Analysis of Indian hotel industry and Hotel Blueberry international - Research Paper Example

? Global Hotel Industry Answer Overview of Global Hotel Industry The global size of the hotel industry is very difficult to imagine. The global hotel industry ranges from small family owned private business to leading international group with more than 6, 00,000 rooms. It is evidenced from global map that the industry covers the globe from US to several small islands. The industry is significantly linked with hospitality and tourism industry. Moreover, hotel industry contributes an effective part to the countries’ GDP growth (Mohanty, 56). For the purpose of the study Hotel Blueberry International, a newly developed Indian hotel has been selected in order to achieve the objective of the study. The organization is planning to establish a hotel near the coastal side of Goa that is one of the popular tourist spots in India. Moreover, they are planning to open more 7 hotels in different tourist places in India on Franchise basis. The study will conduct several analyses about Indian hotel industry and Hotel Blueberry international. Porter’s Five Force Model It will analyze the impact of several micro element factors on Indian Hotel Industry. Supplier’s Power This term includes all kind of inputs that are needed in order to provide products or services. There are very few high standard hotel chains, such as, The TAJ, HHI, Leela Palace and ITC, but Indian market is full of two star and three star hotels in all the metro cities. In terms of five star high standard hotels, there is limited competition among the suppliers as there are limited substitutes of Spa and other five star hotel services. On the other hand, the two star and three star hotels have several options of suppliers who used to provide services in low cost. Therefore, it is feasible that threat of suppliers’ bargaining power is moderate for Hotel Blueberry International. Buyer’s Power The metro cities and developing towns of India are very much competitive for the two and three star hotel industry. Blueberry is entering in this kind of market segment. The target market will be very much price-sensitive and hence the newly developed hotel has to face high bargaining power of customers. Threat of Substitute In India the substitute of low-cost two and three star hotels are several guest house, motels and dormitories. If price-sensitive people find that the price of hotel room night crossing their budget then they can switch to those substitutes. Therefore, it can be feasible that the threat of substitute is moderate for Hotel Blueberry International. Threat of New Entrants Several international hotel chains are entering in India and are tying up with the Indian hotels in order to reduce the initial cost. Moreover, high brand image and customer brand loyalty of The TAJ, HHI, Leela Palace and ITC will make the thing difficult for the new entrants who are thinking to enter in this competitive industry. Therefore, it is feasible that threat of new entrants for Hotel Blueberry International is high. Industry Rivalry Indian low cost hotel industry is full of several potential two and three star hotels. Moreover, day-by-day due to economic slowdown and price hike in several products has made the people very much price sensitive. Therefore, it is feasible that threat of industry rivalry is high for the Hotel Blueberry International. General Environment The general environment analysis will determine the impacts of external environmental factors on the Indian hotel industry. Political Several environment related regulations has restricted the business operation of this industry in India. Several difficulties in getting travel visas to India can affect the industry. Moreover, several terrorist activities and political dilemmas may create a negative impact on Indian hotel industry. Economical India is economically developing country and the Indian hotel industry is contributing a major role on the country’s GDP growth. Tourism and Hospitality sector of India is very much potential business sector. India was among those few countries that have attained positive GDP growth during and post recession era. Moreover, the disposable income of the Indians is increasing slowly and gradually. Therefore, it is feasible that favourable economic conditions and popular tourist spots of India will be able to attract the Indians as well as the foreigners towards this industry. Socio-Cultural It is the trend of the Indians to travel in several tourist spots during the school and office holidays. This favorable socio-cultural environment will be beneficial for the Hotel Blueberry International. Moreover, patronizing of Spa has able to change the lifestyle of Indians. On the other hand, foreigners used to come in India to visit the historical and tourist spots. They always have a knack to taste the traditional Indian food. Therefore, it can be state that these aspects will be favorable for Hotel Blueberry International. Technological In order to run the hotel business successfully, the organization needs to implement several advance technology in the business process. Advance CRM software, implementation of Power Factor Correction, recycling of solid waste and water system will fulfill the customer satisfaction level of the guests of hotels. After looking these aspects it can be suggest that, Hotel Blueberry International should implement advanced IT in business process in order to satisfy the guests and grow their organization. Opportunities Demand between the inbound and national tourist can be effectively managed due to dissimilarity in the holiday periods. September to February is the peak season for the industry considering both domestic and international tourists. Maintaining traditional products and services will increase the competency of Hotel Blueberry International. As India is a perfect destination for tourist, the hotel should on introducing new franchises in the tourist spot like Jaipur, Jammu, and Darjeeling etc. As the industry is becoming very much potential for the small cities, Hotel Blueberry International should focus on that market too. Threats Increasing demand for guest houses, motels and resorts. Political barriers and terrorist activities in the tourist spots, such as, Mumbai 26/11 attack, Hyderabad 2013 blast has restricted the desire of people to visit those areas. Economic slowdown of country and low disposable income of middle class people and several natural calamities like earth quake, tsunami, flood etc. are affecting the Indian hotel industry. Answer 2 Positioning Strategy The Hotel Blueberry International should implement price based positioning strategy. Basis on the budget of 15 million US dollar they should firstly focus on the breakeven of the business. As the Indian hotel industry is very much competitive and the organization is very much new to the industry, therefore it is necessary for them to implement the cost control strategy. They should positioned themselves as the reasonable priced three star hotel this strategy will help because major of the Indians are very much price-sensitive and love to travel during the holidays. In order to implement effective positioning strategy Hotel Blueberry International should focus on the cost effective promotional strategy. Giving promotions on the social media sites, such as Facebook, Twitter will be effective enough. Business-Level Strategy In order to sustain in the competitive market Hotel Blueberry International should implement porter’s Generic Business-level