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An Insight to the Chained v. Independent Hotels - Article Example

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The study, An Insight to the Chained v. Independent Hotels, views the outlook of the hotel industry thru the chained and independent hotels perspective.  Through literature review, problems and experiences of each sector are viewed using Porters Five model of competitive analysis. …
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An Insight to the Chained v. Independent Hotels
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Download file to see previous pages Costs are the number one consideration in the light of a declining economy.
Our concerned areas for discussion are chained and independent hotels that are both testing the international markets to keep their profitability in the light of a slowing economy. I have noted several reports saying that multi-national hotels have looked at emerging countries and offshore opportunities for hotel investments using their brand names and chain marketing. I have noted that Independent hotels compete with these multi-nationals using a different kind of marketing strategy in regions. In this framework, I would like to know what strategies are being used by these hotels to remain in a competitive shape and how do they survive in the globalization process.
In this context, strategies of each hotel segment will be presented using Porters five competitive model process. Michael Porters Competitive forces models consist of rivalry, the threat of substitutes, buyer power, supplier power and barriers to entry.
a. Capital requirements. First, both articles consider capital requirements as a hurdle, simply because of the intensive capital needed to construct a hotel. Below is a calculation of how much does it cost to construct a hotel. The assumption was made on the cost per room of different class of hotels. 
As shown, the costs of constructing a room vary widely if it is economy, mid-price or upscale hotel. An in-depth profitability study should be done to study the appropriateness of the type of hotel needed in the region.
b. Next are the government regulations. At this point, investors should look at the regulations imposed by countries to encourage or discourage new entrants directs analysis on the importance of regulations such as subsidies offered by the government, For instance, the Indian government has set aside a 10 year conditional tax holiday for all government tourism projects. ...Download file to see next pagesRead More
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