The need to balance a company's strategy and structure with changes in the external environment is obvious in any industry.  However, in fast changing industries such as the Hospitality Industry, this need is even more important.  Hospitality operators have to keep track of changes in the mentality of customers, changes in the attitude of government agencies  and legislators towards the industry, changes in economic and technological issues, and strategic changes of competitors and other firms connected to the industry. This responsibility has been previously discussed by West: "The strategic manager [must] scan sectors of the environment which are
appropriate to the intended strategies of the firm, identify trends and changes within each sector, ascertain which require immediate response, interpret the potential effects of environmental occurrences on firm performance, and initiate appropriate firm response."

Unfortunately, the fast-paced nature of this industry prevents most operators from spending adequate amounts of time monitoring the external environment;  day to day operations always take precedent.  For this reason, internet news services such as Hotel Online may be the perfect tool for environmental scanning efforts in the hospitality industry. Hotel Online is a convenient service providing daily information on hospitality related news and events. It counts with nearly 3000 registered users from different hospitality related companies and institutions, although the total number of users is certainly larger (see Table 1). Registration to the service's mailing list is optional, and the web page can be accessed freely by any person with a web browser
 
 

Table 1: Hotel Online Subscription Statistics (based on a random sample of 500 users)
Type of Subscriber	Count	% of Sample
Hospitality Companies	189	37.80%
Domestic Use	4	00.80%
Related Companies	167	33.40%
Educational Institutions	139	27.80%
Regulatory Agencies, Government	1	00.20
Totals	500	100.00%

The content of this paper represents a discussions of trends in the hospitality industry as determined by an analysis of the internet postings in Hotel Online. The project had a double purpose: to obtain environmental information of the hospitality industry and to determine the usefulness of the internet service provided by Hotel Online.

The outcome of this project is the result of a content analysis of Hotel Online. The research involved analyzing the daily news postings in the server over a period of 60 days, between May 12th and July 10th, 1997. The analysis consisted of reading the title, first paragraph and the first sentence of other paragraphs of each article posted. Then, each article was qualified and placed in one of the following categories:
 

a. General environment categories:
1. Socio-cultural environment
2. Political environment
3. Economic environment
4. Technological environment
 a. Specific environment categories:
1. Finance
2. Marketing
3. Research and Development
4. Operations
5. Administration
6. Human Resources

 

Table 2: Weight Assignment
Number of Page Downs	Weight
1 to 2	1
3	2
4	3
5 plus	4

The first major finding of the research process was the fact that the majority of the news posted in Hotel Online relate to the U.S. national industry environment. The actual distribution of national vs. international topics is described in Table 3.
 
 

Another major finding of the study was the predominance of topics related to the specific environment over the general environment (see Table 4). These two characteristics of Hotel Online slightly limit its usefulness as a complete environmental scanning tool.
 
 

General Environment
With respect to the general environment, it has to be acknowledged that  Hotel Online provides just a small amount of information. As it was just  mentioned, the service is dominated by articles referring to the specific environment. In addition, the postings classified under general environment  categories usually referred to industry-specific information (see Figure 1  for major trends in the general environment). Nevertheless, several major  trends in the general environment were identified.

a. Socio-cultural environment:
In general, the trends identified in the Sociocultural environment of  the industry can be summarized as  increasing importance of the elderly in  travel due to the aging of the general population, increasing willingness to  travel, increasing acceptance of casino and gaming operations and increasing concern for safety in travel and lodging.

The aging of the American population is not news to anyone. It is a  process that started with the appearance of the "baby-bust" generation, a  period in which birth rates decreased considerably. Improvements in life expectancy also contributed to this trend. The major trend identified in  this project is the increasing response of the hospitality industry to this  shift in customer needs. Some companies and destinations are specializing in catering  to the elderly traveler. As an example, Oregon coastal towns are  taking advantage of their country-style, relaxing atmosphere to attract  senior citizens. Lodging establishments in the area have adapted to serve  the special needs of this group and are experiencing economic benefits in  the process. It is important that all operators in the industry realize the  increasing importance of this particular segment of the market. A recent study concluded that mature travelers consider assurance, reliability,  tangibility, responsiveness and empathy to be the most important customer  service factors in a hotel.  Operators must make sure that the service provided emphasizes these characteristics when dealing with older guests.  The implications on human resource management are obvious. Employees must be  trained to provide a level of service that meets the expectations of this  segment of the population.

