Contemporary Hospitality Issues in Australia †MyAssignmenthelp.com

Question: Discuss about the Contemporary Hospitality Issues in Australia. Answer: Introduction The hospitality sector of the Australia has been growing rapidly with the recent recovery of the economy. In this situation, it is crucial for the hotels to manage the operation cost in a proper way (Cetin et al., 2017). However, due to wasteful practice and high expenses, the profit margin of the hospitality sectors decreases. This is a big concern for the hospitality sectors in the recent years. The hospitality sectors face many unavoidable operation costs such as labor cost, insurance cost, higher energy cost and the brand standards. In order to minimize the operating cost, it is the prime duty of the hospitality sectors to track and manage the cost. This study deals with the operating cost in the hospitality industry and its effect on the business. However, the function of the technology to reduce such cost will be addressed in this section. Discussion Energy cost is a major operating cost in the hospitality sectors. However, energy consumption is increasing in the hospitality sectors due to inappropriate management of the energy saving process. However, a huge proportion of the profitability spends in managing high-energy cost in the hospitality sectors. Heating, cooking, lighting, hot water production, air conditioning, and ventilation are the major causes of high-energy cost in the hospitality sectors (Bokhoree, Balnac Mohee, 2017). However, during the winter season, the heating cost is too high in the hotels, which affects the profitability of such business sectors. High insurance is another big factor that increases the operation cost in the hospitality sectors. However, in order to protect the property, the hospitality sectors establish insurance policy. This insurance policy includes property insurance, staff insurance, and income insurance. However, often the staff claims for their health insurance if the safety is affecte d during their work. In the recent years, the insurance cost is too high that enhances the operation cost. Labor cost is a big factor in the rising operation cost in the hospitality industry. As per the statistical data, the labor cost in Australian hospitality sectors is increased from 32.3% to 34.8% in the year 2009 (Dev, Hamilton Rust, 2017). However, such rising labor cost affects the service of as well as the profitability. Often the hospitality needs to hire expertise from the different countries to enhance their service that is another cause of the rising labor cost. The organization needs to provide payroll related expenses, which is considered as the employee benefit. This cost includes paid time off, retirement plan and mill. Thus, it is difficult for the hotel managers to control such labor cost. Brand standard is another factor of the rising operation cost in the hotels. In order to compete with the other organizations the hospitality industries invest for the brand standard. The hospitality industries try to maintain the luxury standard and to locate their hotels in a crowde d city, which increases their operation cost. In order to provide the luxury service such as food, beverage, banqueting, concierge service and parking the hospitality sectors invest more (King Perry, 2017). As a result, they face the high cost of the brand standard. Electricity is considered as the major utility expense as it comprises 60% of the total expenditure in hospitality sectors (Hospitalitynet.org, 2017). Providing service and water is the largest utility cost includes 23.8%. The service of the hospitality sectors and water supply is associated with the consumption of the fuel and steam. The fuel consumes 10.6% and steam consumes 2.3% of the energy in a hotel industry. For this reason, energy management is necessary and it can be done by taking the energy conservation programs. Different energy conservation programs like avoiding the overheating corridors and the bedrooms. This will be helpful to reduce the operation cost. On the other hand, the hospitality sectors must have good control over the heating process. The hotels need to ensure that the leaking taps are repaired in a proper way and the pipeworks are insulated properly. It is crucial for the hotel to avoid operating the cooling and heating system in a simultaneous process. Ins tallation of the day light sensor also enables the hotels to conserve energy. Moreover, creating awareness among the staffs enables the hospitality sectors to reduce the high-energy cost (Lee, Oh Hsu, 2017). High insurance cost leads the hotels towards the bankruptcy or closure of the industry. The hospitality industries need to accomplish unemployment insurance, medical insurance, disability insurance and business insurance. Apart from this worker compensation is associated with the medical insurance that the hotels need to cover (Hua Yang, 2017). Food-borne illness liability is another insurance that often affects the economy of the hospitality industries. Cyber liability occurs if the breach of information occurs during the management of data. Labor cost is the big part of the hospitality industries that lead the organization to face high operation cost. In the recent years, the labor cost is increasing rapidly, which affects the profit margin of the business. Apart from the labor cost maintenance of the brand standard, also affect the business profitability (Dev, Hamilton, R., Rust, 2017). High energy cost, insurance cost, labor cost and brand standards have both negative and positive impact on the hospitality industries. However, high consumption of energy in the hospitality sectors facilitates the high operation cost. In the recent years, the energy cost has been increasing in the hospitality sectors, which leads to the industry and the business practice to face negative effect. Electricity and the water supply include the major utility cost in the hospitality industry. It has been found that the gas and fuel cause the major utility expenses. In the year 2014, the gas and fuel expenditure is increased up to 5.2% (Hospitalitynet.org, 2017). The high cost of the energy leads the hospitality industry to cut back on the services that affect their business practice. On the other hand, they have to increase the service charge, which may be helpful to manage their profitability. However, often the high price of the service leaves the negative impact on the business as custo mer number begins to decrease due to the high cost of the service. The hotels are considered as