a top-down approach (starting from a macroeconomic perspective) and.Therefore, the decision to invest in the sector is based on a combination of both This is mainly because unlike commodities or fast-moving consumer goods that can move around for consumption, the demand for a hotel is a function of its location.Īs Ellsworth Statler, father of the modern hotel industry has said, ''There are three things that make a hotel famous - location, location, location.'' The demand and supply of hotel rooms can affect the viability of a hotel in any part of the world. This means that if and when for some reason, the economy flounders, so will the hotel stocks. The hotel industry is highly cyclical and linked to economic growth. Porters Five Forces Analysis of the Hotel Sector in India But now, with the advent of apartment and home rentals websites like Airbnb, it is moderately high. The threat of substitutes was low in the hotel industry. #5 Threat of SubstitutesĪ substitute product uses a different technology to try to solve the same economic need. It is higher in the metros and is slowly picking up in tier-2 and tier-3 cities. The competition in the hotel industry has intensified due to the entry of foreign hotel chains. #4 Competitionįor most industries, having an understanding of the competition is vital to successfully marketing or selling a product. In the hotel sector, the bargaining power of customers is high in metros due to increased room supply. It is high if buyers have many alternatives and low if they have few choices. The bargaining power of customers is the ability of customers to put the firm under pressure. The bargaining power of suppliers in the hotel sector is limited due to higher competition, especially in metros.
Suppliers may refuse to work with the firm or charge excessively high prices for unique resources.
The bargaining power of suppliers is the ability of suppliers to put the firm under pressure.
These are primarily led by high capital costs, intense competition in the industry, poor infrastructure facilities and scarcity of land. In the hotel sector, barriers to entry are high. The most attractive segment is one in which barriers to entry are high as they restrict the threat of new entrants.Ĭonversely if the barriers are low, the risk of new companies venturing into a given market is high. Let us have a look at how these five forces shape the hotel sector: #1 Barriers to Entry These are barriers to entry, bargaining power of suppliers, bargaining power of customers, threat of substitutes and competition within the industry.Ī change in any of the forces normally requires a company to re-assess the marketplace. Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry. Porter's Five Forces Analysis of the Hotel Sector in India The hotel industry is closely linked to the travel and tourism industry.Īs per the India Brand Equity Foundation (IBEF), the travel market in India is projected to reach US$ 125 billion by FY27 from an estimated US$ 75 billion in FY20.
The industry has moved in line with the changing behaviour of customers.Īpart from this, the inclusion of newer technologies such as online booking systems and digital payments and demand for heritage & boutique hotels has also helped. This comes on the back of the transformation in the industry over the decades. The hotel industry in India has emerged as the eminent sector propelling the Indian economy.
0 kommentar(er)
