Overall Market
In early 2005, the U.S hotel industry was consist as highly competitive industry with approximately 4.4 million hotel rooms and 47,598 properties in the country (Exhibit 2) . The recorded revenue during that time was $113.7 billion and pre-tax profit of $16.7 billion dollars.
Approximately 66% of the U.S hotels were associated with a brand, and only 33% of U.S hotels were either privately owned or not associated with a brand. The U.S hotel industry at that time was a bit of disorder, there wasn’t any hotel company that is in control of the majority of hotels, most of the hotel companies would rather have several sub-brands under the company, and it is highly fragmented. Exhibit 1 has shown the top ten hotel companies in the U.S, and each of them would have not one or two but tens and twenties of sub hotel brands. For example, Cendant Corporation which is on the top of the list controlling a total number of 12 sub hotel brands and 5,622 properties across the country.
Segmentation:
Overall, the U.S hotels were competes on the basis of amenities, price, and service (Kerin& Peterson, 2013). People can decide to stay the hotel either because of the low price or those willing to pay high price for the service they get while staying. Hotel room price can be determined by service, facilities, or speciality.
There were mainly six segments in the whole industry: luxury, upper scale, upscale, midscale with food and beverage, midscale without food and beverage, and economy (Exhibit 3). It can categorise into two types: hotels that are offering full services and hotels offering limited services. Among them, luxury hotels, upper scale hotels, upscale hotels and midscale hotels (with food and beverage) would consist as full-se...
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...omparing to U$72,600), and majority of them was in a managerial position and have a decent income of U$81,000 comparing to leisure travellers which their annual income were average U$72,600; Business travellers usually stay one adult per room, whereas leisure travellers tend to have two adults per room; Business travellers had lower reservation rate than leisure travellers and they were willing to pay more for the room they stayed, which average was about U$96/night comparing to leisure travellers paid U$89/night, based on the price it would be a full-service hotel in the upscale to upper scale hotel segment. Out of all the guest stayed in the hotel, surprisingly leisure travellers tend to have higher percentage on spent one and two nights in the hotel than business guest, but lower percentage on staying three to four nights than business travellers during the stay.
Marriott Corporation began in 1927with J. WillardMarriott's root beer stand. Over the next 6O years, the business grew into one of the leading lodging and food service companies in the United States. Marriott's l987 profits were $223million on sales of 56.5binion.See Exhibit l for a summary of Marriott's financial history.
Hilton Worldwide carries out business through three segments: (1) management and franchise; (2) ownership; and (3) time-share. These business segments enable management to capitalize on strengths like brand recognition and economies of scale. The company focuses primarily on the management and franchise segment which consist of 3,918 hotels with 610,413 rooms. Managing the properties, rather than owning them, allows the company t...
Each year, America’s travel and tourism industry generates approximately $1.5 trillion dollars in economic output, or about 2.6% of the country’s gross domestic product (Select USA, 2016). Nearly 20% of this economic activity is directly related to accommodations, which serve the short term lodging needs of pleasure and business travelers. Unlike other American economic sectors, this lodging industry is a highly fragmented, diversified market with an incredible variety of suppliers. Temporary overnight lodging can range from undeveloped campsites, hostels, and capsule hotels all the way up to mansions and incredibly luxurious five store hotels. Price ranges run the gamut from just a few dollars a night to thousands of
There are 7 major environmental trends that affect the design of hotels around the world. The first is the competitive environment; a company needs to satisfy the needs, and wants of consumers better than its competitors do in order to survive. Hotels need to be designed so they are more appealing than competitors. Second is the demographic environment, or the people environment. The target of all hotels, the design is to appeal to customers. Third, the economic environment; economic trends in income and changing consumer patterns change the way marketing is used. Adjusting prices of hotel rooms is a huge variable in making profits. Attention to the natural environment is also important, this includes the use of natural resources. Fifth, the technological trends; one of the most important trends in the 21st century. Sixth, the political environment, follows the laws and regulations set by the government; making sure all rules in the design process as far as warrants and inspections needed are followed. Lastly are cultural trends, they affect society's values, perceptions, preferences, and behaviors. Beware of current trends, change hotels according to these
The hotel industry performs within a saturated market, driven by customer loyalty and competitive pricing to stand-out. This competitive nature makes it extremely important to capitalise on strengths while improving on
Marriott International, Inc is founded in 1927 and in 1983 it became the first hotel chain designed for business travellers. Up till now, Marriott has grown to a chain with 18 different brands and broad segment groups, with 3,900 properties over 72 countries all over the world and with around 42 million members in their loyalty program.