Coupled with the good state of the economy in the U.S. and many other  countries, there is an identifiable increase in the appeal of travel and  tourism for the general population. Travel continues to increase, and records seem to be broken every day. A very specific trend is the increase  in the number of young people (ages 18 to 24) traveling in small groups on  vacation. Hospitality operators must take notice of the importance of this cost-conscious, practical group of travelers. Another identifiable trend is  the craving for educational experiences in travel. Travelers want to  increase their appreciation of nature and culture by traveling to specific destinations where the potential for knowledge acquisition is greater.  Destinations such as Virginia and some European cities are taking advantage  of this situation.

With the opening of doors for gambling operations in many states of the  country, there is an increasing social acceptance of this controversial form  of entertainment. Many people are recognizing the economic benefits that such operations can bring to local economies, and more people are giving in  to the temptation of attending casinos and try their luck. A perfect example  of this trend is the increasing number of Native American tribes that are  developing casino operations to support their families and preserve their  way of life. Hospitality companies in general may take advantage of this  shift in social perception to increase income through gaming operations in their establishments.

A final Sociocultural trend that has been present in the industry for  quite a while is a concern for safe travel. A 1995 study on choice criteria  of leisure travelers concluded that security is a primary decision factor in choosing airlines, hotels and other travel related companies.  Travelers  discriminate among different service providers according to their safety  records, a factor worth of special attention in the industry.

b. Political environment:

The major themes under both the legislative and lobbying aspects of the  political environment concerned regulations on hospitality operations and  the application of new taxes to hospitality companies.
 

A specific trend concerning regulations on hospitality operations is  the close monitoring of casino operations by different state and local  government agencies. Many steps have to be followed to obtain permission to open, operate and maintain a gaming operation. Although several restrictions  have been removed, it is still very important for gaming companies to be  aware of existing regulations to avoid legal complications.
 

Another relevant issue is the application of new taxes on hospitality  and travel companies as part of a new tax plan of the federal government.  The U.S. Congress is considering a new airline tax that will severely  increase the average price of a ticket and considerably affect the tourism  industry of the country. The new tax is part of an income tax reduction plan  for individual contributors. The government hopes that this hidden tax will not be noticed by the general public, but the effect it could have on the  travel and tourism industry must be acknowledged. This practice is nothing  new. The Tax Reform Act of 1986 also shifted tax contributions from individuals to corporations, including hospitality and travel companies.  It  is clear that this industry is already heavily taxed, and further burdens  should be avoided. Hospitality operators must keep track of further developments on this matter to adjust their operations accordingly.

c. Economic environment:
The major trends identified in the economic environment of the  hospitality industry include an overall increase in tourism-related economic  activity, an increase in the cost of traveling and an acknowledgment of the potential of tourism as a generator of economic growth and employment.

The analysis undertaken reveals that most tourism destinations are  experiencing increased economic activity and increased revenues as a result  of tourist visits. It is obvious that the main reason for this trend is the  excellent condition of the American economy in general. Many studies have  discussed the close relationship between hotel room occupancy and trends in  business cycles.  Currently, his trend is also coupled with the increasing  popularity of travel among the general population. Although a few  destinations have experienced some problems due to a variety of external  circumstances, the general economic picture in the industry is favorable. A  clear sign of this situation is the constant development of tourism  facilities (hotels, parks, shopping centers, etc.) nationally and  internationally. The rush towards construction of new facilities has also resulted on an increasing need for financing and capital investments.

Another situation that has surfaced in this environment is the  palpable increase in the cost of traveling. According to AAA, for instance,  the cost of lodging in the U.S. has increased by 3% in 1997 compared to the previous year. A result of this economic reality is the increased popularity  of motels and other low cost establishments. There is a nationwide boom of  motel construction that is mentioned constantly in hospitality publications.

Finally, it has been found that there is an increasing appreciation of  the value of the hospitality industry as a creator of jobs and a generator  of economic growth. This was the most popular subject in this category. It is no secret that the hospitality industry is the second in importance  globally, and it appears that it will not lose that position in the  foreseeable future. An example found in the research process is the  situation of Cuba and its reliance on tourism as a way out from its economic  difficulties. The tourism sector of Cuba's economy is closing in on sugar  production as the major industry of the country, and it has been a provider  of international investment since 1990.  With respect to the jobs created by  the industry, the adoption of a plan by the eight most industrialized  nations of the world (the G7, plus 1) to rely on the industry to provide  labor opportunities in each country underpins the favorable outlook of  economies where tourism plays an important role.
 

d. Technological environment:
The technological trends identified through this research are very  specific to the hospitality industry, but are closely related to  technological improvements experienced globally. The major tendencies in technology call for an increased use of the internet, a constant development  of new technologies to improve hospitality operations and the creation of  new technologies to improve food handling, processing and sanitation.

