hotel
DESCRIPTION
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A CRITICAL ANALYSIS OF THE HOTEL SECTOR
BUSINESS STRATEGY GROUP 4
BY ANDREA FIUMANA,
CASSANDRA BRAHAMS,
FELICITY STRAWSON,
HANNAH MAXWELL,
ZOE SWAIN
DEFINITION
‘Ho-tel [ho tél] (plural ho-tels) noun
Place for an overnight stay: A building or commercial establishment where people pay for lodging, and where meals and other facilities such as conference rooms are often available’.
PRESENTATION OUTLINE
Description of the hotel sector The UK hotel market in context How the market is segmented External Influences Key Players / The Competitive Environment Customer/ Market trends SWOT analysis Conclusion References
UK HOTEL MARKET IN CONTEXT 2000
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10
£Bn
CD
's &
Vid
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Ga
me
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Bo
ok
s &
Ma
ga
zin
es
Th
ea
tre
,S
po
rts
Ad
mis
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Ga
mb
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nc
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ery
)
Ho
tels
Sector ONS Data/Mintel
Turnover of the UK Hotel Market £Bn Current Prices
Actual Turnover of Hotel Sector
0
2
4
6
8
10
12
14
Y1994 Y1996 Y1998 Y1999 Y2000 Y2001 Y2002 Y2003 Y2004
Year
£Bn actual
turnover
PredictedTurnover
A Year on Year Percentage Growth Analysis
0
2
4
6
8
10
12
14
16
18
Y1996 Y1998 Y1999 Y2000 Y2001 Y2002 Y2003 Y2004
%
Ye
ar
ActualGrowth
PredictedGrowth
BRANDS
THREE TYPES:Four / Five Star: High Quality, Excellent
Service, Premium PriceMid-Market: Good Quality, Wide Range of
Facilities, More Accessible priceBudget hotels: Functional / Basic Facilities,
Lower Price Point
PEST ANALYSISPolitical LegislationEconomic RecessionSocial Social Changes Inbound tourismTechnological New influences Internet
0
50
100
150
200
250
300
350
400
Bass
Whit
brea
dHilto
n
Thistle
Compa
ss
Accor
Choice
hot
els
Jarv
is
Regal
Hotel
Gro
up
Mac
dona
ld Hot
els
HOTEL
NO
OF
HO
TE
LS
No of hotels
Top Ten Budget Hotel Groups in the UK
0
50
100
150
200
250
300
Trave
l Inn
Trave
lodge
Prem
ier L
odge
Holida
y In
n Exp
ress
IBIS
Old
Englis
h In
ns
Days
Inn
Campa
nile
city
Inn
Form
ule 1
No
of H
otel
s
Number of Hotels
Top ten hotel groups in the UK
Martin information Ltd Dec 2000
Percentage of market sector for Budget Hotel Groups
Travel Inn
Travelodge
Premier Lodge
Holiday Inn Express
IBIS
Old English Inns
Days Inn
Campanile
City Inn
Formule 1
Howard Johnson Hotels
Percentage of Market Share for Top Ten UK Hotel Groups
Bass
Whitbread
Hilton
Thistle
Compass
Accor
Choice hotels
Jarvis
Regal
Macdonald
The Competitive Environment
Broad Target
COMPETITIVE SCOPE
Narrow Target
LOW COST DIFFERENTIATION
Travel LodgeHoliday Inn ExpressMarriott CourtyardPosthouse
MariottDe VereHiltonHeritage
Guest HousesBed & BreakfastsYouth Hostels
The SavoyThe LanesboroughThe Ritz
Porters five forces model
Potential Entrants
Threat of Entrants
Suppliers Buyers
Bargaining Bargaining Power Power
Threat of substitutes
Substitutes
CompetitiveRivalry
Industry Sector Stakeholder Mapping
Low LEVEL OF INTEREST High
D New Entrants Lenders Competitors shareholders Chairmen of Competitors Board of Directors
Government
A
Suppliers Employees Community Auditors of Key Players Competitors Lenders
B
C Customers/ Potential
Low
High