Strategy that comprises Cost-Leadership, Differentiation and Focus strategy. Among these three strategies the hotel can implement cost-leadership and differentiation strategy. As it is discussed earlier, Indian hotel industry is becoming highly competitive and the Indians are price sensitive, therefore, they need to implement low pricing strategy. Reduction of unnecessary operational cost will help the hotel to implement this cost-leadership strategy. On the other hand, they can also implement differentiation strategy. Along with the room rate the hotel can provide a small tourist package for their guests. It will help the hotel to increase their brand loyalty and brand recall. Sightseeing and packages like night safari are the effective options for Hotel Blueberry International to implement. Answer 3 Franchising The name of the newly developed hotel is Hotel Blueberry International. The organization is planning to establish a hotel near the coastal side of Goa that is one of the popular tourist spots in India. Moreover, they are planning to open more 7 hotels in different tourist places in India on Franchise basis. Marketing support is one of the major benefits of Franchise. The knowledge or experience sharing between the franchise owners and the management of hotels will significantly increase the core competency of Hotel Blueberry International. This system added value in the sales and marketing strategy of an organization. The hotel can be benefited through a successful networking experience. Knowledge about the local market of the franchise owners will help the hotel to achieve the competitive advantage in that particular area. Own reservation system within the hotel will bring more flexibility in the business process. Depending upon the budget, this strategy will be effective and beneficial. Target Market As it has discussed earlier that the hotel should implement the price positioning strategy, they need to target the people of middle class and upper middle class. It is feasible that, Indians are very much price-sensitive and always concerned about the quality of product. According to the consumer buying behavior of Indians, they need to target the market. Direct mails, promotional activities through social media site in order to aware the target audience will help the organization to increase their target customers. Finally, it can be said that in order to overcome the threats and market challenges the hotel should try to target the middle class people basis on the low pricing strategy. Three Main Features Hotel Blueberry International should diversify and implement new activities and amenities comparing to the other hotels as these will help the hotel to retain the old guests and attain the new guests. Patronizing of Spa with discounted price, in a separate section of the hotel will significantly satisfy the comfort level of the guest. Including sightseeing, night safari and small tour packages with the hotel fair will increase the brand awareness and brand recall of Hotel Blueberry International. In-room WI-Fi facility, inclusion of traditional food items in the break-fast menu and all the necessary room amenities will increase the core competency of Hotel Blueberry International. Internal Strengths Employee and manpower cost in Indian hotel industry is lowest comparing to the other countries. Hotel Blueberry international can hire effective management team to provide trainings to the employees in order to increase their skills. Talented and skilled employees could be key strength for the hotel. Hotel Blueberry International can offer several readymade and customized tourists destination packages with the available resources in order to attract more number of tourists. Offering traditional food products, room amenities and effective customized in-room guest service and Patronizing of Spa with discounted price will fulfill the satisfaction level of the tourists or guests. Internal Weaknesses High tax structure comparing to the other foreign countries may affect the profit margin of Hotel Blueberry International. The hotel needs to reduce the operational cost, such as F&B operation cost, In-Room operation cost etc. It will help the hotel to sustain in this difficult economic scenario. Limited value added services by the Indian hotels are failing to create a stabilize customers base. According to Indian culture guests are God. Therefore, Hotel Blueberry International needs to provide value added service to its guest from the time of check in to check out. Inadequate and insufficient room amenities are the weak point of several Indian hotels. Keeping these things in mind, Hotel Blueberry International should control this In-Room service Answer 4 Five Elements of Strategy If any business has a strategy then the strategy has several parts. There are five elements of a strategy, such as, Arenas, Vehicles, Differentiators, Staging and Economic Logic (Wide, 48). Arenas Arenas determine the product category and target market of the product. In terms of Hotel Blueberry international, the product category is franchise based low-cost hotel chains. Moreover, the target market of this hotel is the price sensitive middle class and upper middle class people who used to travel across India during holidays and the foreigners who used to visit India in order to visit the popular historical and tourist spots. Vehicles In terms of Hotel Blueberry international, they have to set vehicles in order to achieve the business objectives. They should implement pull service and production strategy in order to target major number of potential guests. Own reservation system and adequate CRM implementation can become a key strength of the hotel. Staff training about customers services is mandatory as they are trying to enter in such a competitive market place. Differentiators The hotel should concentrate on more than a life style and product image. Implementation of cost leadership and differentiation strategy will be effective for Hotel Blueberry International to differentiate themselves from other competitors. Implementation of pricing strategy according to the customer’s need, inclusion of small tour packages will be effective differentiators. Staging Staging is all about the moves that are being undertaken in order to achieve the business objective. It includes sequence and speed of a project. Implementation of effective marketing strategies like promotional campaigning, implementation of product and pricing strategy, business expansion on franchise basis can be drawn as the example of Hotel Blueberry International’s staging. Business expansion across the cities and towns across India will be effective staging for Hotel Blueberry International. Economic Logic There are various ways for the company to maximize profit, such as, low quantity against premium price or large quantity against low price (Anderton, 133). Depending upon the initial budget of the organization it is being recommended that, Hotel Blueberry International should implement low pricing strategy as major of the Indians are very much price sensitive. Targeting the people of middle class and upper middle class level with reasonable price will help the hotel to increase their customer base. Work Cited Anderton, Alain. Economics: A Level Student Book. New Delhi: Pearson Education India, 1993, Print. Mohanty, Pragati. Hotel Industry and Tourisn in India. New Delhi: APH Publishing, 2008. Print. Wide, Felix. Worldwide Development of Nuclear Energy- Strategic Development. Varese: Diplomica Verlag, 2011. Print. Read More