Various factors affect the operational activities of the hotel and hospitality industry. The macro-environment factors are, therefore, the external factors that affect these businesses. Being in the hotel and hospitality industry and having extensive branches in South Africa, the Gazella hotels should consider five macro-environment factors, including economic, technological, demographic, political, and social-cultural factors that would either positively or negatively affect the business.
Question 1
Macro Environment Factors
Economic Factors
Economic factors that affect the hotel’s business include unpredictable economic cycles, fluctuating currencies, and workforce availability. National or natural disasters can cause unpredictable economic cycles. These economic cycles affect how people spend; in case of increased travel spending, the hotel business experience increased profits (Market insider, 2017). When the economy is not doing well, the hotel business experiences a decrease in discretional spending (Frue, 20201). The availability of labor enables the industry to offer personalized services effectively. In addition, the strength of a currency affects the attractiveness of vacation spots.
Technological Factor
The technological factor is a major factor of the macro-environment that simultaneously affects business and customers. Technology is one factor that has played a significant role in the hotel industry in the past decade (Frue, 2021; Kasima, 2016, p. 520). In conclusion, technology has enabled most companies to reduce their operating costs, enhance their operations, and improve customer experience due to better service delivery.
Demographic Factors
In the hospitality business, the changing lifestyles of people affect the trends followed, which plays a significant role in the profits generated by hotels. Some of the demographic ratios that would impact the hotel business include population, gender, age, sex, and lifestyles (Frue, 2021; Market Insider, 2017). The demography is not only the customers but also the employees that work in the hotels. Demographics are important in understanding how customers search for information and the factors that inform their decisions to purchase services online (Uca et al., 2017, p. 237). Therefore, a company’s ability to measure such characteristics enables it to identify the number of potential customers to target its products and services.
Political Factors
Politics as a macro environment factor is highly significant since a slight change in politics would drastically affect business processes or make the businesses non-existent. A country’s government holds extensive power over the hospitality industry (Koc, 2020; Erel, 2021, p. 343). For example, tax reforms can enable hotel businesses to pay lower taxes, and the saved amounts would expand the businesses. A change in government would either negatively or positively affect the hotel industry as a new president would mean new ideals which would favor or disfavor the industry.
Social-Cultural Factors
Social-cultural forces have a human impact on the hotel industry. The emphasis is on the change in the quality of life of people, which affects their preferences (Koc, 2020). Most customers prefer cheaper hotels with convenience. In conclusion, cultural diversity highly influences the hotel industry due to the global customers with differing traditions, norms, and identity.
Question 2
Practical Examples of How Each Factor Would Impact on Gazilla Hotels
Economic Factors
South Africa’s economy is influenced by several factors that can fluctuate the business operations of Gazilla Hotels in the country. The Corporate Tax rate in South Africa is at 28% for all the companies with additional capital gains tax at a 22.4 % rate (Expatica, 2021). If South Africa’s government increased the corporate tax, most businesses would experience abrupt economic losses. A rise in corporate tax would mean that the companies would keep fewer profits needed for investments, increasing the possibility of job losses (Expatica, 2021). A decrease in the hotels business would also negatively affect the tourism sector of South Africa as an increase in the hospitality charges would force the tourist to seek tourism destinations with cheaper charges. Although South Africa is still among the developing countries, the strength of its economy makes it generally stable (Expatica, 2021). However, any minor fluctuations in the country’s economy would negatively impact the profit of Gazilla hotels. The fluctuation in economic factors has a significant potential of impacting the cost of services, the demand of the services, and the range of the profits that the hotels would make. In case of such fluctuations, the Gazella hotels would try to engage in comparatively trivial factors such as acquisition and merging to cut the operational costs (Skokic et al., 2016, p. 6; Kim, 2015). Gazella hotels should therefore be keen and consider the economic factor present in the economy and which would negatively affect the business if not addressed as required.
Technological Factor
Gazella hotels have encouraged the installation of modern technologies by engaging photojournalists to take photos and post on company websites and social media accounts. These photos portray employee commitment to serving customers. Therefore, doing this attracts more customers, but then the company management should ensure that the social media accounts and the websites provide all the necessary information to the online customers.
Demographic Factors
The demography does include not only the customers but also the employees of Gazella hotels. Since the company focuses on offering deluxe accommodation and personalized services, the employees working in the company should be well trained (Basan, n.d). Acquiring such employees would mean paying them a higher salary, and for such experienced employees, most would be of mature age and not millennials. The demand for a product or service is dependent on the purchasing power of the customer base.