D New Entrants Lenders Competitors shareholders Chairmen of Competitors Board of Directors
Government
A
Suppliers Employees Community Auditors of Key Players Competitors Lenders
B
C Customers/ Potential
Low P O W E R
High
CUSTOMER TRENDS
Future customer trendsCustomer Demand
MARKET TRENDSIndustry Life cyclenumber of UK Hotels
Number of UK Hotel Operators
0
2000
4000
6000
8000
10000
12000
14000
16000
Y 1991 Y1992 Y1993 Y1994 Y1995 Y1996 Y1997 Y1998 Y1999 Y2000 Y2005
Year
Num
be
r o
f H
ote
ls
Hotel Industry Life Cycle
0
1
2
3
4
5
6
7
8
9
Y1994-
95
Y1995-
96
Y1996-
97
Y1997-
98
Y1998-
99
Y1999-
00
Y2000-
01
Y2001-
02
Y2002-
03
Y2003-
04Time
% G
row
th A
cco
rdin
g to
Tur
nove
r Y
ea
r o
n Y
ea
r
SWOT ANALYSIS
Strengths Well established brands UK is a leading tourist destination Major brands are offering specific products Internet Weaknesses Major brands are less flexible Hotel Industry is linked with the wider Economy leaving the sector
vulnerable in times of the recession High costs Hotel classifications VAT Strength of the pound
SWOT ANALYSIS
Opportunities Internet Increase revenue from non-residents Scope for further growth Budget hotel sector Euro Ageing Population Threats Alternative accommodation Hotel groups V Independent Corporate spending Competitive prices on overseas travel
CONCLUSION
The UK hotel sector in the future Fewer hotels but more rooms Major investing from large Hotel groups, i.e. buy
outs and mergers Analytical tools which a new entrant should use
to determine success and position
REFERENCES Tim Knowles, Corporate Strategy For Hospitality, 1996 Johnson, Scholes, Exploring Corporate Strategy, Fifth edition Mintel Market Research.com Joan Marsan, Hotels, July 1999 Geoff Tyler, Hotel & Restaurant, January 2001 Jay Kandampully, Dwi Suhartanto, International Journal Of Contemporary Hospitality Management, Vol 12 issue 6 Gaby Huddart, Caterer & Hotelkeeper, December 1999 Paul A Philips, International Journal of Contemporary Hospitality Management, Vol 9 issue 4 Trevor Ward, International Journal of Contemporary Hospitality Management, vol 9 issue 7 Gavin Eccles, Philip Durand, Managing Service Quality, Vol 7 issue 5 Vinitia Mathews, International Journal of Contemporary Hospitality Management, Vol 12, issue 2 Encarta, world English dictionary BDO Hospitality Consulting, International Journal of Contemporary Hospitality Management, Vol 8 issue 7 Marty Whitford, Hotel & Motel Management, November 1998 Sarah Toyne, BBC News “What now for Tourism?”, 18th September 2001 TRI Hospitality consulting- United Kingdom Hotel Industry 2001 International Journal of Contemporary Hospitality Management vol 11 issue 7 and vol 12 issue 2. Norma Cohen, FT.com, “Regus expects more tough times ahead” July 31st 2001. Margaret Brown, International journal of contemporary Hospitality Management vol 8 issue 3. “Environmental policy in the Hotel
sector: “green strategy or strategem?” Peter McGunnigle and Stephanie M. Jameson “HRM in UK Hotels: a focus on commitment”, Employee Relations, vol 22, issue 4. Mark Poustie,Jenifer Ross, Norman Geddes and William Stewart, Hospitality and Tourism Law, 1999. Office of National Staistics Martin Informantion Limited, “Guide to Hotel Brands in the Uk” December 2001. Bob Brotherton, “An Introduction to the UK Hospitality Industry, 2000. The Business Enviroment