Threat of New Entrants – Barrier to Entry-Moderate According to Michael Porter (1980), threat of new entrants in hotel industry is considered a medium level. Although it requires large a sum of capital costs for branding, advertising, product creations, high proportion of fixed costs and need to conduct differentiated strategies to compete with rivalries; it is not a difficult industry for companies to enter (Cheng 2013). Despite of the fact that capital requirements includes cash and financial resources, which are essential for operating a business; political requirements is regarded as another important role in hotel industry, such as licensing, tax laws and different regulations in terms of real estate and property investments in various
2.0 Environmental Analysis In order to better evaluate the business environment in which this business is involved, a Porter’s Five Forces analysis is conducted. This analysis would be able to give a clear view of the competitiveness and profitability of the hotel industry. 2.1 Threats of New Entrants- Barriers to Entry For an industry, the threat of new entrants is mostly determined by barriers to entry. The barriers of entry could be made of financial and non-financial factors as well as the competition already present in the industry. The hotel industry in characterised as an industry with high capital costs which would include the costs of construction, furnishing and equipment, pre-operational expenses and finance.The two most important
Size: The larger the hotel the more will be its room tariff as the construction, modern technology, more staff and cost aplied will be more. c. Duration: another main consideration will be length of stay of the guest arrived. A long staying guest on itemized bill will be a long one. d. Marketing Consideration: When the guest is on full baord plan (meals Inclusion) and suppose does not want it; then he should expect a reduction in the final bill of his (which is usually not given). This often encourage guests to take advantage of the the wider choice because they feel free to choose and thus help to increse restaurant sales in figures.
Normally, acquisition risk is lower when the valuation risk is higher; the acquisition risk is higher when the valuation risk is lower means that sometime the consumer like to purchase the service in advance to secure the service to consume but they uncertain of can con consume or not; but at least they no need to worries about unavailability. The first risk that the potential customer will be face during the acquisition risk is unavailability of the service due to fully occupied or hard supply of company or boutique hotels. For example, the guest wait until last minute for the special rate to enjoy the stay at the boutique hotels; but unfortunately the time the guest go for book the room, all the room was fully booked and no rooms available on that day; which this showing of the high acquisition risk that unable to consume due to planning of purchasing on spot of consuming time. The following risk that the guest might be face in boutique hotel due to acquisition risk is that the price of the room will be higher compare to the beginning; which normal hotel practice that they will increase the price depends on the demanding of the business or market. For example, the guest would like to see the crowd of the consumer towards the hotel during the peak season period and buy after that; unfortunately the price of the Boutique Hotel’s room is getting higher due to the number of booking and reservation is higher.
InterContinental Hotels Group (IHG) had to focus on their functions and cost in the period of financial crisis in order to ensure long-term success and stability. This was the time when the organisation faced lot of trouble in all their functions (Papatheodorou, et al.,
This is due to many competitors at the same location as BMP Hotel. The effect can clearly be seen during peak season. Although the competitors are higher rated hotels, but because they offering almost the same price as a 3-star hotel with better ambience and facilities, customer will definitely fall into it. Bargaining Power of Suppliers The bargaining power of suppliers is low because BMP Hotel does not rely on limited number of suppliers. They have plenty of suppliers local and international providing stocks for hotel’s operation.
These costs can not quite the same as offering it specifically through the online channel, the hotel site or hotel front desk. According to Green (2006) distribution costs can sometimes be as high as 25% of hotel revenues. The capacity to oversee and specifically utilize a large number of channels is the new focus of hotel managers who now focus on the most proficient method to best select and work with outsider delegates and channels as opposed to endeavouring to kill them. Mostly revenue managers utilize high cost channels as a part of request to accomplish high occupancy, so they must be extremely cautious about the quantity of high cost channels they choose. For instance, if hotel has normal occupancy rate of in excess of 90%, the revenue manager would likely not to utilize high cost channels to fill the hotel’s rooms; they would rather spare rooms for a last minute walk-ins when they find themselves able to charge a premium for the
Info on Cheap Accommodation and Hostels Airline travel was once probably the most costly modes of travel within the eighties and due to the cost of operation, cost of air tickets was sky-high for the reason that period of time, and just couple of people can afford it. With alterations in research and technology, and market structure, it is probably the most cost-effective travel options, thinking about benefits. Now, people can certainly travel mix edges with least expensive air tickets worldwide, provided by budget service providers. However, the costs haven 't like magic came by greater than 50 percent in a couple of decades. Hassle-free Tours Many service providers offer flight and hotel packages also, that are usually cheaper and convenient for vacationers.
With technology constantly improving and becoming cost effective, initiatives that seemed too expensive just a short while earlier are now within reach of most hotels. In some countries, there are also government disincentives for over-consumption of water and energy. The hospitality industry is grappling with issues of competition, tighter profit margins, discerning guests and reduced disposable income among patrons. In such a scenario, hotels are employing lean management principles, making business decisions with long term perspective and of course keeping costs in check, green technology, is thus an inevitable choice. References: 1.
Chapter one identifies the background and problem statement of this research with a general overview about brand equity in hotel industry and brief information about The Mira Hotel. This chapter also consists of research objectives and question, significance of the study, scope and limitation of the study, and structure of the study. 1.1 Research background The social mainstream of businesses nowadays is changing gradually to catch up with service-oriented style of marketing. That is why branding has been considered to be “the cornerstone of services marketing for the twenty-first century” (Berry, 2000, p. 129). Simoes and Dibb (2001) also disputed that branding and brand equity management play special roles for service businesses.