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PESTEL – Discussion on Development of Integrated Operations Protocol

PESTEL Situational Analysis of Hospitality

The Hotel and Tourism industry is coping with stiff competition with organizations such as Airbnb that provide different affordable rooms compared to the average hotel room. The hotel industry also depends heavily on the government (Frue, 2019). For instance, from potential travel restrictions to tax reforms that cause disruption and shock to the industry.

Political factors

The government have authority over the hotel industry. For example, if the ruling regime restricts travel or imposes travel bans, the impact of such actions would be very detrimental to the hotel industry (Frue, 2019). It only takes one action decision, and a country’s entire economy goes crumbling on its knee. Also, the government control taxes, and there is a need for tax reforms to support the industry through tax reduction.

Economic factors

Factors such as weak current, tailored products, and economic cycles like recession and boom greatly affect the hotel and tourism sector. Fluctuation in the exchange rate can significantly influence the attractiveness of tourist destinations (Frue, 2019). For example, if the dollar is weak compared to other international currencies, then people from other nations would want to visit the United States.

Socio-cultural factors

Potential customers always prefer cheap restaurants and prefer Airbnb rather than big hotels. Airbnb poses the most competitive threat to the hotel industry, and visitors, especially millennials, prefer the room selections that Airbnb offer to their clients (Frue, 2019). Customers can conveniently and quickly book their preferred room using a mobile application system, and the rooms are less expensive compared to hotel neighboring hotels. Nevertheless, hotels offer more services compared to Airbnb rooms. Most hotels offer additional facilities such as a massage parlor, gym and pools, and one can eat in many restaurants found within, like in Starbucks.

Technological factors

Not many years ago, the hotel industry only relied on traditional broadcasting print media. However, the new era of technological advancement has brought forth new media through the internet for people to explore and exploit (LexisNexis, n.d). Social media platforms like Facebook, YouTube and mobile applications systems are the most prominent technique to adjust to changes in the industry.

Legal factors

The two critical laws that affect the hotel industry are innkeeper laws and truth in menu laws. All hotels need to adhere to the truth in menu laws which implies that the hotel needs to be honest about the food and drinks. The hotel needs to be truthful about the calories in the food and the nutritional content of the dishes (Frue, 2019). Besides, the hotel owner adheres to innkeeper regulations that ensure the health and safety of customers and properties. In certain regions, the innkeeper regulations are posted inside the door of all guest rooms. In many scenarios, the innkeeper law will state how much penalties the innkeeper will compensate the hotel if they damage hotel property.

Environmental factors

Guests stay in the hotel for many reasons, such as when on vacation, on a business trip and when visiting friends and family. Clients often prefer to stay somewhere cool and peaceful. The deciding factor for some guests to stay in a hotel is the weather of the local region, which is beyond the control of hotel owners. However, the owners need to understand the seasonal variation before charging their rooms and adjust when necessary.

PESTEL factors and Effectiveness of Risk Management

The PESTEL factors affect the effectiveness of risk management because of the government over-regulation of the sector. Besides, these factors are beyond the business owner’s control, and they have to cope with them in daily operations (LexisNexis, n.d). Therefore, PESTEL factors affect effective risk assessment because of the changing trends in the business operating environment. The factors keep on changing daily, and what might pose a risk today might be a risk tomorrow due to the ever-changing external business environment. Thus, the only way for the business, especially the dynamic hotel industry, to effectively assess risk associated with PESTEL factors is to identify the industry trend.

Comprehensive Risk Management Plan and Safekeeping Strategies for Integrated Operations

Companies are currently embracing an integrated risk management approach to ensure the risk exposure is identified early enough and addressed. The approach enables the management to coordinate and unify risk mitigation measures through the organization. (Mikulić et al., 2018). Therefore, a comprehensive management plan provides safekeeping strategies by enabling the organization to understand its risk exposure properly. In addition, it helps in supporting critical and risk-based decisions to handle the risk exposure (Foerster & Arnold, 2019). The plan provides a conceptual framework and action for checking that operations are executed to meet the organization’s expectations.


Foerster. M.& Arnold.C. (2019). Eight Steps to Establish a Firm Risk Management Program

Frue, K. (2019). Pestle Analysis for Hotel Industry

LexisNexis. (n.d.). The Macro-Environmental Influences on Your Company

Mikulić, J., Sprčić, D. M., Holiček, H., & Prebežac, D. (2018). Strategic crisis management in tourism: An application of integrated risk management principles to the Croatian tourism industry. Journal of destination marketing & management, 7, 36-38.


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