One of the most popular topics today is the wonder of the internet. It  appears that every industry has at least experimented with this new  technology, and the travel and hospitality industry is not an exception. The major uses of this technological marvel include the development of  internet-based reservations systems, the creation of web pages as marketing  tools, and the use of the internet as an outlet for increasing research and education in the field of hospitality. A curious development is the  incursion of some companies into the business of gaming through the  internet. Virtual casinos seem to be popping up everywhere. Hospitality operators must maintain themselves updated with the new ways this technology  can be used to improve their operations and increase sales.

A recurrent topic throughout this environment is the continuous  development of new systems, machinery and software to aid the hospitality  operator. Major developments include new PMS systems, new reservations systems, new safety and security systems and some new facility designs that  enhance customer appeal and ease of operation. An example is the emphasis on  the development of new entertainment options for travel and lodging  customers. The trend towards offering video-on-demand features in hotel TV  systems, in-room video games and electric outlets in airplanes is  widespread, and it will probably continue in the near future. The hospitality operator must keep informed of these technological improvements  in order to remain competitive in a market where the customer is  increasingly demanding cutting-edge services.

A minor theme covered in the analysis was the development of new  products and technologies geared specifically for food operations. Food  sanitation is a big concern, and some companies are coming out with products  that help increase the safe handling on perishable goods. An example is the  invention of a bacteria-fighting towel to be used by kitchen personnel to  avoid food contamination. Due to the potentially damaging effects of a food  poisoning situation, F&B and restaurant managers must take advantage of these technologies to avoid such complications.
 

Specific Environment

As mentioned before, the news provided by Hotel Online is quite  industry specific. As a result, most of the postings were related to  management practices of several hospitality related companies. This  characteristic allowed the researcher to determine major trends experienced  by the hospitality industry in the six main functional areas of management.  After the analysis of these trends was completed, it was clear that most of  them were outcomes or effects of the general environment trends identified  earlier. As it is described in Figure 2, the most important topics appearing  in Hotel Online related to finance, marketing and operations, as opposed to
research and development, administration and human resources.

a. Finance:
According to Figure 2, discussion of financial situations covered the  24.41% of the space dedicated to the specific environment - the second in  importance after operations. The major subjects mentioned in Hotel Online postings are the continuing epidemic of mergers and acquisitions among  hospitality companies, the increasing level of complexity of financing  activities in the industry and the reporting of good financial performance by most hospitality companies in the period analyzed.

The trend of mergers and acquisitions has taken front stage in the  hospitality industry since the last decade. The original factors that gave  birth to this trend where "the scarcity of land sites suitable for hotel development, high cost of building, and the need for strategic market  locations."  Even though the latter is probably the only factor still  present in the industry, the trend has survived and will probably continue for several years. Small firms continue to merge with larger ones in order  to survive and improve their financial status. Large companies are always  willing to acquire more hotels, more restaurants and more management companies in order to expand their operations and diversify their portfolios  (geographically or by product category). The merger-mania appears top be  more severe among gaming companies and airlines. This rapidly changing  industry forces operators to keep track of the merger and acquisition game.  One never knows when the person in charge of operating the company is going  to change.

The vast majority of space dedicated to this area of management  involved the description of financial transactions and strategies of  hospitality companies. Comments on credit ratings, dividend announcements, public stock offerings, stock splits, credit line increases and loan  petitions abounded. Although these issues can be seen more as facts of   life in management than as trends, they do highlight the increasing complexity of financing a hospitality operation  and the wide variety of  financing resources available to every operation. Hospitality managers must  keep track of the financial activities of the industry in order to use the appropriate financing tools when the times demand it.

The final group of postings was composed of press releases of  companies reporting their operating results, primarily from the first  quarter of 1997. An analysis of these articles resulted in the  identification of two main trends. First, hospitality companies overall are  performing quite acceptably. Secondly, big hospitality corporations tend to  perform a lot better than independent, small companies. The excellent  performances of Circus Circus Enterprises, Marriott International, and  Choice Hotels International contrasts with the somewhat poor results of  small hotel and gaming companies such as Sands Regent and U.S. Franchise  Systems. The performance of several casinos in particular seemed not to keep  pace with the overall good results in the industry. It must be noted that  due to the short period analyzed, seasonal considerations may have played an important role in the performance of these companies. Nevertheless, scanning  the financial performance of competitors can help the hospitality manager  assess the value and merit of the results obtained in a particular operation.

b. Marketing:
According to Figure 2, topics in the area of marketing covered almost  20% of Hotel Online space dedicated to the specific environment. The major  issues surfacing in this management area include an increase in the use of the internet for marketing purposes, a proliferation of special promotions  and advertising from hospitality companies, and an increase in the  importance of state tourism organizations and tourism promotion associations in marketing destinations as a package.

