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The Challenges faced by startups in Hospitality Industry

Consumer behaviour is constantly changing in India, and this current scenario has raised the demand on practically every segment in the hospitality industry and all other sectors. Furthermore, we cannot deny that this shift in customer behaviour has offered tremendous opportunities for many startups in the hospitality sector. As a result of this growing trend, India now has the world’s third-largest startup ecosystem.

Most of the research has focused on the technology industry when discussing the barriers and opportunities of startups. The other sectors, particularly hospitality, are not extensively studied, although numerous opportunities are being explored. Following the pandemic, the recovery of the hospitality sector is improving, even though all hotels and other aspects of this industry suffered a near-total loss as a result of the global lockdown.

Internationally, there has been much innovation in technology and expectations in recent years. When it comes to hospitality, customer satisfaction comes first. As a result, new entrants must meet rising expectations and other challenges that the industry is currently confronting.

Let’s take a look at some of the challenges that the startups in the hospitality industry are dealing with.

Starting a hospitality business comes with many risks and a lot of excitement. Several costs are involved with startups. Those costs, such as working capital, operating costs, and other costs linked to software administration, hiring employees, insurance, licenses and permits, and so on, should adhere to the budget they set. Initially, finding the funds is a significant challenge, which can be overcome by bank or lender loans, crowdfunding, venture capital, and Angel investors. They can assist in the establishment of a company.

In this sector, innovative technology is also a key barrier. Many hotels across the country, for example, have implemented E-check, which allows guests to go straight to their room without having to wait for confirmation or other procedures. Because all startups have a limited budget, they can’t implement all technological aspects at the outset. The effects may be adverse if they do not upgrade to current standards after earning the ability to operate and remain competitive in the industry.

Since employees are directly connected with customers, finding and retaining qualified personnel is extremely crucial. Every hospitality startup battles to find and retain top talent to survive in the market. Employees hired based on referrals are more likely to stay on the job and contribute to the company’s success. Like incentives or flexible work schedules, motivators are necessary for staff retention.

The number of domestic and international visitors to the hospitality industry is expanding yearly. Startups are attempting to overcome barriers to establishing cultural understanding to satisfy customer expectations. Hiring an employee who speaks multiple languages, for example, is necessary to serve and attract customers from various regions.

The effective use of digital marketing channels is the current digital transformation challenge for the hospitality business. Though some cost-effective and productive digital marketing strategies are available to drive sales and establish a solid client base, not every startup is taking advantage of them owing to a lack of research, insufficient funds, unproductive traditional marketing, and being in the wrong market, and other factors. Several digital marketing tactics that are beneficial in turning a startup into a profitable firm should be adopted early.

There are many other obstacles that startups in the hospitality industry face, such as maintaining a positive reputation, reorganising the business, data security, and rising costs are to list a few. Startups should perceive them as opportunities and employ innovative skills to enhance their businesses.

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Amala Sree Murali
Amala Sree Murali
Digital Editor at Business Review Live and a certified content writer from IIM Skills. She completed her post-graduation in Business Administration with a Bachelor's degree in Computer Science.