Chapter 4: Uniqueness of the Hospitality Product

Abstract

This chapter is excerpted from ‘A Profile of the Hospitality Industry'. The hospitality industry is generally referred to as businesses that provide accommodation and foodservice. Traditionally an entrepreneurial business, it now includes organizations ranging from small independent cafes to large multinational corporations. Businesses in the hospitality industry have many organizational structures to include whole ownership, franchising, consortia, and management contracts as key configurations. Affected by capital investment, travel and tourism trends, threats and opportunities, the hospitality industry has proved resilient. The hospitality industry is unique in many aspects of organization and strategy. In addition, the hospitality product is generally part service and part product, produced and consumed simultaneously, and includes the customer as part of the delivery process. Inventory is perishable. Human resources plays a significant role as the hospitality industry is labor intensive. Because the hospitality industry is so diverse, governmental regulation and policies influence many aspects of the industry. Of primary concern are policies that promote or restrict tourism and travel. Guest and employee safety are highly regulated. Hospitality businesses are subject to labor provisions, food safety laws and requirements for accommodations for customers with disabilities. Global expansion is also highly regulated with requirements for partnership and governmental ownership in foreign development and investment. The hospitality industry is ripe with opportunity and challenges. Global expansion is increasingly a part of the modern hospitality industry. The hospitality industry faces many challenges. The ongoing threat of terrorism to travel remains a concern. Cost and availability of capital for expansion can be an obstacle in some markets. Technology has changed the distribution of the hospitality product. Pricing transparency in lodging and accommodations threatens commoditization. Social marketing, while presenting opportunities, has also destabilized the ratings and information process of hospitality products, putting control of information in the hands of the consumer. Greening, or sustainability efforts, provides both opportunity and challenge as hospitality organizations embrace market, methods, and processes which renew and replenish resources.