Oak Tree Inn has been a part of the hospitality industry in the Scotland since past 25 years. The company provides accommodation and food to the people visiting and explore the location. The following discussion evaluates the macro-environment and the challenges and growth possibilities for the company through using the framework of PESTLE analysis. Here is the detailed PESTLE Analysis of Oak Tree Inn.
PESTLE Analysis of Oak Tree Inn
Following are the external factors have been impacting the Oak Tree inn Performance:
- Political Factors
- Economics Factors
- Social Factors
- Technological Factors
- Legal factors
- Environmental Factors
Political Factors
The political factors as a component of the external environment of an organization determine how likely an organization is to flourish and gain high profitability. When there is a threat of conflict in a region, the earnings by hospitality sector companies decrease as individuals refrain from traveling.
UK and Scotland have faced high uncertainty due to Brexit, which created a volatile environment for the different organizations, including Oak Tree Inn. However, the company has been able to handle the political uncertainty and continued to progress in the industry. The founder of the inn was providing with a lifetime achievement award on the basis of the exceptional service quality (The Oak Tree Inn, 2023).
Government policies related to tax such as the implementation of tourist tax effects the number of people visiting UK and Scotland. The tax is regarded as an additional cost to the traveling expenditure, which can lower the number of foreigners traveling to the different regions within the country (Murphy, 2023).
Economic Factors
The economic stability is likely to create business opportunities for hotels and inns. A higher number of people traveling to different locations can make it a favorable factor for the firms in the hospitality sector. Oak Tree Inn has experienced business growth when there was a stable economic climate in the UK and Scotland and has been regarded as pub of the year in 2012 (The Oak Tree Inn, 2023).
A direct effect of Brexit in the form of changing prices has created increased prices. The rising inflation has posed a considerable challenge for the hospitality industry in the region, as the increasing cost has affected the profit margins. Oak Tree Inn has also been influenced by the issue of inflation as the operational expenses of managing B&B, along with the pub has risen.
The management had to make decisions about increasing the service charges. The notion of customer affordability also had to be kept into consideration while revising the prices. A sudden hike could discourage the people and they may seek alternative accommodation and food options (Butler, 2022).
Another problem that is linked to the economic factors is availability of skilled labor that can fulfil job responsibilities effectively. Difficulty in finding trained and skilled staff can become a challenge for the segment, exerting pressure on the companies to seek the relevant personnel to manage the operations.
In case of Loch Lomond, career opportunities have decreased for people as different inns have opted to closed operations due to financial issues and a decline in number of international visitors. The Oak Tree Inn has not been massively affected due to shortage of job opportunities, however the low number of tourists from other countries has caused financial issues for the inn.
Social Factors
The population increase is a positive environment indicator as the growing number of people within the region implies a greater number of likely customers. The main focus of the inn is on people who are seeking accommodation within affordable ranges, along with the basic facilities such as free Wi-Fi and private parking, which are available at Oak Tree.
The organization has been able to connect with the local residents and the feeling of being a part of the community growth has been at the foundation of the organization. This connection with the local residents and customer loyalty remains a key supporting factor in the strong position of the business (The Oak Tree Inn, 2023).
The tendency of people to travel and explore the nature and willingness to spend money on traveling is another important social factor that determines the number of customers. Pandemic has negatively affected the hospitality industry and lockdown imposed due to Covid-19 has restricted the business operations of Oak Tree Inn.
In addition, pandemic and inflation has changed the consumer spending habits as people were opting for low cost options. This has resulted in lower sales for Oak Tree Inn as customers tried to cut down on their tour spending such as ordering one course rather than the usual two course (BBC, 2022).
Technological Factors
The hospitality industry uses technology to stay connected with the customers through maintaining digital presence. Oak Tree Inn has been able to use social media platforms and internet to reach the target market. The website managed by the company provides an overview of the facilities available for the customers and the locations to be explored by the tourists.
Besides this information, internet also helps the customers in accessing feedback of visitors and make decisions accordingly. The management at the inn has been able to maintain a positive presence in the industry through the availability of a strong IT infrastructure and social media. The number of people using social media also supports the company to connect with the market.
Legal Factors
The regulations that determine the quality of service and the operations of hospitality segment govern the way processes are managed at Oak Tree Inn. For instance, obtaining license and trademark for the company name are important. Moreover, compliance with health and safety guidelines determine the quality of accommodation and food provided to the customers.
Environmental Factors
Similar to other organizations in the industry, Oak Tree Inn is also playing its role in protecting the environment by taking sustainability initiatives. The inn has been able to embrace the notion of becoming pro-environment by investing in various projects such as biomass and renewable energy to manage the energy needs for the kitchen and the restaurant (Oak Tree Inn, 2023).
Conclusion
Few of the major challenges that Oak Tree Inn has faced are due to the economic and social environment. Inflation has changes the customer spending habits which has caused a decline in number of visitors, while the industry dynamics have also become unfavorable. Despite these issues, the inn has been able to maintain its operations and stay profitable.
References
- BBC (2022). Charity fears over loss of hotels in Loch Lomond and The Trossachs. Retrieved from https://www.bbc.com/news/uk-scotland-tayside-central-63047718
- Butler, S. (2022). ‘Everything is going up’: UK hospitality sector struggles as inflation soars. The Guardian. Retrieved from https://www.theguardian.com/business/2022/jul/20/uk-hospitality-sector-struggles-as-inflation-soars
- Murphy, N. (2023). UK ‘tourist tax’ has deterred two million visitors, report finds. The National News. Retrieved from https://www.thenationalnews.com/world/uk-news/2023/07/31/uk-tourist-tax-has-deterred-two-million-visitors-report-finds/
- Oak Tree Inn (2023). Green Credentials. Retrieved from https://www.theoaktreeinn.co.uk/green-credentials
- The Oak Tree Inn (2023). Our Story. Retrieved from https://www.theoaktreeinn.co.uk/our-story