What Are the Top Challenges in Global Hospitality Management Today?

Success in the hospitality industry is notoriously tough, and it has gotten especially hard in recent times. In the wake of unprecedented shifts in supply and demand in the pandemic years, companies in this field have realized the impact of disturbances on survival and the importance of adapting to constantly changing circumstances, such as talent availability, cost increases, demand, and high competition.

However, there are significant opportunities for global hospitality management companies that embrace appropriate technologies and processes to manage these factors effectively, enabling them to attract customers, deliver exceptional experiences, and build loyalty.

● Labour shortages

Talent shortages are an issue in practically every industry today. Labour is critical to success in the people-centric hotel industry. From local restaurants to international airlines, all hospitality businesses rely on service staff. However, talent shortage, combined with a record turnover and salary inflation, has increased labour costs, which are a significant expense for hospitality organizations.

Indeed, hospitality professionals identified labour supply and costs as major concerns in STR's 2023 Hospitality Industry Sentiment survey. Additionally, over half of the hotel CFOs surveyed by EY noted that labour shortages significantly impact their companies' net operating income, with nearly all respondents indicating plans to increase employee wages as a prudent investment, given that a lack of skilled workers can detrimentally affect the guest experience.

● Cost of living crisis

Inflation, or the rate at which costs rise and buying power declines, influences both demand and supply in the hospitality industry. On the demand side, hospitality firms, whether coffee shops or resorts, depend heavily on consumer discretionary spending. When customers have less money, their tendency to spend on extravagances like dining out or a weekend getaway declines.

Reports found that three-quarters of travellers said the cost of living was impacting their spending plans. Similarly, some hospitality companies, including hotels, airlines, and restaurants, depend on non-essential business travel and entertainment expenses more often, the first types of company spending cut back on during times of economic downturn. On the supply side, this leads to higher operational costs since items as simple as flour and jet fuel have risen in price.

● Rising operating expenses

Controlling operating costs, just like labour costs, is crucial for hospitality and sports management businesses because both have a high bearing on the financials. Inflation in every commodity, from food prices to electricity bills, brings profitability down. Therefore, it is essential to have control over the operational expenses while maintaining quality to ensure profitability and growth.

● Growing demand

Lockdowns of the pandemic have devastated hospitality companies; however, various signs indicate ongoing growth that surpasses the pre-pandemic levels. While this is promising for hospitality and sports management companies, they also need to figure out how to manage this higher demand with increased costs and labour shortages.

Concluding Remarks

Those entering the global hospitality management industry are motivated by a desire to please others. However, success requires more than goodwill. Tackling common hospitality challenges such as low seasons, high labour costs, shifts in consumer spending, and regulatory compliance requires investments in tools and processes to respond proactively.

Hospitality companies that invest in strategies and solutions for these challenges will be better positioned to control costs, meet brand promises, capitalize on rising demand, and keep customers.