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Beyond Tax Breaks: How Hotels Can Build Lasting Financial Strength

22 February 2024
The hospitality industry – hotels, restaurants, and all the businesses that make travel possible – is no stranger to hardship. The sector constantly struggles to maintain profitability, from rising rents and food costs to the fallout of global economic downturns. It's no wonder that hotels and related businesses often turn to governments for relief. Tax breaks, subsidies, and favorable regulations are frequently on their wish lists. While lobbying for this kind of support is understandable, I argue that this reliance on external aid ultimately gets in the way of the hospitality industry reaching its true potential. This short-term focus hinders the agility and innovation required for long-term financial success.

Why Seeking Government Support Is the Easy Way Out

Let's be honest: lobbying the government is a well-worn path for many struggling industries, and hospitality is no exception. It's a familiar route that offers several tempting benefits:
  • The Comfort of the Known: Petitioning for help feels proactive and avoids the messy, difficult task of overhauling internal practices. Change is hard, especially in an industry built on tradition.
  • A Quick Bandage: Tax breaks and subsidies offer much-needed breathing room when cash flow is tight. However, these are temporary fixes. They don't solve the underlying problems of outdated business models or inefficient operations.
  • Tilting the Playing Field: Unfortunately, widespread government support risks distorting markets. Businesses that might otherwise be forced to adapt or fail are kept afloat artificially. This hinders healthy competition, slowing down the overall pace of improvement across the industry.

The Hidden Costs of Relying on Aid

While government support might seem like the answer to immediate financial woes, it comes with hidden costs that hurt the hospitality industry in the long run.
  • Innovation Stagnation: When the focus is on securing the next tax break or subsidy, there's less incentive to invest in the future. Upgrades to technology, streamlining processes, and rethinking service models easily get pushed down the priority list in the daily struggle for survival.
  • Trading Freedom for Funds: Increased government support often comes with strings attached. New regulations, reporting requirements, and restrictions on how money can be used all erode a business's ability to respond quickly and creatively to changing markets.
  • A Risky Gamble: Politics are fickle. The programs and benefits available today might disappear with a change in administration or a shift in public opinion. Building a business strategy based on the assumption of continued government aid is a recipe for financial vulnerability.

What Hotels Can Do Right Now

The good news is that the hospitality industry doesn't need to wait for a government bailout to bolster its financial position. Here are some powerful, proactive steps that can be taken immediately:
  • Go Lean: It's time to examine every process critically. Does it create genuine value? Is there a more efficient way? Eliminating waste, redundancy, and unnecessary complexity directly improves your bottom line.
  • Tech Isn't the Enemy: Automation has gotten a bad rap in some circles, but it's a tool. Invest in automating mundane tasks like check-in/out and back-office paperwork. This frees staff for more valuable interactions. Data analytics can power more innovative pricing and targeted offerings.
  • Experience is Everything: Today's travelers have different expectations. Cater to desires for personalization and tech-enabled options. The key is to deliver experiences that go beyond the ordinary, experiences that justify a higher price point. By elevating the guest experience, hotels offset rising costs while boosting customer satisfaction and loyalty.

The Long-Term Plan for Financial Sustainability

The actions in the previous section deliver immediate benefits, but proper financial resilience requires a longer-term vision. Here's where the hospitality industry needs to focus its efforts:
  • Target the Right Guests: Stop taking guest flow as a given. Invest in understanding your ideal audience and actively target them. This means tailoring your marketing efforts and upgrading your facilities to cater to the segments that bring in the most value and best align with your brand.
  • Workforce Transformation: Ditch the mentality of hospitality jobs as strictly low-wage, entry-level positions. Invest in upskilling your team to take on more complex, value-adding roles that merit higher compensation. Use technology strategically to streamline routine tasks, freeing up human workers for the interactions that matter most.
  • Destination-Wide Collaboration: Partner with the local destination marketing organization (DMO) and other tourism-related businesses. Together, you can develop compelling reasons for people to visit your area and run integrated marketing campaigns that benefit everyone.

What Governments Can Do to Foster a Thriving Business Environment

While the primary responsibility for financial success lies with individual businesses, government policies play a critical role in shaping the business landscape. Here's how governments can support industries like hospitality without resorting to direct handouts:
  • Streamline Regulation: Complex, frequently changing regulations stifle innovation and waste resources. Governments should prioritize simple, clear rules and minimize time-consuming reporting burdens.
  • Level the Playing Field: Avoid offering special favors to specific industries or sectors. A fair tax system where everyone contributes their share creates healthier competition in the long run.
  • Invest in Infrastructure: Robust transportation networks, reliable internet access, and modern infrastructure benefit all businesses, including those in the hospitality industry.
  • Focus on Education & Skill Development: Partner with the private sector to develop training programs aligned with the evolving needs of industries like hospitality. This supports a skilled workforce that can power business growth.
  • Champion Small Businesses: Small and medium-sized enterprises (SMEs) are innovation and job creation engines. Make it easier to start and run an SME by reducing bureaucracy and offering targeted support programs where needed.


Seeking government aid during tough times is understandable, yet it can quickly become a crutch. Relying on external support distracts the hospitality industry from the internal changes vital for long-term success. While a supportive government environment is beneficial, true financial resilience comes from within.
Agility, relentless innovation, and a laser focus on delivering exceptional value are the keys to building financially strong hospitality businesses. This requires a willingness to challenge the status quo and move beyond dependence on government interventions. Let the current challenges be the catalyst for a bolder, more self-reliant future for the industry, one where hotels and hospitality businesses thrive due to their ingenuity and adaptability.