Introduction
External influences are those factors that affect business and the business has no control over these factors. Many external influences do exist. These influences can be economic, legal, environmental or technological. This paper is going to look at these four categories of influences in relation to the hotel industry. The hotel industry is among the successful industries in the current times. However, this industry experiences external influences some of which turn out to be barriers to normal operations while others offer opportunities for growth. A specific hotel in the United Kingdom is going to be considered. This hotel is the Hilton London Paddington.
Hilton London Paddington Hotel
The Hilton London Paddington hotel is a four-star hotel located in London close to Kensington Gardens, Buckingham Palace and the Hyde Park Speaker’s corner. This hotel has a restaurant and a bar and provides services on a 24-hour basis. Its amenities include secretarial services, audio-visual equipment, internet access, and a business center. The event facilities include conference rooms and banquet facilities. This hotel is among the most prestigious and can serve both leisure travelers as well as business travelers. It has a great choice of bedrooms together with the leisure facilities that include the indoor swimming pool and the Livingwell Health club (Anonymous: Hilton London Paddington Hotel – London, 2010).
According to Anonymous (3 posts categorized “Hotel Industry in the United Kingdom, 2009), the hotel aims at realizing sustainable growth in the UK hotel industry. The hotel services of this business establishment will play a critical role in the two cases. The hotel is in a position to establish a wider leadership and most often by carrying out the acquisition of other hotel establishments that are strong together with their services which are then brought together to form a larger new hotel.
The mission of this hotel is to secure the growth of the business in a way that is sustainable and at the same time continuously bringing about improvement in the profitability of the business. The strategy put in place to realize this has four components which include; working hard so as to approach a leading position in the markets that are attractive, concentrating on securing a share that is competitive of the segments of the hotel, carrying out its activities so as to build on the efficiency of the company and bringing down the operating costs, and continuously growing through acquisitions that are selectively provided they bring about shareholder value (Anonymous: 3 posts categorized “Hotel Industry in the United Kingdom, 2009).
The external influences
Four categories of external influences are going to be looked at and they include legal influence, environmental influence, economic influence, and technological influence.
Economic influences
According to Akehurst (2010), the year 2009 was a very difficult year though not an impossible one in regard to the hospitality industry. He believed that this industry was still well-positioned to realize a moderate turnover and the rising in profits in the presence of the ongoing economic calamity and the onset of a government squeeze that was sustainable that involves not only the huge increases in taxes but big cuts in the expenditure of the government and the employment in the public sector as well.
The United Kingdom and the world economic slowdown in the cause of the year 2009 were projected to allow for moderate improvement in the growth of the hospitality industry in the initial half of the year 2010 as long as the businesses in this industry offer favorable value for money and services of high quality to the customers. However, it was projected that in the next half of the year it might turn out to be a period of dampened demand due to the effects of the government taxes that are high and when the expenditure cuts actually set in.
According to Akehurst (2010), a reduction of 24 percent in the business visits to the U.K in the course of the year 2009 up to the month of September led to the ongoing reduction in the total visits to the country. This was according to the data given out by the Office of National Statistics. In the course of the 12 months that came before the month of September the year 2009, the number of those who visited the country from abroad went down by 9 percent and this was a drop of 3 million in comparison with the last 12 months that came before the month of September the year 2008.
However, despite a difficult economic situation like this, the holiday visits were reported to increase in the course of the year by about 1 percent. This was attributed mainly to the reducing pound exchange value, and most particularly in relation to the euro.
In the course of the first nine months of the year 2009, the hotels in the UK experienced a decrease in the occupancy, the income per room, the room rate, and the total revenue per room available. This was attributed partially to the replacement of the business demand by the discounted leisure demand. However, there are indications that hotels and most particularly in the United Kingdom are improving in terms of profitability and the travelers are coming back.
The exchange rates which have been quite favorable have been playing a major role in terms of driving leisure travel from countries like France as well as Germany within the Eurozone. More so, the province occupancy levels have constantly improved from the summer of the year 2009 but on the other hand, strong discounting has brought about lower average room rates.
Basing on these trends, there is an indication that the demand is increasing once again and this growing demand in combination with good cost controls seem to indicate that the reduction in profitability has been stopped. There is a likelihood that the average room rates will still go down up to the middle of the year 2010.
Relating these trends to the operations of the Hilton London Paddington hotel, there is a great potential for the hotel to improve on its profitability. The year 2009 was a year of hardships but not as much bad as it had earlier on been predicted. The hospitality services demand stood at a better position against the actual expectations, and at the time several businesses in the industry have experienced a reduction in demand but in most cases, this drop in demand has not been very much disastrous.
