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Ethical Issues Facing the Hospitality Industry

In the hotel industry, the customer’s happiness is supposed to be the first priority. The manner in which a hotel is operated should start and end with the customer. The definition of hospitality is the friendly or kind reception and treatment of guests. In some cases those in the corporate sectors and boardrooms lose sight of these “golden rules” of their trade and can only see the possibility of making more profit, legally or not. This is when companies fail to abide by their ethical code and fall victim to crime and scandal.
One of the key ethical issues of the hotel industry is when franchise companies operate with off-balance books. “Every dollar of corporate overhead that can be pushed to the marketing or reservation fund increases corporate profits by a dollar.” This is essentially what Enron began doing at the beginning of their huge scandal. The idea show as much profit as they could in the books, whether it’s real or not, and look good to their investors in order to increase stock prices. Another issue the hospitality industry faces has to do with management and franchise companies interacting with corporate hotel purchasing programs. The idea of these programs is to allow the franchisees and hotel owners to receive the lowest possible prices and a wide choice of vendors for the quality level they choose. The problem occurs when vendors receive primary access to this because they pay large upfront fees or rebates to corporate. A third ethical issue is the unnecessary, extreme salaries given to executives. “Since 1980, the average CEO pay has gone from 42 times to more than 400 times the pay of the average production worker.” The CEO of former hotel chain Cedant, Henry Silverman, was taking in $36 million dollars in 2001 while housekeepers were making less then six dollars an hour.
These are many of the ethical issues faced by hospitality industry at the corporate level. There are also some issues faced in particular hotels. Hotel companies should be about the customer, which many of them are. Although these problems do occur, the hospitality industry has been fortunate to have very few ethical scandals in the past few decades.

References:
Hazard Jr, Robert C. "Corporate ETHICS Corporate PAY AND THE LODGING INDUSTRY." Lodging Hospitality 58.15 (2002): 65. Business Source Premier. EBSCO. Web. 25 Sept. 2011.
Hotel CEO Pay: The Hot Potato

http://ksb100hospitality.blogspot.ca/2011/09/ethical-issues-facing-hospitality.html
Posted 25th September 2011 by John Schoof>>>