Hospitality industry, in specification Hotels are of course affected by political factors, such as negatively or positively.
Beginning with the negative part, an example shall be set to clarify the point. The illustration of Lebanon is widely known as hostile and dangerous environment. Tourism there is not as large as it would be in times of freedom and political stability. People choose destinations where they can be safe, not fear their lives or fear the fact that they might be taken prisoners or captives. Unstable governments give an image of instability to control the country and to protect the people which indeed causes the biggest fear and conflicts among them, among the country itself leaving no place for a tourist to fit in this hostile climate. A job in such circumstances would be unstable and risky or even low paid, resulting a bad economic development.
Simply put, 'political risk' refers to the possibility that political decisions or events in a country will affect the business climate in such a way that owners or investors will lose money or not make as much money as they expected when the investment was made.
From the other hand though hotels, are unusually vulnerable to political risk due to substantial investments in fixed assets. For instance, despite recent economic problems in Brazil, hotel development is strong and aimed largely at capturing the huge domestic business traveler segment. As there is effectively no debt financing available as interest rates are too high, most hotel companies are injecting equity funds into projects, sourcing the finance from private equity, pension funds, or development funds.
Another case which should be examined is the fact that tourism has indeed grown and some legal and political issues have insured that, be opening the boarders and international travel is done freely.
An image of a stable and...