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PESTLE analysis of the China Hotel Industry Essay

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Updated: Dec 16th, 2019

A PESTLE analysis is an in depth assessment of the different factors that directly or indirectly affect the operations of a given industry and are usually external meaning that they are out of the corporations control. Furthermore, these factors are analyzed either as threats or opportunities.

Generally, there are variations of this kind of analysis but touching on the same basic components. A PESTLE analysis examines the political, economic, social, technological, legal and the environmental factors. The discussion below is an in-depth look at the factors affecting the hotel industry in China.

Political factors depend on the government controls and obligations imposed on an industry. The government of China has a policy of non interventionism on all businesses and believes in the operation of a free market system. This is both an opportunity and a threat as the prevailing conditions in the different regions of the massive Chinese frontier are different from place to place.

The government has a disjointed policy in the way that it affects tourism and the hotel industry as a whole since, the Hong Kong sector seems to be autonomous of the rest of mainland china. This has had a negative impact on the general growth of the industry since, while some areas are booming with high average room occupancies, some are experiencing slumps.

The Chinese economy is the second largest in the world and it is the fastest growing in the developed world at over 10% annually. This has been characterized by a high Gross Domestic Product to the benefit of the industry. Consumers therefore have a higher purchasing power but this has somewhat been curtailed by the global economic crisis experienced recently.

The unemployment rate in most of china is low and therefore, the cost of labor is moderate. However, the costs of operation in the hotel industry in china are very high in many areas especially in major cities like Hong Kong and Beijing.

The steady increase in the number of double income families has had an impact on the standards of living by increasing the size of the disposable income. This serves to increase consumer spending and has positively impacted the hotel industry (Cheverton 2004, p. 75).

The social context in china is also very stable as the society is very conservative and therefore trends are not likely to change as fast as they do in western societies. China has a very large number of unskilled laborers. This means that skilled labor in the country is expensive.

Technological factors refer to the need for people to upgrade their skills and for business to upgrade to newer platforms occasioned by advancements in technology. The major shift in the hotel industry has been the adoption of information and communication technology in undertakings.

This has been efficient in the processes of reservations and monitoring of guest expenditure within the hotel premises. There has also been the transfer of arrangements between two institutions in different countries and with collaboration with foreign investors all made possible by the presence of technology.

China has transformed its policy on travel and presently, there are very few restrictions for travel to china. Consequently, there have been a high number of visitors to china, most of who are business travelers and only make stopovers in china hence patronizing the hotel facilities available. The travel rules that had been imposed against the travel to and fro mainland china and Hong Kong have also been eased.

Additionally, hotels in china are subject to only 3% government tax. This means that there is more revenue that the hotel industry in the country saves as a result of the taxation structure in comparison to other developed countries worldwide.

The environmental factors that are characteristic to the hotel industry mainly involve the control of pollution in major Chinese cities and also the spread of diseases in the crowded areas of operation. The level of pollution is very high especially in Hong Kong and the government is taking key steps in an attempt to reduce it.

There was also a scare when the SARS outbreak was experience in china and many tourists and travelers to china canceled their trips (Normile and Enserink 2003, p.40). Although the virus has been contained, there is still sceptism on the capability of the government to detect outbreaks early and contain them given the size of the population.

Reflective Thinking

Reflective thinking is important in the running of any organization. The goal of this practice is to create meaning to different situation, to regulate behavior, to refine and redefine the values for which you stand for, to challenge any assumptions made in the course of action, to learn about who you really are and to assess your intuitions.

The major point to remember here is that the greatest hindrance for individual development lies within the individual himself. The initial step towards positive growth is by reflective thinking and in particular stoppage of ones habitual patterns and course of behavior and stand back to view things from a different perspective and in a different light.

Forrester (2011) states that the best decisions, insights, ideas, and outcomes result when we take sufficient time to think and reflect ”Only by carving out think time and reflection can we actually understand, in an entirely different context, the actions we take.”

Think time should be scattered within the normal activities and densely packed schedules. This should be applied for significant decisions that are still pending and whose initial effects might not be evident for some time.

Assumptions are considered, the effectiveness of past decisions is analyzed and the downside of the decisions yet to be made is factored in. however, an individual should consider think time as a luxury because in the normal working environment, there is no time to sit back and think.

