Hotel sector five forces analysis

The competition is expected to intensify more as there are high exit barriers in terms of the physical assets created. Cheng, In an industry such as this where there is high capital costs, the pressure to sell the capacity by price cutting is high except at weekends and holidays and the competition becomes intense.

Harvard Business Review 79 3. Corporate customers depend on the economic activity in the area. Such substitutes can affect the business traveler segment of the customers.

Most of the firms do not have any major plans of investment in the next few years and hence the interest cost is expected to be lower thus higher overall profitability of the firms can be expected in the coming year. The suppliers do not enjoy much power in this industry as these are available of the shelf for the firms or there are enough providers for these articles.

Customer Profile for Hotel Industry 4. The new entrants will be at disadvantage as the best locations are limited in the metropolitan cities. However considering the less threat of substitutes and low power of suppliers over the industry, the hotel industry has very few hindrance in successful market growth.

Taj group till recently used to get bed sheets and other clothes from Bombay Dying through their Mumbai central warehouse. Firms enjoy higher bargaining power due to high volume of customers as well as across the year demand.

In order to be in the leading league a hotel has to maintain a cost advantage over its rivals and be innovative about differentiating itself in its own strategic group. This has been possible due to continuous improvement in the facilities and services provided by the domestic players and due to presence of various multinational brands.

Indian Hotel Industry premium segment is internationally competitive.

Certain groups of buyers exercise power over the hotel industry when the purchasing of hotel rooms in bulk is required. Analysis of the Industry Hotel industry is more global in nature as compared to most of the other industries i.

Cheng, Power of Suppliers The power of suppliers over hotel industry is relatively low. In hotel industry such is the case. Hotels are not subjected to the bargaining power of suppliers and it has low and indirect pressure on their competitiveness. The hotel industry is only subjected to the power of the labor, trained staff and personnel and the industry has a huge demand of them.

The average employee to room ratio in India is 1. It has increased the curiosity of some travelers, but by and large it had negative impact too. The gestation period for a hotel is expected to be around 30 months. The hotel has to make sure that the high capital cost is gaining its worth in the form of output and the resources are used to it utmost potential.

Customers enjoy a good amount of bargaining power on the quality of service provided in this segment. These groups include tour operators, domestic and international airlines and convention organizers and participants.Porters 5 forces analysis for hotel industryBARGAINING POWER OF SUPPLIERS The term 'suppliers' comprises all sources for inputs that are needed i 1/5(1).

We will write a custom essay sample on Porter’s Five Forces Model Competitive Analysis for Hotel Industry specifically for you for only $ $ /page Order now. Due to the economic recession in the past, the business travel all over the world suffered a decline which consequently had a bad effect on the hotel industry.

At the same time H1N1 epidemic (Swine Flu) hit the world and tourism deteriorated by various degrees. After suffering these blows, the hotel industry managed to gain [ ].

WikiWealth’s comprehensive five (5) forces analysis of hotel-industry includes bargaining power of supplies and customers; threat of substitutes, competitors, and rivals. Hilton Porter’s Five Forces Analysis Posted on August 30, by John Dudovskiy The analytical framework of Porter’s Five Forces developed by Michael Porter () [1] explains five separate forces that shape the overall extent of competition in the industry.

Porter’s Five Forces Model of Hotel Industry

The Five Forces Analysis was created by Harvard Professor Michael Porter in and it provides a framework for industry analysis and business development. Porter proposes there to be five forces which either inhibit or prohibit a company’s.

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Hotel sector five forces analysis
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