Challenges Facing 5 Star Hotel Businesses

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1 September 2015

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The hotel industry contributes significantly to revenue generation through customs, license fees, value added tax, landing fees, and exercise duty. The revenue generated plays a significant role in the overall development of resident economy as well as the global economy. The hotel industry, under the umbrella of tourism and hospitality, has faced numerous challenges that have led to a stagnated growth. Most 5-star hotel businesses across the globe often shift their operation to restaurants that have potentially limited their growth. Most hoteliers have mentioned short comes in demand and supply that are not in sync. Likewise, the market for five-star hotels is growing at a slower rate that demands operational efficiencies to have a bigger share of the pie. As such, this paper discusses the challenges experienced by five-star hotels in this century based on current research validations.

Description of a 5-Star Hotel and Rationale for the Choice

The term five-star hotel is most often associated with ultimate luxury and by implication, expense. Five-star hotel groups are committed to displaying conduct through their behavior and actions. Hotels promote corporate citizenship through their strategic private-public partnerships. The significance of hotels is to reduce malnutrition, enhancing employment, promoting indigenous craftsmen and artisans. Five-star hotels present a unique scope and opportunity that enables the development of raw potential individuals to a skilled workforce, which according to Chandana, are immediately employable by the key players in the hotel sector (Chandana, 2013) Likewise, five-star hotels drive myriad community projects that emphasize on food production, housekeeping, kitchen management, spas, and customer service to promote economic empowerment for candidates from vulnerable social and economic backgrounds. The rationale for choosing the hotel sector is due to their capability and previous good record in global economic performance. However, the challenges facing the hotel sector are numerous and solutions are readily available. Likewise, the commitment of the hotel sector in economic development, creation of employment, food security campaigns, and environmental sustainability is significant for developing careers in the sector.Shortage of Qualified Employees

According to a study conducted on the Romanian 5-star hotels, approximately 40 percent of the 5-star hotels are facing the shortage of qualified employees. Besides, Haidment (2007) predicts that within the next ten years, employee shortage in terms of talent in a five-star hotel would increase by 15 percent. As such, five-star hotels around the globe, according to him, will face challenging times from the human resource point of view. However, the problem is not the presence qualified and talented candidates to work for these hotels; rather it is the inability of these hotels to attract talented and qualified candidates for the hotel industry (Haidment, 2007). The deficit mainly refers to the specialized positions such as receptionist, cooks, pastry cooks, chambermaids, and waiters. The study further reveals that the number of vacancies in five-star hotels is continually increasing with 11, 000 jobs announced annually, according to data forecast by World Travel and Tourism Council (2007). The causes of labor shortage in five-star hotels, Haidment (2007) explains, begin with the shrinking of the population due to emigration. Besides, the lack of national integration plan to and action plan to support the development of human capital in the hotel industry, 5-star hotels, in particular, partially explains the deficit of employees in 5 star hotels.

Insufficient Employee Training and Development

The current market for 5-star hotels is highly competitive and requires skillful workforce to remain successful in the competitive hotel sector game. Boella and Goss-Turner, (2005) indicates that one of the major obstacles that affect the workplace of 5-star hotels is the lack of employee training and development. According to him, employee training is an essential process that should be designed and implemented continually in any 5-star hotel as well as other firms. The significance of human resource department is to improve the attractiveness of the organization by providing the employees with skills, knowledge and attitudes that in turn improves their current job performance (Boella & Goss-Turner, 2005). However, five-star hotels have experienced limited development activities that have reduced the acquisition of new knowledge and skills for the purposes of employee career and personal growth. The current economic downturn has hit five star hotels with appalling impacts everywhere especially Europe and U.S. Thus, the productivity of the employees in the sector, according to Boella et al. (2005), has reduced in double digits further challenging the organizations in meeting their establishment goals.


Terrorism is a global problem affecting both the developed and developing countries. According to Chandana, (2013) terror groups that exist in many nations have led to a sharp economic downturn. In particular, the hotel industry is a sector that provides revenue for the government and employment to numerous people globally. However, the acts of terrorism have led to the closure of some 5-star hotels and numerous people rendered jobless. Chandana, (2013) notes that most five-star hotels, especially, in developing countries relies on visitors from abroad touring the nation. However, the threat due to terrorist and bandits in these countries has led to decrease in traveling and tourism activities. For instance, the recent terrorist activities and attacks by bandits in Kenya and Nigeria have seen some countries such as U.S warning their citizens to visit these countries at their own risk. Yet, these countries have five-star hotels that heavily bank on of foreign visitors that seek the services of their facilities considered expensive for most of their citizens.

Therefore, terrorist activities and bandit attacks, according to Lockyer (2007), provides a significant challenge to five-star hotels and the tourism sector at large. Also, bandits that reside within the countries have discouraged domestic tourism with the few potential visitors of 5-star hotels avoiding such places. Lockyer, (2007) further highlights that 5-star hotels attract terrorist activities as some of the agendas derived by the terrorists aim at seeking audience of the high class. Thus, the terrorists keep on storming 5-star hotels and kidnapping and killing people. In a nutshell, the resultant victim in this tussle is the five-star hotel investors that experience severe losses leading to closure in extreme scenarios.


Fierce competition among the 5-star hotels has recently underscored by the increased opening of more hotels across the globe. Currently, luxury hotels are build up to 180-story with numerous rooms and reduced charges. The cut-throat competition among the hoteliers has led to the withdrawal of some hotels and mergers. Lockyer, (2007) writes that hotels have experienced mergers and acquisitions to achieve competitive advantage in the market. Due to the decrease revenues, merger and acquisition among hotels are the key marketing strategy of sustaining a competitive market. As such, numerous hotels are forced into mergers and acquisition, thus shutting their individual objectives.


Five-star hotels around the world have documented numerous challenges over the past, according to research. The main challenges facing five-star hotels are competition, insecurity, and lack of competent employees. However, in order for five star hotels to survive the management must set most efficient strategic goals, identify the needs for implementing the goals, train employees and equip them with skills and knowledge required for job performance. Likewise, employee motivation to improve their skills is essential for curbing some challenges facing the hotel industry.


Boella, M. & Goss-Turner, S. (2005), Human Resources Management in the Hospitality Industry, London: Elsevier

Chandana, C. J. (January 01, 2013). The Canadian hotel industry: innovative solutions to secure the industry’s future. Worldwide Hospitality and Tourism Themes, 5, 2, 219-230.

Haidment, F. (2007), Human Resources 2006-2007 – Annual Editions, London: Then McGraw – Hill Companies

Lockyer, T. L. G. (2007). The international hotel industry: Sustainable management. New York: Haworth Hospitality & Tourism Press

World Travel and Tourism Council (2007), Romania – Travel &Tourism Navigating the Path Ahead

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