the energetic black hole if the energy consumption is not managed properly. However, due to the food safety issue the hospitality industries are not able to cut back the service quality, which is another reason for the price rise (Xu Chi, 2017). Such high price of the energy often leads the business to face huge loss and the hospitality industry compels to close their service. Hospitality sectors often face issues in their operation cost due to high insurance cost. However, for the well-organized hospitality industries, they need to maintain the Healthcare Act. For this reason, the hospitality sectors have to provide staff compensation during any health injury in their work (Tan, 2017). As a result, the employees can claim money for their health injury at any time, which often leads the organization to face difficulties. Hence, the cost of claims is too high for the organization if major injuries occur with the employees. The organization may face legal issues if they are unable to provide the insurance cost. Food borne illness liability is another insurance policy that gives benefits to the customers. However, if the staffs serve contaminated food to the guest they become sick as a result, the organization has to ensure the liability cost that is a big loss for the organization. Premises pollution liability occurs if the guests become sick due airborne po llutants cost (Nicholas Steyn, 2017). This increases the operation cost and affects the brand image of the hospitality sectors. Business insurance is beneficial for the hospitality sectors as it protects the business from any kind of external financial loss, expensive loss and disaster. Cyber liability the hospitality sectors may face legal obstacle due to the breach of guests personal information that often occurs due to the inappropriate data management system (Trustedchoice.com, 2017). Adoption of cyber liability protection resists the hospitality sector to give a penalty for the breach of information. The above insurance policies need to be maintained by the hospitality sectors, which hits their profit margin. The high cost of the labor facilitates the high operation cost in the business. However, in the competitive labor pool, there is the shortage of the skilled labor (Chrisman, Devaraj Patel, 2017). As a result, the labor cost is rising in the business industry. In the context of hospitality industries, they have to provide more salary to the employees in order to retain them. In the recent years, there is a huge competition in the hospitality sectors. An ongoing competition regarding hiring the skilled employees leads the organization to provide high scale salary to reduce the employee turnover. High labor cost harms the profit margin of the business and as it is associated with the increasing of the operation cost. Labor union is another factor of high labor cost as the strike is very common to increase the salary in a business industry. On the other hand, the hospitality sectors have to provide the fringe benefit to the employees excluding their salary (Bloomfield et al., 2017). As for example, medication cost, car service is included in the fringe benefit. These are provided by the organization to make the employees more flexible in their work. These extra charges create difficulties for the organization as if the organization fails to keep these then they face high turnover. On the other hand, to keep these policies the hospitality sectors may face excessive loss in their business. Apart from this, often the hospitality sectors have to provide visa cost to hire skilled employees from the different countries cost (Nicholas Steyn, 2017). However, this may be helpful for the industry to enhance their productivity and improve the service. On the other hand, this includes an additional cost in the operating cost as the immigrants claim a high salary for their work and visa. Brand standard contributes a good proportion of the operation cost. In order to increase the service of the hotel industry, the hospitality sectors invest more in their service (Bridgman, 2017). Therefore, an increased amenity is another reason for the rising operation cost in the hospitality sectors. In order to gain the competitive advantages in the global market, the hospitality sectors try to provide high-quality service, which includes high investment. This enhances the operation cost, however; it improves the brand image of the organization. Due to the increased level of competition in the global market, the hospitality sectors try to make their business unique, which requires more investment in the business. However, the industry faces a negative impact on the high operation cost due to maintain the quality of their service. In order to improve the brand image the organization needs to face the increased level of operation cost. This will enable the hospitality sectors to sati sfy their customers (Bhowmick Prasad, 2017). However, often to maintain the quality service the hospitality sectors lead to close their business due to a huge loss. They need to increase their service cost, which may decrease the number of customers. As a result, the entire profitability is decreased. Technology plays an important role in reducing the operation cost in the business. However, automation process reduces the operation cost by replacing the manual handling process (Whitaker, Ekman Thompson, 2017). Investment of green technology is helpful for the hospitality sectors to reduce the energy cost. They can use renewable energy sources to reduce the use of natural gas. Therefore, use of CFL and LED light are the gifts of new technology that is effective to reduce the energy consumption and high energy cost in the hospitality sectors (Nicholas Steyn, 2017). On the other hand, using automation process the labor cost can be reduced in the hospitality sectors. Use of modern technology such as technologically advanced equipment the work can be done within less time and by using fewer workforces. Conclusion The above piece of work reveals the different reasons of increasing operation cost in the business. However, labor cost, high insurance cost, business standard cost and the high cost of energy are the major reasons of the rising operation cost. However, the high cost of the energy is a big barrier of the hospitality industries as it hits the profit margin. On the other hand, the hospitality industry needs to hire the skilled employee from the foreign country this is another factor of high operation cost in the business. 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