SWOT ANALYSIS OF THE HOTELS AND RESTAURANTS SECTOR

This SWOT analysis gives a short but concise overview of the Strengths, Weaknesses, Opportunities and Threats of the European Hotels and Restaurants sector.

Strengths

• Non-substitutable: Historically the trend is clear. People will never stop travelling completely. Being a sector greatly dependent on tourists, that is a great strength. Considering the catering industry it is the same, people will never stop eating.
• An open sector. The sector creates job opportunities for young people and for women. Also, people with limited education can get the opportunity for a career.
• It is a global industry with highly international markets
• Due to its labour intensive and customer close nature it cannot be exported or outsourced.
• It is a flexible industry which handles changes relatively easy.

Weaknesses

• High dependency on tourists, which are highly sensitive to political events.
• High seasonal dependency for most parts of the sector.
• Tend to be reactive instead of proactive for example when it comes to CSR and climate.
• Low productivity: low profit margins and low added value.
• Low levels of skills and education, working conditions etc.
• Perceived to be a low status employment sector.
• Especially for restaurants, cafés and bars: Low barrier sector: many start-ups and failures pressing profit margins.

Opportunities

• The ageing population could be a boost for the integrated services of the catering sub-sector
• Changes in the gender structures: more women entering the labour market means less time to cook at home. Also this means an opportunity for the sector to get the needed labour.
• The trend of higher demands on quality could add value to the sector.
• Concerns for climate and health are also trends that potentially add value to products and services.
• Increasing globalisation, leading to more international travellers and tourists, especially from emerging economies.
• Being increasingly on the move, we need more snacking and take away.

Threats

• The big black market is a threat to working conditions, which in the long run is a threat to the sector's competitiveness when it comes to recruiting skilled staff.
• The lack of sufficiently skilled personnel jeopardises the quality of the sector.
• If the climate threat grows, long distance travelling might decrease and thereby hurt the sector.
• An ageing population makes it even harder to recruit labour.
• The educational system is ageing and might, if not renewed, jeopardise the quality of the sector.
• For the catering industry there is a trend to invest less in food for employees and to put taxes on these kinds of wage benefits
• Terrorism and political unrest.

At EU Level

The need for skilled labour has been rising slowly but steadily within the European Hotels and restaurant sector the last 10 to 15 years. However, if the sector is to be able to deal successfully with the challenges of the increased international competition, the little increase in added value, and the many new emerging consumer preferences, more focus has to be put on raising the sector’s level of skills and competencies – both further and faster. The European Hotels and restaurant sector should look more into the possibilities of competing in quality and within the new emerging up-scale niche markets. A general recommendation is therefore to enhance upskilling and innovation in the sector - two things that are also closely connected.

The questions of how to attract skilled workers from outside the EU and how to handle the increasing amount of illegal immigrants working in the Hotel and restaurants sector call for discussions and initiatives at the EU level.

• The EU should support the strengthening of Social Dialogue at the EU level. Increasingly many hospitality companies are so called multinationals calling for social dialogue at the supra national level.
• In order to facilitate increased international mobility for hospitality workers, the EU should initiate and support the processes of international standardisation and certification of core skills and competencies.
• Awareness among EU decision makers of the specifics of the integrated catering and facility management sector should be heightened. In many relations, the catering sector has very divergent structures and workings compared to the rest of the hospitality sector. For example, this often calls for separated studies and initiatives.
• The EU should initiate and support the development of new digital learning and teaching tools within the sector. The tools are often too expensive to develop for a single company or educational institution, but can be good value for the money if disseminated widely in the industry.

 Lastly, the lack of reliable and upto-date data on the sector should be mentioned. There is a need for all stakeholders in the sector to invest more in high quality research at the micro level in order to get a clearer and more precise idea of the trends and specific workings of the sector.