If the Hilton London Paddington Hotel can keep on focusing on good value, high-quality service and thorough cost repression, the hotel will not only be able to go on surviving but in actual sense, it will have to prosper. This is quite possible and this has been seen many times but nothing should be taken for granted by this business. The main source of fear in this is however that a government squeeze that goes on for a long time will kill out the rather delicate recovery that has currently started. This is still an actual possibility as well as an actual threat to the success of the hospitality industry in general.
According to Boles (2005), the owners of hotels as well as the owners of restaurants would be encountering a shortfall in staffing that is big and paying more salaries if there was no arrival of workers from the time there was the expansion to include some more eight member countries. However, according to him, the Governor of the Bank of England together with colleagues over and over again has been alluding to the presence of these new people. Parliament Treasury committee was told by a member of the Monetary Policy Committee that there was minimal doubt that the labor provided by the migrants has assisted in dampening wage pressures.
Having the unemployment rate standing at 4.7 percent in the U.K, the wage pressures should be going up, but on the other hand, this turns out not to be the case. The wage inflation stands at around 4 percent, with revenues in the hospitality sector greatly conforming to the national trend. More so, the benchmark consumer price inflation stands at 2.5 percent having the sector of hospitality posting about 3,7 percent. This is according to the Office for National Statistics of the U.K. (Boles, 2005). A critical question is whether wages are held low by the arrival of people from the new countries that joined the E.U for the corporate strategy, the interest rate-setters as well as the public policy. According to him, if it were not for the readiness of Europeans from the eastern part to arrive in Britain, the hotel chains based in the United States of America would be making struggles to fill up the empty positions and left paying greatly more for the staff responsible for housekeeping as well as for the kitchen. But the actual information is dolefully not complete. The people who are workers coming from the eastern European Union who is capitalizing on the decision made by the United Kingdom to put off their right to get jobs in the United Kingdom have made a contribution of an average net of about $876 to the economy from the month of May in the year 2004. This is according to the Home Office which was not in a position to give an explanation of the way it carried out the calculation of this figure (Bole, 2005). Carrying out the assessment of the actual impact of the new arrivals is of great significance not only for the policymakers at the national level but as well to their E.U counterparts anywhere else. While nations like the United Kingdom, Sweden as well as Ireland allowed for the entry of the new members of the European Union, the rest of the nations made a choice to enforce restrictions on the free labor movement. This policy is under review.
The inter-EU migration would possibly bring up the level of the GDPs of the host countries to about 0.3 percent and at the same time blowing wages by up to about 0.6 percent. This is according to the models set up by Herbert Brucker together with Tito Boeri in the research they carried out (Bole, 2005). This research made a discovery of the idea that in relative terms those who mainly benefit are the countries of origin that get the remittances.
This brings about a situation where there is a dilemma in the policy. This is so because not just richer countries would move economic benefits to those countries that are poorer at the expense of holding back the wage prospects at the domestic level, but there could as well be the worsening of the effect if not all the members of the European Union operate on the basis of the same rules.
To carry out the assessment of the impact of the migrants in the E.U, the central bank is supposed to have more information on the number of the new arrivals, the time they are staying and the amount of money they are using while in the U.K as it is the opposite case about the amount of money that is being sent back to the countries of origin. Some experts suggest that the Eastern European workers are using almost half of their wages in the U.K in terms of spending on living expenses and the other half is taken back to their home countries. The idea of having higher salaries in the U.K implies that the flow of workers will remain steady (Bole, 2005).
Basing on this, this turns out to be of benefit to the Hilton London Paddington Hotel. This inflow of new workers from Eastern European countries allows for the availability of adequate labor. This is of advantage to the hotel in a way that there will be a larger pool from which the workers will be taken. It is much easier to access the workers with the required skills to carry out particular jobs as opposed to a small pool where there will be a lack of enough skilled workers.
According to Anonymous (Terrorism fears may hamper hotels’ recovery, 2004), a research carried out by PKF, an accountancy firm, revealed that even if the year 2004 should see the hotel sector reverting back to its normal level from the three past years that were depressing, there was a possibility that the tourists could not be encouraged to come basing of the fact that there was a possibility of the terrorist attacks. According to this study, London could undergo so many troubles to be able to attract tourists from overseas because of the war in Iraq and the bombings that had occurred in recent times in Madrid which served as warnings that the next attacks could be done on the U.K.
