Project – The impact of business environment on the survival of hospitality industry.
ABSTRACT
The study examined the impact of business environment on the survival of hospitality industry. A case of five selected hotels in Lagos. The study made use of four objectives, namely: to examine the influence of the business environment on the survival of selected hotels in Lagos; to identify the environmental factors that affect the performance and sustainability of the hospitality industry in Lagos; to assess the strategies employed by hotels to mitigate the impact of the business environment on their operations; and to evaluate the relationship between the business environment and the profitability of selected hotels in Lagos. The study adopted descriptive survey method. To select the needed samples for this study, the researcher used a total number of one hundred (100) workers of five selected Hotels in Ikeja, Lagos. The study concluded that Business environment has significant impact on the profitability of selected hotels in Lagos. The study recommended that hotels should invest in market research to understand the dynamics of the business environment.
CHAPTER ONE
INTRODUCTION
- Background to the Study
The business environment plays a significant role in the survival and growth of the hospitality industry, particularly in urban areas such as Lagos, Nigeria. According to a study by Okeke and Eze (2018), the business environment, which includes factors such as government policies, economic conditions, and social-cultural factors, significantly influences the performance and survival of hotels in Lagos. The study found that government policies, such as taxation and regulations, can either promote or hinder the growth of the hospitality industry. For instance, high taxes and stringent regulations can increase operational costs and reduce profitability, thereby threatening the survival of hotels.
Economic conditions, such as inflation, exchange rates, and income levels, also impact the survival of the hospitality industry. A study by Ogunnaike and Ojo (2017) found that high inflation and exchange rates increase the cost of imported goods and services, which are essential inputs in the hospitality industry. This increases operational costs and reduces profitability. On the other hand, high income levels increase the purchasing power of consumers, thereby increasing demand for hospitality services and enhancing the survival of hotels.
Social-cultural factors, such as lifestyle changes, consumer preferences, and cultural diversity, also influence the survival of the hospitality industry. According to a study by Adebayo and Oyewole (2016), changes in lifestyle and consumer preferences, such as the increasing preference for healthy and organic foods, have forced hotels in Lagos to adapt their services to meet these changing preferences. Similarly, cultural diversity, due to the cosmopolitan nature of Lagos, has necessitated hotels to offer diverse and culturally sensitive services to cater to the diverse needs of their customers.
Technological advancements also play a crucial role in the survival of the hospitality industry. A study by Oyewole, Egbetokun, and Olamade (2018) found that the adoption of modern technologies, such as online booking systems, digital marketing, and automated service delivery systems, has enhanced the efficiency, competitiveness, and survival of hotels in Lagos. The study found that hotels that have embraced technology have a competitive advantage over those that have not.
However, despite the significant impact of the business environment on the survival of the hospitality industry, the industry also faces other challenges, such as inadequate infrastructure, high operational costs, and stiff competition. According to a study by Okeke, Eze, and Eze (2019), these challenges, coupled with the volatile business environment, threaten the survival of hotels in Lagos. The study recommends that hotels should adopt strategic management practices, such as cost reduction strategies, differentiation strategies, and market penetration strategies, to enhance their survival.
The business environment significantly impacts the survival of the hospitality industry in Lagos. Government policies, economic conditions, social-cultural factors, and technological advancements are key determinants of the performance and survival of hotels. Therefore, hotels need to continuously monitor and adapt to changes in the business environment to enhance their survival.
- Statement of the Problem
The hospitality industry, particularly in Lagos, is facing a myriad of challenges that threaten its survival. The first problem is the unstable business environment characterized by economic fluctuations, policy inconsistencies, and infrastructural deficits. These factors have a direct impact on the operational costs of hotels, thereby affecting their profitability and survival.
Secondly, the high level of competition in the hospitality industry in Lagos is another problem. With the proliferation of hotels, each establishment is striving to attract and retain customers, leading to a price war that further strains their financial resources. This intense competition, coupled with the harsh business environment, makes it difficult for hotels to survive and thrive.
Thirdly, the issue of inadequate skilled manpower is another problem facing the hospitality industry in Lagos. The lack of well-trained personnel affects the quality of service delivery, which in turn affects customer satisfaction and loyalty. This problem is exacerbated by the high turnover rate in the industry, which further depletes the pool of skilled workers.