Many hospitality companies are realizing the marketing potential  provided by the internet. From on-line reservation systems geared to the end  consumer, to the development of web pages describing the services and facilities offered, hospitality marketers are jumping into the information  superhighway to increase sales and product awareness. Web-developing  companies are taking advantage of this trend to offer their services to hospitality companies, which can place adds at different web pages or  collect reservations online. In addition, companies such as Radisson Hotels  are offering special features on their home pages to attract more customers,
such as online games and other interactive activities. The potential use of  the internet in marketing hospitality products is amazing, and it can be  guaranteed that more and more companies will employ it in the future.

The abundance of special promotions and heavy advertising is still a  trend in the hospitality industry. The larger amount of postings described  original promotions offered  by different companies with the purpose of attracting more customers. The most popular promotions always appear to  involve frequent flyer miles or frequent guest points. Also, most of this  promotions involve joint efforts between different companies (i.e. a car rental company offering more miles to customers flying in a specific  airline). This emphasis on promotions seems to be an attempt to  differentiate the services provided by very similar companies. It is getting harder to offer a completely original product to the potential guest, and  these promotions may allow companies to be more appealing to certain  customers. However, a big problem with promotions is that they are easily imitated by competitors. An example is a recent promotion started by  American Airlines, offering half-price rates for babies two and under if the  parents owned approved safety seats. On the same day, every other U.S. airline except USAir had matched the promotion. Hospitality operators must  assess the potential for success of every promotion before implementation.

With respect to advertising, there appears to be an increasing  tendency to use specialized advertising agencies to support corporate  marketing efforts and deliver a more effective message. Due to their larger resources, big hospitality trademarks such as Caesar's Hotels, Planet  Hollywood and KFC have taken advantage of this situation to deliver better  ads and build brand loyalty.

A final marketing aspect worth mentioning is the active role that  state tourism organizations and other associations are taking to promote  destinations. Joint efforts by hospitality and tourism firms in specific destinations are proving to be successful in increasing the size of the pie  for everyone to share. In the case of some cities and states, the efforts of  these organizations are essential for the good performance of the tourism industry. Hospitality and travel managers will probably continue to  cooperate with this joint marketing endeavors to improve sales and financial  performance at the firm specific level.

c. Research and Development:
As it can be seen in Figure 2, R&D continues to be the most neglected  area in the hospitality industry. However, there appears to be a greater  appreciation of the need to conduct market and customer research, and test  new services and products before launching them into the market. The role of  tourism organizations appears to be basic in this area of management,  representing close to 50% of the research efforts found in Hotel Online.

The major efforts in this area have been directed to the determination  of customer preferences and attitudes through surveys, the evaluation of  economic impact of tourism activities on specific destinations and the test of new products and services by hospitality companies. From this efforts,  companies have discovered changes in attitudes from their repeat customers,  many cities have discovered the great economic effects of tourism for their  communities, and companies such as McDonald's have tested the implementation  of new technologies to improve their service. The importance of R&D in this  industry resides in the fact that it can be the means for a company to  obtain a competitive advantage and differentiate its product in the marketplace.

d. Operations:
This was the functional area of management covered more extensively  by  this online news service. The major trends that were determined under this  category are the expansion of operations of several hospitality and travel companies, and the streamlining of operations by the use of new computerized  systems and the improvement of facilities, menus and services.

The vast majority of articles related to this category  addressed the  issue of companies expanding their operations in a variety of ways.  Airlines, for instance, appear to be constantly extending their operations to serve new destinations and diversify their geographical position.  Management companies continue to acquire contracts with a variety of  properties, franchises continue to expand, and international chains continue to open new properties in a variety of geographical locations. An important  factor in this trend is the increasing efforts to expand internationally.  Around 20% of new operations by local chains described in Hotel Online were
located outside the U.S. An example is the incursion of Ritz-Carlton in  China, positioning itself as one of the first international luxury chains to  enter this market. The scanning of these expansion activities in the  industry allows the hospitality operator to keep track of competitive  threats and opportunities for expansion in untapped markets.

The use of new technologies continues to be a major trend in the  operation of hospitality and travel related companies. Many companies keep  their property management systems up-to-date with the latest technologies, realizing the improvements on efficiency that this products bring. The  introduction of high-tech services and features for guests and customers is  also a noticeable tendency. An example is the adoption of video-on-demand  options in in-room TV systems by some lodging companies on an experimental  basis.