The most prestigious name in the industry, Hilton Hotels & Resorts stands as the stylish, enthusiastic and global leader of hospitality. With over 92 years of experience, Hilton continues to be synonymous with hotel because of innovative approach to products, facilities and service. They help make traveling easier with smart design, innovative restaurant concepts, authentic hospitality and assurance to the global community.
2. Demand-supply gap : Indian hotel industry is facing a mismatch between the demand and supply of rooms leading to higher room rates and occupancy levels. With the privilege of hosting Commonwealth Games 2010 there is more demand of rooms in five star hotels. This has led to the rapid expansion of the sector.
In an effort to expand, the corporation has acquired properties that they will convert to Mandarin Oriental’s brand and standards. The company is looking to develop further and has planned or is planning on acquiring buildings from other hotels such as the Hotel Ritz Madrid in Spain (Winston Nicklin, 2015). They have also sold some of their hotels, such as their location in San Francisco to Loews Hotels and Resorts (King, 2015). The Mandarin Oriental Group is discerning on where they will build or acquire properties, especially from a financial standpoint (Photos.mandarinoriental.com, n.d.). Though they are continually expanding, the Mandarin Oriental Group strives to keep its Asian influences. (Mandarinoriental.com,
The external environment of the hotel industry in is very competitive and already well established. Trends in the market include promotional campaigns to customers using the "more bang for your buck," method. There are several different segments of the hotel industry including: luxury, upscale, mid-market with food and beverage, mid-market without food and beverage, economy, and budget. Each different segment offers certain amenities to appeal to consumers depending on what they are looking for in an over night stay away from home. As McDonald's looks at entering the hotel industry they have looked at several important issues dealing with an entry into this market. McDonald's would like to enter the market in the state of Illinois where the company's headquarters is. Illinois leads all other states in money spent on tourism totaling $61.1 million in the year 2000. Illinois also ranked fourth in the nation for leisure person trips in 2000. Hotel industry has several important barriers to entry including cost of entry, ability to differentiate from other hotels, and competition in every hotel segment.
Thanks to these factors, pricing becomes one of the primary uses with which hotels attract customers. However, due to customers’ independent nature, there influence over industry players is limited. In the high-end segment of hotels, price influence becomes even less as hotels find it easier to differentiate themselves from the competition and customers become less price sensitive coming to expect higher prices as a symbolism of superior quality and services. Lastly, corporate business and tour operators can exert more influence due to their large purchases but this affect is of a limited nature and does not extend across the whole
When talking about substitute goods in the hotel industry it is all about the type of hotel that you are aiming for which will determines how high the treats of a substitute good are. For example, when talking about a hotel catering to a niche population of comfort, modern, and good pricing the treat of a substitute good is extremely high because it is easier to get into these types of hotels. However, when talking about more specific and expensive fo...
History of Hilton hotel has been very interesting as it started as Mobley Hotel in year 1919 a small building. Because, when the company started it had no plans or ideas of expanding, the sole purpose was to serve as a place for the travelers to stay where they can comfortably enjoy a night or few and carry on towards their journey. After twenty-seven years of business and hard work, this small hotel went nationally in eleven states within United States, known as Hilton. Currently they have four thousand worldwide properties, either directly owned or franchised (including third party), in seventy-eight countries. Hilton even though allows franchises but there policies remain the same and direct Hilton officials do all the upper level management. The company name Hilton understands for Hosp...
Energy- Excess use of energy can be really costly and with some adjustments, it can lead to massive savings. In many hotels the average consumption of energy per bed per night might be approximately
The overall industry saw a strong boom rate from 2010-2014. The global hotels & motels industry had total revenues of $677.1bn in 2014, representing a compound annual growth rate (CAGR) of 4.6% between 2010 and 2014. In comparison, the Asia-Pacific and US industries grew with CAGRs of 6.6% and 5% respectively, over the same period, to reach respective values of $163.7bn and $166.2bn in 2014(Global Hotels & Motels 7). The reason for this growth is due to the Asia-Pacific Region and Americas. The US alone with its world’s largest hotels/market has conquered net value growth, while China has literally doubled the revenue in the same time span. The leisure segment