Fourthly, the problem of inadequate and unreliable power supply is a significant challenge for the hospitality industry in Lagos. The frequent power outages increase operational costs as hotels have to rely on expensive alternative power sources (Adeola & Evans, 2017). This problem not only affects the profitability of hotels but also the quality of service delivery.
Fifthly, the issue of insecurity in Lagos is another problem that affects the survival of the hospitality industry. The high crime rate and the perception of insecurity discourage tourists and other potential customers from patronizing hotels, thereby affecting their revenue generation.
Lastly, the problem of inadequate government support and unfavorable policies is another challenge facing the hospitality industry in Lagos. The lack of supportive policies and incentives from the government makes it difficult for hotels to cope with the harsh business environment. This problem, coupled with the other issues, threatens the survival of the hospitality industry in Lagos.
- Aim and Objectives of the Study
The aim of the study is to examine the impact of business environment on the survival of hospitality industry case of selected hotels in Lagos.
- To examine the influence of the business environment on the survival of selected hotels in Lagos.
- To identify the environmental factors that affect the performance and sustainability of the hospitality industry in Lagos.
- To assess the strategies employed by hotels to mitigate the impact of the business environment on their operations.
- To evaluate the relationship between the business environment and the profitability of selected hotels in Lagos.
- Research Questions
The research questions are buttressed below
- How does the business environment influence the survival of selected hotels in Lagos?
- What are the environmental factors that affect the performance and sustainability of the hospitality industry in Lagos?
- What strategies are employed by hotels to mitigate the impact of the business environment on their operations?
- Is there a relationship between the business environment and the profitability of selected hotels in Lagos?
- Research Hypothesis
The research hypothesis is buttressed below:
Ho: Business environment has no significant impact on the profitability of selected hotels in Lagos.
H1: Business environment has significant impact on the profitability of selected hotels in Lagos.
- Significance of the Study
The study of the impact of the business environment on the survival of the hospitality industry, particularly in the context of selected hotels in Lagos, holds significant importance for several reasons.
Firstly, the hospitality industry is a major contributor to the economy of Lagos, providing employment opportunities and contributing to the GDP. Understanding the influence of the business environment on this industry can help in formulating policies and strategies that can enhance its growth and sustainability.
Secondly, the findings of this study can provide valuable insights to hotel owners and managers in Lagos. By understanding the environmental factors that affect their operations, they can devise effective strategies to mitigate these impacts and enhance their profitability.
Thirdly, this study can contribute to the existing body of knowledge on the hospitality industry in Lagos. It can provide a deeper understanding of the unique challenges faced by this industry in the context of Lagos’s business environment, which can be useful for future research in this area.
Fourthly, the study can also be beneficial for stakeholders such as investors and policymakers. For investors, the findings can provide a clearer picture of the risks and opportunities associated with investing in Lagos’s hospitality industry. For policymakers, the study can provide empirical evidence that can guide them in making decisions that can foster a conducive business environment for the hospitality industry.
Lastly, the study can also have implications for the broader hospitality industry beyond Lagos. The findings can provide insights that can be applied in other similar contexts, thereby contributing to the global understanding of the relationship between the business environment and the survival of the hospitality industry.
- Scope of the Study
The study examines the impact of business environment on the survival of hospitality industry. A case of selected hotels in Lagos.
- Operational Definition of Terms
“Impact” generally refers to the effect or influence that an event, situation, or entity has on another. In the context of this study, it refers to the effect that the business environment has on the hospitality industry.
“Business environment” is a broad term that encompasses all external and internal factors that influence a company’s operations, including customers, competitors, suppliers, distributors, industry trends, regulations, advancements in technology, and economic, political, and cultural conditions. It is a crucial factor that businesses must consider and respond to in order to survive and thrive.
“Survival” in a business context refers to the ability of a business or an industry to sustain its operations and remain in business over a long period of time. It involves generating enough revenue to cover expenses and potentially make a profit, and adapting to changes in the business environment.
The “hospitality industry” is a broad category of fields within the service industry that includes lodging, food and drink service, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry. In the context of this study, it refers specifically to hotels in Lagos
Project – The impact of business environment on the survival of hospitality industry.