A final consideration regarding operations is the fact that results  from in-house surveys are being considered more frequently to improve  operations. Most menu improvements come from direct customer research, and result in economic benefits to food service providers. Operators must  continue to pay close attention to the preferences of their repeat customers  in order to increase loyalty or improve the quality of the service provided.

e.  Administration:
Administrative topics occupied about 16% of the specific environment  space of Hotel Online. The major trends identified in the analysis of this  category are the increase in the number of strategic alliances and joint ventures among companies, a continuing involvement of hospitality and travel  firms in legal cases and a more open discussion of internal management  practices as a good public relations tool.

The popularity of strategic alliances and joint ventures among travel  and tourism companies is easy to identify. One study found that the main  driving factors behind such alliances are the increasing globalization of the industry, heavy competition and the low profitability of some  operations.  These alliances vary in purpose, but they are usually intended  to improve marketing potential through cooperation, or to maximize management capacity by joining forces with more knowledgeable operators.  Recent examples are the management alliances of Sheraton with Felcor and  Equity Inns with Interstate hotels. A curious marketing alliance discovered  through this research project is the  joint marketing efforts of Las Vegas,  Phoenix and San Diego to sell packaged tours including visits to the three  cities in the same trip. This alliance signals the incursion of local  tourism organizations into the world of corporate cooperation. Hospitality  managers at any level should be aware of the potential benefits of strategic  alliances to be able to take advantage of them if the circumstances  recommend it, and also monitor the moves of competitors to recognize  situation in which a particular operation might be threatened.

Another long-lasting trend the hospitality industry has experienced  over the last years is its continuous involvement in legal and regulatory  cases. The outlook for 1997 so far does not promise any changes. Although must cases involve routine legal matters such as obtaining construction   permits and gaming  licenses, others involve civil suits  and legal  proceedings that can have a profound effect on any company. A majority of these cases involve suits and complaints placed by customers, while the rest  involve legal fights between companies on the grounds of unfair competition  or unfulfilled contracts.

The majority of administration related postings depicted management  practices, conflicts and changes experienced by some companies. Although no  trend can be identified in these articles, hospitality operators may learn  form the mistakes and successes of other companies. In addition, the  reporting of new administrative strategies may give  companies an  opportunity to  create favorable publicity in  the marketplace. An  example is an announcement by McDonald's describing new strategies that will  push decision-making down to the customer level. Since this company has been  under examination lately, spreading the word about the new strategy may  result in a more positive attitude towards the company.

f. Human Resources:
This functional area of management was a bit neglected in the Hotel  Online news service. The major trends identified were a continuing  involvement of travel and hospitality firms in labor related litigation and other labor conflicts, a strong competition among firms for top-management  talent and the implementation of innovative employee support programs.

Labor conflict issues include suits placed by employees against  companies practicing biased or unfair hiring policies and strikes undertaken  by airline employees. This does not seem to be a new trend in the industry; rather, it is a constant reality that operators have to face. Fortunately,  the reduced number of cases noticed by the general media indicates that most  companies are making a good job of managing their employee relations.

The vast majority of HR related postings were hiring and promotion  announcements by different hospitality companies. An important consideration  in this area is the fact that employee exchange occurs almost always within  the hospitality industry, which highlights the magnitude of competition  among different companies for the skills and capabilities of top-level managers.

Finally, a trend sustained primarily by large hospitality corporations  is the implementation of superior employee support programs in the industry.  Companies are not just aiming to comply with labor regulations. They are  going further to secure the well-being of their employees and achieve  employee loyalty to the company. Good examples are Marriott's  Welfare-to-work and Foundation for people with disabilities programs that  appeared in Hotel Online postings. Hospitality companies must continue to  provide this type of programs in order to reduce turnover and improve  customer service.

Some  limitations of this  research endeavor have to be acknowledged.  First, the postings analyzed were reduced to a 60 day period, which  undermines the coverage of all trends and neglects the cyclical nature of this industry. Second, the study was limited to the Hospitality News section  of Hotel Online. Further research and  analysis of the Ideas and Trends  section of the service may give more support to the usefulness of this internet service.

In conclusion, it can be determined that only some of the trends  currently experienced were identified in this project. Their discussion can  certainly provide the hospitality operator with a good overall picture of the industry's environment. Moreover, a good argument in support of online  means of information can be derived at after analyzing this particular  project. Hotel Online appears to be an excellent provider of information for  the many managers involved in travel and hospitality operations.  Nevertheless, this study determined that the news provided are extremely  industry specific, and users must realize that their environmental scanning efforts have to be complimented with more general publications, such as  business magazines, newspapers and other journals. Since most of these  publications are already available online, an excellent environmental scanning program may be implemented by simply adding bookmarks to a web browser.

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