This study revealed that the hotels in Britain realized a reduction in hotel occupancy by about 0.1 percent in the previous year to about 71 percent. The hotels in London underwent great losses with the revenues from rooms going down by about 4.5 percent in comparison with the other parts of England. This poor performance was attributed to the Iraq war.
The hotels and bed breakfasts have put up with an unstable past three years, with the terrorist attack of September 11 and the crisis that arose from the foot and mouth disease causing the small business operators to close their businesses (Anonymous: Terrorism fears may hamper hotels’ recovery, 2004).
This issue of wars and terrorist attacks may have a negative impact on the operations of the Hilton London Paddington hotel. Since the hotel is located in London which is deemed to be a target by the terrorists, this may bring in fear among the overseas customers coming in. However, there should be appropriate verification of these rumors that seem to spoil the hotel business and the necessary communication be carried out to the customers about the actual situation in regard to the fears of the terrorist attacks.
Legal influence
The legal issues in any kind of business should be keenly observed in order to avoid the violation of the law. The legal issues have so much influence on a business and the business organization might not have control over this influence. The legal influence can spring from such sources as consumer legislation, data protection and employment legislation. This section is basically going to look at data protection and will specifically consider the Data Protection Act 1998 and linking this to the business operations of the Hilton London Paddington Hotel.
According to Lucas (2004), the Data Protection Act, 1998 is an Act of parliament in the UK that gives a definition to the law of the U.K on data processing about people who can be identified. It is the major part of legislation that offers control over the protection of personal data in the nation. Even if this act does not give mention privacy, in the practical situation it offers a means by which people can control their own personal information. A large part of the act is not applicable to domestic use (Data Protection Act 1998). Any person holding personal data for other intentions is supposed to observe this act which is subjected to some exceptions.
This act made a replacement of the Data Protection Act 1984. It was put in place to bring the law of the United Kingdom in conformity with the European Directive of 1995. In some features like electronic marketing and communication, this act has been refreshed by the resulting legislation. The EC directive has since changed the (acceptance) requirement. Exemptions still remain for the existing clients. The key principles of the act can be summarized as indicated below:
One of the principles of information handling practice is that data may be utilized for the purposes that are specific in nature for which it has been gathered. Another principle is that there must be no disclosure of data to irrelevant parties without the acceptance of the person on whom the data is about. This can only be done in the case where legislation exists or where there is a reason that is legitimate to allow the sharing of the information. It is illegal for the irrelevant parties to get this personal data in the absence of authorization.
More so, another principle is that people have the right to access the data about them but exceptions do exist like in the case where the data is held in order to prevent a crime or to detect a crime. Another principle provides that the personal data can be held but not beyond a time period than it is required and this data must always be updated.
The next principle is that the personal data may not be taken to other areas beyond the European Economic Area. This can only be done in the case where the person whose data is held agrees or there is sufficient protection for this information. More so, in the face of some exceptions for organizations that do not carry out complex processing, for utilization that is domestic, the overall entities concerned with the processing of the data should register themselves with the Information Commissioner’s Office.
In addition, those entities concerned with holding personal data are supposed to have sufficient measures put in place in regard to security. These measures consist of technical measures like firewalls and organizational measures like the training of the staff. Lastly, individuals possess the right to have the information that is not right to undergo correction.
Since the Hilton London Hotel Paddington is very much involved in handling data about their customers, this business organization is supposed to comply with this act. The hotel keeps data concerning their customers for the purpose of efficiently carrying out their business operations. It should observe all the principles of this act in order to avoid violating the law.
Technological influences
With the advent of modernization in the field of information technology, it is quite vital for the hotel businesses, regardless of their size, to keep themselves abreast with the current trends in order to hold their competitive value of the services and products they provide in the world market. Among the most obvious trends is the use of information systems as well as innovative technologies so we to build on the operations of the business (Harrison, 2003).
The hotel; innovation technologies refer to the systems and gadgets that bring about the implementation of the policies of the hotel and the duties essential to give the clients satisfaction as well as employees and the management in a most effective and efficient way possible.
According to Anonymous (3 posts categorized “Hotel Industry in the United Kingdom, 2009), among technologies used by the Hilton London Paddington hotel is the hotel automation system. This system provides the integration of vital documents of the hotel of all kinds by way of integrating images in the automation system. This system encompasses such applications as word processing, spreadsheet, database, and mail and all of these applications are capable of accessing image documents. It is possible to store the image documents because of the utilization of the various storage media. The storage media include optical disks and microfilms.