In the heat of things, the leader does not fully see the task ahead and therefore, cannot weigh the impact a decision will have on his personal and organizational development. The purpose of reflection is therefore to equip oneself with the necessary skills that are needed to expand perspectives and in turn to present more valid options in decision making.

This is core to leadership and should entail the ability to visualize what others cannot and make them in turn see it. Although a luxury, leaders should always spare sometime to think and to create hypothetical situations in their minds that may be possibilities for future occurrences. In turn, they must visualize possible solutions to these problems when they occur.

The world we live in is insistent on narrower viewpoints as people become more specialized. This is useful for advancement of useful theories in diverse studies. However, as leaders, individuals should not confine themselves to narrow viewpoints demanded by their specialization.

On the contrary, they must widen the scope of their views to incorporate different scenarios that will occur in the organizations environment that may require snapshot decisions.

Therefore, leaders should teach themselves the value of being able to step back and analyze a given scenario critically and to conjure up a wide array of different solutions with different consequences and be able to make the best decision for the good of the organization in general.

Many organizations fail in their endeavors because they value immediacy and focus on the short term instead of reflection and seeking long term solutions to chronic problems. As a leader, one must continually to challenge oneself in different fields aided by reflective thinking in order to give viable guidance to those that look up to you for it. Thoughtful insights are not aspects that can be contained within a given time frame.

On the contrary, they may be realized sooner or may take time depending on the considerations to be made. The results of reflective thinking are not hinged on the amount of time that the person spends on his thoughts. Far from it, the real results are gotten by how the thought process is structured and utilized within the amount of time available, usually long moments that are disjointed.

A leader should consider allocating time for all of his staff members to be engulfed in their thoughts in order to be more effective. The popular method of achieving this is by having a no-internal-e-mail-day policy where technology does ceases to serve as a distraction.

Most of the support members in an organization concede that when they are over worked, they usually do not have time to think. A leader, however much he is worked, should never resign to being comfortable with the status quo and embracing it as a proven method of operation.

In summary, it is paramount to be aware that thinking creates reality. Reflection as controlled thinking is as a result of two vectors, namely the individual’s competence and his authenticity (Baldino 2011, pp. 2). This is a conglomeration of skills, specialty and know-how with individual identity, attitude and character which should make you into a better and more effective leader.


Motivation entails the forces which compel individual to achieve their goals. To influence a person’ s motivation is getting the person to want to do what you as a leader knows must be done (U.S, Army Handbook 1973). Motivation is influenced by how strong a certain need is and the perception that a person has of the on the satisfaction of needs.

Motivational forces are many and range from beliefs to fears, from values to interests and even to worthiness of a cause.

Motivational factors can either be internal or external but neither is stronger than the other in absolute terms. While dealing with people, one must understand that there is no proven formula for motivating them and therefore, the specific nature of the person you are dealing with will determine what he/she responds best to.

To be effective as a leader, one must focus on the needs of the team and that of the organization and make sure that they are in sync. This means that the common motivators of people in every organization like promotions, raises, job security and approval from colleagues should form the basis on which the organization is built.

Furthermore, people working in the same industry, like hospitality, tend to have common internal ethics, morals and values as is demanded by the career choice. Staff members must be encouraged and trained to the specifications of the organization and must realize that their needs are tied to those of the organization.

The leader must ensure that his beliefs and those of the company are in tandem with those of individual team members as ultimately, the kind of values exercised will be the motivators of performance.

A good leader must be able to reward the best behavior within the group. There are different and effective ways of awarding. A simple thank you, a letter of commendation or a certificate may be equally efficient in motivating staff (Pardey 2007). In the hospitality industry, where service is the key source of business, interactions with people are inevitable.

Leaders should cite the best behaviors in dealing with guests and reward the specific behavior rather than a general message of gratitude. This serves as a blueprint for the repetition of the particular action and in turn serves as a perfect motivator.

The best motivator for staff members is the example they get out of their leader. Therefore, as a leader, one must always be the image of demure goodness in order for the same to rub off on the subordinates. An effective leader is always aware of the morale and esprit de corps in the organization.

