• 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.
The bargaining power of the suppliers in the luxury industry is moderate. Even though these companies have economies of scale emanating from their global operations, most of them use the focused differentiation strategy on the basis of quality. This gives their suppliers some leverage over them because finding suppliers of premium materials in the quantities which these companies procure is not easy. Noteworthy, these companies must consider the time they spend in building their relationships with their suppliers. The bargaining power of the buyers is also moderate.
Therefore, the services and products offered by a firm in a hospitality industry are different due to which they are more likely to fall in different segment of hospitality industry depending on the revenue streams of the companies. It was noted that the use of profitable ratio were same but the use of efficiency ratios and asset management ratios is different for the firms that fall in different segments at a time. Similar findings were obtained by the other authors who highlight that the use of the financial indicators vary in firms operating in hospitality industry but the size and capital structure of the firm dominantly
Three factors limit buyers in their acquisition (a) the switching cost is high, (b) the seller’s brand reputation is important to buyers, and (c) the collaboration with sellers to find a win-win position. Buyers in the lodging industry carry a high switching cost due to location, tenant leases, rent increases or profit sharing agreements (Morningstar, 2010). Threat of Suppliers – Low. The industry identifies two types of suppliers, construction companies and suppliers of food, furniture, and laundry. Construction companies are highly affected by market conditions either causing them to stop expanding or renovating during the economic downturn and tended to save cash or building more to forecasted demands.
However, luxury services work in the same manner as luxury goods; they possess high income elasticity of demand. That is to say that as people became wealthier, they will purchase more and are more willing to indulge in luxury services. This works the opposite way as well. As people’s income decrease in times of economic recession, demand for luxury accommodations declines considerably as people settle for less costly alternatives that can fulfill their basic needs. Furthermore, it is of good marketing advantage that The Ritz-Carlton belong to a “chain of hotels” to benefit from brand image or loyalty.
However, when it comes to a certain division of the company, they faced various types of competition such as the intensity of rivalry among competitors and the threat of substitute products and services. For example, the intensity of rivalry is rather high for Sunway Group’s hospitality sector. This is due to the rise of the Malaysian tourism industry, which leads to an increase in the number of substitute products and services. Sunway Group faces moderately high threats from the entrance of cheaper lodging alternatives such as motels, budget inns and service apartments. Many travelers might prefer to stay in these lodging alternatives as they provide all the basic necessities and are much more affordable compared to the many hotels under the Sunway Group.
In recent years, many hotels believe that revenue management and room rate management are more or less same, but it 's not. Revenue management is not only about increasing the high period demand, it also helps in controlling the demand in a low period. In many cases revenue managers plays an important role in establishing the room rates. (Stainslav Ivano, 2014) In order to sell the right product to the right customers at the right time it requires a revenue manager to forecast demand on the market segment. Almost not many of the customers are profitable for the hotels because they may have high expectation and requirement, but
Introduction The hotel industry is a field within a service industry which includes not only event planning, cruise line, theme line, transportation and lodging but also additional services within industry of tourism. It is a multi-billion dollar industry which depends on availability of disposable industry and leisure time. Hospitality units like hotels, amusement parks, or restaurants have many groups like direct operations such as bar tenders, kitchen workers, housekeepers, servers, human resources, and marketing and facility maintenance. Efficient operations and impeccable customer care service gives hospitality which is a decided advantage when it comes to competition and also improving technology in the hotel industry allows businesses
1.1.1. The Global Hotel Industry: An ever-increasing number of destinations worldwide have opened up to, and invested in tourism, turning it into a key driver of socio-economic progress through the creation of jobs and enterprises, export revenues, and infrastructure development. Over the past six decades, tourism has experienced continued expansion and diversification to become one of the largest and fastest-growing economic sectors in the world. Many new destinations have emerged in addition to the traditional favorites of Europe and North America. World Tourism Organization [UNWTO] (2017) Tourism has boasted virtually uninterrupted growth over time, despite occasional shocks, demonstrating the sector’s strength and resilience.