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Essay On Hotel Industry

739 Words3 Pages

The entry barriers to the hotel industry are high for several reasons as following. • High capital requirements. Investing in a hotel is requires millions dollar while the investment recovery period is for several years and even more than ten years (Sin et al., 2005). What’s more, the high land prices in San Francisco aggravate the capital burden of new entrants further. • Barriers of economic of Scale. Enter to the hotel industry similar to the Good Hotel requires many measures and certificates, which increases the opportunity costs (Almeida & Andrada, 2010). In the meanwhile, the price advantage of the Good Hotel will exert pressures to the new entrants further. • Cost disadvantage independent of size. The Good Hotel has developed competitive advantages in the cooperation with suppliers, which is costly and time-consuming for the new entrants. • Barriers of product differentiation. The brand reputation that …show more content…

The extremely low price of social hotels and hostels may shunt some customers. 1.2.5 Intense Rivalry The competition environment for the Good Hotel is fierce for several reasons: • Numerous competitors. The number of hotels is continuous increasing, even just consider the neighboring hotels, the number of competitors for Good Hotel is over twenty thousand. • The slow growth of the hotel industry. Although the hotel industry is recovery from the financial crisis in 2008 steadily, the growth is too slow to support the development of existing large number of hotels. As a consequent, the saturate and even oversaturate hotel industry situation hotels are participating in fights for survival and market share in a variety means. • The waning differentiation advantages of Good Hotel. The core concept of the Good Hotel is green accommodation in reasonable prices. However, nowadays, various hotels are using green marketing to promote itself, which decreases the competitive advantages of the Good Hotel (Céspedes-Lorente et al,

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