against terrorism. This will boost the number of customers visiting these hotels and as results profits will be higher. Despite these challenges, five-star hotels have to find their way out and remain in the market. There is a need to analyze the challenges they face so that they can come up with lasting solutions. Works CitedDan, Popescu, and Chivu Iulia. "Headhunting challenges and opportunities for the hotel industry in Romania." (2008).Korstanje, Maximiliano E., and Anthony Clayton. "Tourism and terrorism: conflicts and commonalities." Worldwide Hospitality and Tourism Themes 4.1 (2012): 8-25.Leslie, David. "The hospitality industry, industrial placement and personnel management." Service Industries Journal 11.1 (1991): 63-74.ћimon, Cristina, Dan Popescu, and Iulia Chivu. "Romanian Tourism Facing Labour Shortage." Acta Universitatis Danubius. ’conomica 4.1 (2010).Zervas, Georgios, Davide Proserpio, and John W. Byers. "The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry." Journal of marketing research 54.5 (2017): 687-705.