Hotel and Boutique Hotels
2. Identify and explain the opportunities and threats faced by the segment in each company.
Threats
Bargaining power of consumers
Bargaining power of suppliers
Threat of substitutes ( Backpacker Hostel, find onlne to stay at peoples room)
/intense rivalry of competitors threat of new entrance
Opportunities
Go abroad to target another consumer base create more branding
Collaborate with travel agencies
Global Premium Hotels Ltd (Economy to Mid-Tier Hotels A.K.A Budget Hotels)
Threats Faced by Global Premium Hotels Ltd
Demographic Segments
Sociocultural
Political/Legal
Technological
Economic
Porter’s Five Force Model of Industry Competition
Threat of New Entrants
The threat of new entrants into the hotel industry is generally low, due to high barriers to entry. However, comparing budget and boutique hotels, the threat of new entrants is significantly higher for budget hotels due to the barriers to entry being significantly lesser than the barriers to entry for boutique hotels.
Product Differentiation – Budget hotels offer more or less the same service, a place to stay for the lowest cost possible. Boutique hotels on the other hand have a brand/name to uphold and tend to cultivate customer loyalty.
Capital Requirements – Budget Hotels in general just need a plot of land/building and can convert the place in to a hotel. Boutique hotels tend to need larger capital to construct nicer looking rooms, better facilities such as swimming pools.
The Bargaining Power of Buyers
The Bargaining power of buyers in the hotel industry is generally high as there are many substitutes around. This bargaining power is even more significant for the Budget hotels.
Product Differentiation – For the budget hotel, the service it provides is mainly similar to other budget hotels and consumers can easily find alternatives. Unlike, Boutique hotels although customers can also seek out cheaper alternatives, boutique hotels are able to
Threats
Bargaining power of consumers
Bargaining power of suppliers
Threat of substitutes ( Backpacker Hostel, find onlne to stay at peoples room)
/intense rivalry of competitors threat of new entrance
Opportunities
Go abroad to target another consumer base create more branding
Collaborate with travel agencies
Global Premium Hotels Ltd (Economy to Mid-Tier Hotels A.K.A Budget Hotels)
Threats Faced by Global Premium Hotels Ltd
Demographic Segments
Sociocultural
Political/Legal
Technological
Economic
Porter’s Five Force Model of Industry Competition
Threat of New Entrants
The threat of new entrants into the hotel industry is generally low, due to high barriers to entry. However, comparing budget and boutique hotels, the threat of new entrants is significantly higher for budget hotels due to the barriers to entry being significantly lesser than the barriers to entry for boutique hotels.
Product Differentiation – Budget hotels offer more or less the same service, a place to stay for the lowest cost possible. Boutique hotels on the other hand have a brand/name to uphold and tend to cultivate customer loyalty.
Capital Requirements – Budget Hotels in general just need a plot of land/building and can convert the place in to a hotel. Boutique hotels tend to need larger capital to construct nicer looking rooms, better facilities such as swimming pools.
The Bargaining Power of Buyers
The Bargaining power of buyers in the hotel industry is generally high as there are many substitutes around. This bargaining power is even more significant for the Budget hotels.
Product Differentiation – For the budget hotel, the service it provides is mainly similar to other budget hotels and consumers can easily find alternatives. Unlike, Boutique hotels although customers can also seek out cheaper alternatives, boutique hotels are able to