Political Factors
The government of South Africa is lenient to the hospitality industry, and its support has seen the country attract more tourists. The support is because the hospitality industry’s contribution to the South African economy is approximately a 3% direct contribution to the GDP (Christie, 2014). As a developing country, South Africa has experienced a lot of tension with Xenophobia affecting the number of tourists visiting the country. Due to such unstable conditions, most companies in the industry are experiencing losses. Tourists generally avoid an environment with an unstable environment (Skokic et al., 2016, p. 8). If countries set a travel ban on their citizens, preventing them from going to South Africa, the tourism and hospitality industry would significantly be impacted.
Social-Cultural Factors
Airbnb is the biggest competitor of the hotel industry. Most travelers, especially the millennials, enjoy the mass selection of Airbnb’s rooms since it is easier to book the room through the apps, and most times, the rooms are less expensive than hotels. Even people of older ages have resorted to using Airbnb to book rooms. Gazella hotels should therefore consider making its rooms cheaper or maintain the prices offered by Airbnb. Most hotels have better rooms than those offered by Airbnb, with additional features like a gym, pools, and massage parlors. The prices would therefore ensure Gazilla hotels have an increased competitive advantage.
Question 3
Contribution of the COVID 19 to the Complexities of Each factor
Economic Factors
The COVID 19 pandemic has hit the hotels industry in South Africa. Most people have lost their livelihoods since the pandemic struck, and therefore most people are struggling to balance their lives and livelihoods (Net, 2021). Most people have been forced to sacrifice the ‘luxury’ of hotels, thus decreasing income for hotels, and this has caused most employees to be laid off. However, Gazilla hotels can focus on increasing their sales by reconsidering marketing campaigns that would enable them to offer meal deliveries with deals such as a free dessert for an order exceeding one meal. Due to job losses to employees, Gazilla hotels can work with the remaining employees and incorporate apps that can enable meal delivery to guest rooms due to job losses to employees. Such services might lead to more incurred costs, but then they would help increase the customer base.
Technological Factors
Due to COVID 19, most people have resorted to ordering most services online. Therefore, relying on offline operations can negatively impact the profits that a company gets (Net, 2021). Gazilla hotels have social media accounts and websites, but that is not enough. As a way of innovation, the company should ensure that most of its services are digitized, where it would encourage its clients to use prepaid cards and other online payment methods to make the payments more convenient (Skokic et al. 2016). It should also ensure that all the bookings are done online and capture data involving check-ins, check-out times, rates, facilities on offer, and other details to ensure that its clients make informed decisions and continue enjoying personalized services. Concierge apps would also be helpful to engage clients without personal contacts. Also, the company should consider remote working for most of the employees in sales, digital marketing, and ecommerce since most of the hotel processes are manageable online. Due to this, the company needs to have cloud-based property management systems that can control operations in real-time.
Demographic Factors
The demographic factor that has major been affected is that pertaining to clients. Most older people are considering staying indoors to prevent any chances of being infected with the Corona Virus. Millennials are more eager to explore the world (Net, 2021). Gazilla hotels should therefore focus on the millenials and lower the accommodation prices. They should also consider ways to attract more millennials and include such strategies in the business recovery plan. They can focus on brand authenticity, transparency, and trust, values that millennials highly value.
Political Factors
Due to COVID 19, most governments have put restrictions to help curb the spread of the virus, and all businesses must comply. Gazilla hotels should also reconsider their existing health and safety policies, procedures, and techniques (Net, 2021). Some of the policies would include staff reduction, self-service pay systems, reduction in unnecessary workplace gatherings, meal ordering through apps, and availability of hand sanitizers at the entrance and exits. As expressed, all the policies and procedures should be reconsidered, amended, and adopted to reduce the chances of spreading the infection.
Social-Cultural Factors
The existence of the COVID virus does not mean that hotels doors close until the period ends. Most clients prefer going to less crowded hotels which maintain high-quality services (Net, 2021). Gazilla hotels should ensure that they improve their infrastructure through repairs and maintenance, laundry room systems check, the inclusion of elevators, having life safety checks, including insurance cover in their packages, improving the pools systems, and having elevators for all rooms. Doing this would ensure the safety of the clients without affecting the quality of services that they get.
Conclusion
Various macroenvironment factors including economic, technological, demographic, political and social-cultural factors affect the hotel and hospitality industry either positively or negatively Macro environment factors enable business to assess the elements that would affect the economic environment of a business as a whole and not a particular section of the market. Businesses should therefore be keen to evaluate these factors and work towards ensuring that these factors do not have negative impact on the business operations.
