Hotel’ Sector Five Forces Analysis

In the premium segment, companies can attract customers by better security and more facilities, such as spas, gyms and integrating hotels into golf complexes. Larger companies implemented loyalty schemes, by offering a points system or air miles to regular customers, which reduces buyer power. As customers are numerous and mostly small in size, their buyer power is reduced since the impact of losing one customer is not a significant threat to a business. However as many of the countries with a heavy reliance on the tourism industry have discovered, the reduction in holiday makers number and overall travelers number means that buyer power has increased as consumers have more options available often at a lower price point.

The return to growth in the industry experienced in 2010 and subsequent steady forecast growth is likely to return buyer power to normal levels. Overall, buyer power is moderate Suppliers in this industry are defined as property owners, developers and real estate companies, interior design and furnishing companies, architects, management and training service providers, marketing companies, industry consultants, and information and computer technology (ICT) manufacturers.

Real estate companies are often much smaller companies than hotel and motel operators and rather than being globalized, they are usually local to the property they develop, which reduces their financial muscle and ability to negotiate favorable contracts. Furthermore, hotels can integrate backwards and operate their own real estate business. The quality and availability of supplier services and equipment is essential to the hotel and motel industry. Hotel operators are reliant upon sophisticated technology and systems, including technology utilized for property management, procurement and reservation systems. Applications, databases and networks must integrate easily with each other and third-party systems to facilitate collaborations with partners. The growing importance of the mobile channel is clear.

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