This means that the environment within which the staff team members operate is conducive and does not cast the image of a place where people desire to get away from. Morale and the team spirit must always be high in order to guarantee the optimum performance of the employees (Achua and Lussier 2010).

This can be achieved by ensuring that there are enough amenities for staff, for example within a hotel setting, where they can relax during breaks and also after work hours and enjoy the same services as do the guests in their private areas at no profit to the organization. This way, they feel that the organization does have their best interests at heart and are motivated to work harder and better.

Good leaders are those that realize the potential within their team members and work to harness that to the benefit of the organization. Thus, they allow the team members to be part of the planning and problem solving process. This allows the members to feel as part of the solution and thus develop an ownership notion to the successful implementation of their decisions.

This investment in the processes is the greatest motivator as these ‘owners’ would not like their ideas to fail and thus work hard at making them come to fruition. After the idea has been successfully implemented and the desired effect is achieved, a leader should make sure that the deserved recognition is awarded. The motivational effect from such a gesture is invaluable.

It is in the nature of human beings to show and want concern therefore, a successful leader should be able to recognize this fact and ensure that his team members are aware that he looks out for them.

The things that a leader may view as insignificant may be of importance in the lives of the team members. It is paramount that the leader be sensitive and empathizes with them. In a nutshell, the leader should be able to feel with the rest of the team members as if he was in their shoes as is insinuated by the German word einfuhling.


The main point to consider for a person aiming at advancing in the hospitality industry is that power is the reason why most people fail to succeed.

This is simply because power is not only exercised by those in authority but rather by those who understand how to get it and how to share it with others for the common good of the organization. The most important consideration for prospective leaders is that they need to learn the ways of skill empowerment, competence enhancement and energizing leadership power.

The initial step towards the realizing of the above considerations should be to invest in individual infrastructure. The most important point to consider here is that there must be a lot of investment in time and effort (Gill 2008). In order to be a good leader, one must first identify a person in a leadership position that inspires and is a role model.

Record the way the person carries out his activities and note all the desirable traits you would like to develop in yourself. Be eager to learn more by purchasing materials that appertain to leadership including books and journals and run the traits you read with those that you observe in the role model. By then you should start appreciating yourself and noting the traits you admire and those you aspire to change.

The next step is to make sure that you meet with other people with the same mindset with a view to improving abilities, skills and behaviors. Finally, in order to be a leader, one must be willing to serve and as such one should be involved in communal affairs or teaching that enhances and hones your leadership skills.

As a leader in the hospitality industry, one must create a conducive environment that enhances the transference of optimism, confidence and professionalism from yourself to your employees and eventually to the guests.

In order to have the right kind of power, a leader must learn to use the hope of the subordinates to inspire visionary ways. On the contrary, a leader can use worry and fear to inspire the same but the latter does not create the necessary aura needed for the employees to function independently and to the best of their abilities.

The visions that a leader projects based on the hopes and faith of team members should be positive and vivid. In attempting to do this, one should consider the methods applied by Nobel Peace Laureate, Dr. Martin, Luther King, Jr. who was very famous for inspiring hope in the struggle against supremacists (Bell, Hilb and White 2004).

In order to successfully exercise power, a leader must not only be visionary but must also be strategic. There should be a laid out plan of action with a goal that it is meant to achieve in the end. In doing this, one will need to pool the right resources, constantly reevaluate the strategy, informed by recent occurrences and observations and measuring the effectiveness the execution of the strategy has achieved.

Power is wielded in many ways and the most common tool is by word of mouth. Therefore, a leader must ensure that the words and instructions to team members aim at speaking to their hearts and are encouraging and inspirational. The leader’s sentiments must reflect appreciation for the contributions, commitments and uniqueness of the team members.

Words have the power to inspire or destroy confidence, depending on the choice and the context in which they are used. Leaders must always be aware of the effect their words will have on people and be able to determine whether it is the right one well in advance.

People’s opinions, ideas and dreams are always expressed in words, so are their reservations, biases and any other ill feelings they harbor. As such, the choice of words is aimed at communicating these sentiments and therefore, a leader should always be aware of the sentiments he wishes to convey.

Effective leaders are those that are congruent, cooperative and consistent. The actions of such a leader are in line with his words, his attitudes rhyme with his conversations and his values are linked to his behavior.

