Perishability
As production and consumption in H&T organizations are simultaneous, services become perishable if they are not sold. Subsequently, their value is lost forever. For example, an airline seat or a hotel room will perish if a customer does not purchase it at the time of production. Therefore, the full utilization of service capacity is a strategic task for many H&T organizations. It is particularly important to emphasize that demand for an H&T organization’s services often fluctuates considerably, depending on the external developments and changes, such as seasonality and crises. For instance, terrorist attacks (such as September 11, 2001 in New York), disease outbreaks (such as SARS in the Far East), and natural weather phenomena (such as tornadoes or hurricanes) all had a negative impact on the demand for services offered by the H&T industry worldwide. Because H&T organizations cannot sell their services when such circumstances arise, they lose a considerable amount of nonrecoverable income. When the demand is low or there are sudden fluctuations in demand, it is neither easy nor recommended for H&T organizations to lower their rates greatly, since it may influence their image, change their customer segment, and upset their regular customers.
A further issue in terms of perishability is that consumer demand for H&T services exhibits very cyclic behavior over a short period of time. For example, restaurants are busy during lunchtime, evenings, and weekends, but they may not be very busy at other times. Demand for many H&T organizations, such as restaurants and theme parks, increases during public holidays such as Christmas, New Year’s Day, and spring break. Depending on the location, many hotels and restaurants experience great variances in summers and winters. This puts much responsibility on the management of these firms in planning for the future and allocating their resources quickly and adequately to the right purposes. In short, expected and unexpected fluctuations in demand have implications on cost structure, pricing, staffing, and resource allocation decisions.