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PEST Scan for Hotel Management: Definition & Application

PEST Scan for Hotel Management: Definition & Application
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  • 0:03 What Is a PEST Scan?
  • 0:57 What Are Political Factors?
  • 1:42 Economic Factors that…
  • 2:50 What Are Social Factors?
  • 3:35 Changes in Technology
  • 5:12 Lesson Summary
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Lesson Transcript
Instructor: Kat Kadian-Baumeyer

Kat has taught college Management and Hospitality Management and has a Master's degree in Organizational Leadership and Management

A PEST scan helps a hotel manager identify influences that affect the hotel by investigating external influences, like political, economic, social, and technological factors, that are outside the manager's control.

What Is a PEST Scan?

When Billy Simms came aboard as the new general manager of the Texas Longhorn Inn and Suites, he had all kinds of aspirations about making the hotel a Texas icon. Billy rounded up the staff and gave them pep talks, incentives, and often gave sage advice.

A few people checked in but the ones that did visit did not stay very long. At a loss for answers, Billy hit the web to seek answers. Billy learned that many hotel managers perform a PEST scan to identify the outside influences that affect a business.

The four external, uncontrollable environments in a PEST scan include:

  • Political factors
  • Economic factors
  • Social factors
  • Technological factors

Let's take a look at how each of the factors plays a part in the overall success of a hotel.

What Are Political Factors?

Billy began with an investigation into changes in the political environment and found that changes in laws, regulations, ordinances, or even town policies affect business. As it turns out, the city where the Texas Longhorn Inn is located recently raised the hotel tax to 15%. This increase in taxes made the overall rate for a stay at the Longhorn much more expensive than competing hotels in the next town.

Billy cannot change the tax rate. But he can adjust his prices to offset the changes in taxes. By lowering the daily rate by a percentage, the tax is lo longer a deterrent. His guests can enjoy the hotel at a reasonable price.

Economic Factors that Affect a Hotel

Billy also needed to consider the economic situation in his local community and the country. Travelers drive about 60-200 miles, and most of Billy's guests visit for long weekends and special occasions.

Local economic factors will play a big part in the success of the hotel. People tend to not travel during tough economic times. With Conglom Provisions, the largest employer in the state closing down soon, people will lose their jobs. Billy knows that Conglom not only employed many of his guests, but the company also used guest rooms for out-of-town staff and sales people. This means occupancy is going to drop quickly.

All is not lost. Billy can do a few things to increase the number of heads in beds. First, Billy can extend his marketing efforts far beyond the Little Bend area. By pairing up with an airline or a travel website, he can offer special rates for those flying in from far away cities. Billy cannot change the economic issues in his small town, but he can cast a wide net to gain more guests.

What Are Social Factors?

Sometimes, it comes down to the way people feel about a destination. Social factors include a guest's beliefs and values. In other words, the way they see a destination. Billy knows that the area had a seedy reputation in the past. Online reviews mention high crime. People may shy away from the location because of the online buzz.

While there is not much Billy can do about changing the demographic, he can employ security services to keep the area around the hotel safe. Billy can also offer food and beverage service on property, so guests do not have to leave the inn. He can also hire local talent to perform for guests making the hotel an all-inclusive vacation.

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