Outline the main characteristics that are common to the hospitality, tourism, leisure and event sectors

Hospitality, tourism, leisure and events businesses are commonly regarded as having a number of distinctive characteristics. These include the following:

Sensitivity of demand: : many of the sectors goods and services are viewed as being luxury items (e.g. package holidays) and therefore tend to be quite sensitive to price. This means economic conditions such as recession, inflation, and taxation play a significant role in the demand for travel, tourism, leisure, hospitality and event products/services. The sectors are also sensitive to occurrences and events in the external environment such as terrorism, natural disasters, political instability, and other factors. .

Seasonality of demand:many HTLE businesses have seasonal demand patterns significantly influenced mainly by weather and holiday periods. This results in establishments experiencing uneven cash flow patterns and in some cases the closure or partial closure of their businesses in off peak periods.

Fixity of costs:high fixed costs are a feature commonly associated with the HTLE sectors. Businesses such as hotels, airlines and tourist attractions employ various revenue management systems to try to ensure that they at least cover their fixed costs.

Perishability of product:in common with other service industries the HTLE sectors offer products and services which are perishable by nature, i.e. they have a limited ‘shelf life’. If a hotel room or an airplane seat is not sold it cannot be stored or saved and sold at a later date. This results in the loss of potential revenue from such products. Many HTLE firms try to counteract this by using tactical pricing techniques to encourage the buying of their products/services.

Scale of operation: although many large HTLE companies exist around the world, the industry is nonetheless made up of, to a large extent, quite modest sized enterprises. The majority of tourism businesses in Ireland consist of firms employing less than 10 people.

Fixed capacity:Hotels, restaurants, airline, clubs, theatres all are limited by a fixed capacity and it is only in the medium to long-term that this capacity can be increased by adding additional plane routes or building hotel extensions etc. As demand is also seasonal, hospitality, tourism, leisure and event businesses must try to predict demand and use price to incentivise sales when demand is low and to price accordingly when demand is high.

Capital Intensive: Hotel, leisure centres, theatres and cinemas can all be considered capital intensive. It requires a large investment to set up these type of businesses as size, style and location are key in attracting custom and achieving success. Thus hospitality tourism and leisure businesses all suffer from a comparatively low revenue to capital ratio. This is often not the case for event businesses as set up costs are not considered significant.