Transaction processing (system) collects and organizes hotel operations data. An example can be given by a banking operation that requires the transfer of $1000 from the customer’s account to the checking account of the hotel. This would look as if it was one operation to the hotel but in the actual sense, this operation composes of two steps. The first step is to debit the account of the customer by $1000 and the other step is to credit the checking account of the hotel by $1000. If there was a success in carrying out debiting and no success in crediting, then there would be the disappearance of the $1000.
The task of the transaction processing system is to make the combination of the two transactions and puts them in one transaction. In the case where the operation does not succeed, there is the discarding of the data that is copied and the reporting of the error. These are among the technologies adopted by the Hilton London Paddington hotel that has enabled the company to offer services to its customers in the most efficient way. The advancement in technology has generally offered an opportunity for this business on which it has capitalized to improve on its operations.
Environmental influences
With the increasing degradation of the environment, on the increasing level, people all over the world are becoming aware of the vitality of coming up with and implementing measures that are more effective to offer protection to the environment. Sustainable development has therefore turned out to be an essential priority and an actual challenge of the present day. This issue should be dealt with at all levels, working together with the makers of the policies, industry, and the general public among others.
According to Bohdanowicz, Simanic, and Martinac (2005), the continuously rising environmental loads produced by the built environment and their expanding multiplicity require measures that are more effective targeted at bringing down the ecological track of buildings. Within the tourism industry, the hotels are responsible for a great amount of the general pollution brought about by this sector Anonymous (The Interaction between Business and the Environment in the Tourism Industry, 2007). The prospective of carrying out the implementation of the practices that are more sustainable in the hotel sector calls for the presence of the tools that are more reliable to carry out assessment and hotel environmental performance benchmarking.
Several such tools have been built up by the international organizations concerned with the environment, as well as hotel companies and branch associations. The several schemes vary depending on the geographical areas under consideration, the nature of hotel facilities, the environmental information needed, the methods of benchmarking, the cost of implementation, and the user-friendliness.
According to Bohdanowicz, Simanic, and Martinac (2005), up to very recent times, the hotel industry has had a very minimal concern about the level to which the environmental destruction brought about by the services and operations it engages in. However, in the last twenty years or so, there has been a rising level of awareness in regard to the environmental matters among people, the coming up of the social-environmental movements and the building up of the “green consumerism” concept. This ultimately has triggered high criticism of the hotel practices carried out. Just recently, environmental responsibility has obtained much of the hotel industry’s attention and currently is turned out to be a corporate issue.
In order to realize higher environmental responsibility, however, there is a necessity to have clear tools of implementation as well as strategies. The basic move of implementation involves enforcing laws and regulations. These laws and regulations include the laws relevant to the use of water, laws related to health and safety requirements, and laws related to waste generation and emissions release as well as building and planning regulations.
The Hilton London Paddington hotel has to regard the issue of environmental responsibility as a corporate issue and carry out its operations in the most effective way to prevent the destruction of the environment.
Conclusion
Having considered the four main external influences on the business activities, and in this case the Hilton London Paddington, it has been established that these influences are beyond the control of the business organization. These influences can pose a threat to a business and in some cases may offer opportunities for the growth of the business organization. Therefore, it is quite vital for the Hilton London Hotel management to be in a position to identify those influences that pose a threat to position themselves in an appropriate way to be able to deal with this. It should also be able to identify those influences that bring about opportunities and be able to capitalize on this.
Reference
Anonymous, (2010). Hilton London Paddington Hotel – London. Web.
Anonymous, (2009). 3 posts categorized “Hotel Industry in the United Kingdom. Web.
Anonymous, (2007). The Interaction between Business and the Environment in the Tourism Industry. Web.
Anonymous, (2004). Terrorism fears may hamper hotels’ recovery. Web.
Akehurst, G. Hospitality industry forecasts for 2010. Web.
Bohdanowicz P., Simanic B., and Martinac I., (2005). Sustainable hotels – Environmental reporting according to green globe 21, green globes Canada/Gem UK. Ihei Benchmark hotel and Hilton environmental reporting. Web.
Boles, C. (2005). Expanding EU Aids U.K Hoteliers. The Wallstreet Journal. Eastern edition. New York, N.Y.
Data Protection Act 1998, Part IV (Exemptions), Section 36, Office of Public Sector Information.
Harrison, J. S. (2003). Strategic analysis for the hospitality industry: hospitality executives must analyze both external factors and internal resource. Web.
Lucas, R. (2004). Employment relations in the hospitality and tourism industries. Routledge. ISBN: 0415297117, 9780415297110