Additionally, this type of leader applies the same standards to everyone he is involved with, makes decisions only when he has all the facts available and always follows the same course when faced with a recurrent problem. Finally, this kind of leader realizes that in order to enlist the cooperation of his team members, he must respect, value and work with their desires, decisions and differences.

This involves asking for their opinions, listening to their thoughts and always factor in their inputs so that whenever something happens, “we” takes credit over “I” (Thomas 2004, pp. 5).

Decision making

Critical decision making is perhaps the most important factor in the development of a leader (Megginson and Whiaker 2007). This is because the consequence of reflective thinking, motivation and exercise of power is the decision making component. Decision making is a result of a leader’s self-awareness, skills and competence.

The most fundamental principle in making important decisions is self confidence. The confidence one has in his mental capabilities ultimately determines how he envisions the world around him and in turn the analysis of a situation. Self confidence is not only beneficial to the leader but it also rubs off on the other team members that look for guidance from him. This can therefore be the difference between success and failure in an organization.

A leader has to be analytical. The facts that he perceives from a given situation should be what informs him to act in a given manner. An analysis of a situation for a leader should be able to yield multiple courses of action that have different implications.

The leader thus considers all the facts that he can conjure up and makes a decision based on them. In considering this aspect of a leader, there is a glaring need for him to be critical in analysis in order to get on the right track straight from the get go.

Understanding the value of research is key in determining what course of action a leader takes. This is because decision making is dependant of having the right facts concerning a different situation. The leader should thus be a person appreciative of the value that research has in the determination of the components of a given scenario and consequently the determination of the course of action that is preferred (Proctor 1999).

In the hospitality industry, there are many occurrences happening simultaneously. A leader can never purport to be in keeping with all of them. Therefore, anything that happens warranting his attention can only be solved by gathering facts. This is closely related to the need for skills in conflict management.

Managing conflict is a major determinant of how an organization will run. Conflicts can either be between team members or between team members and the work environment including tools and other resources (Deutsch and Coleman 2000). A leader should be very keen on how he manages such a crisis as it will influence the actions of the concerned parties.

An amicable resolution of a conflict leads to motivation of team members involved. However, if a leader does not resolve a conflict in an amicable manner, it will only serve to add frustrations to the affected party and can have a negative impact on the morale and attitude of the aggrieved party.

Leaders do not have to overwhelm themselves by attempting to make all decisions in an organization. Decentralizing the decision making process can aid in relieving a leader of the excess baggage in order to focus on the long-term future of an organization (Novak 1997, 24). This also acts as a motivator of team members charged with the responsibility of making some critical decisions.

It also challenges team members to develop solutions and thus can generate new ideas and concepts that can de fundamental in charting the course for future action. However, this does not insinuate that a leader abdicates his duties. On the contrary, he should be the one that takes responsibility for any decisions made by his support staff and should vet these decisions in order to eradicate conflicts caused by inconsistent actions.

Tichy (1998) compares good leadership to good parenting and asserts that there should be a considerable investment in time for both scenarios. There is also what he refers to as a “teachable point of view” whose main focus is on nurturing the team members so that they also ultimately become good decision makers.

Furthermore, a leader should have the courage to make decisions and in turn take risks that he thinks will pay off in the end often in the face of opposition.

Critical decision making is the difference between a bad situation and a good one. Leaders should be people capable of making positives out of negative occurrences like down-sizing, budget restraints and increase in workloads.

A person who wants to transform into an effective leader should visualize this setbacks as opportunities to learn. One should look towards the negatives in order to gain experience in dealing with them. Ultimately, this strengthens the leader and fosters growth.


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Bell, A., Hilb, M. & White, A.E. 2004. Understanding Leadership: Paradigms and London: Cases. Sage.

Cheverton, P. 2004. Key Marketing Skills: strategies, tools and technics for marketing success. Kogan: Page Publishers.

Deutsch M., & Coleman, P. 2000. The Handbook of Conflict Resolution: Theory and Practice. San Francisco, CA: Jossey-Bass.

Forrester, D. P. 2011. Consider: Harnessing the Power of Reflective Thinking in Your Organization. Palgrave: MacMillan.

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