Kempinski Hotels in United Arab Emirates - Essay Example

At the moment the Kempinski Hotel of Ajman is in its growth period and it is expected that it will soon reach its zenith in the hospitality industry. (Sen, 448-50) 2) It is always difficult to enter any industry and the hospitality industry in UAE was no different. However with proper execution of five forces it becomes logically viable for a new company enter into a specified market Michael Porter in his famous idea of the Five Forces condenses his theory regarding the 5 separate forces, which, according to him, influence any given industry.

These forces include the force of Rivalry, rampant between all the firms in the industry. Threat of substitutes is another force i.e. the threat posed by outside products which do not belong to the same industry as the product it tends to threaten. Buyer Power Barriers is another which, if high, can even set the price for things available in the market. The next one is the Supplier Power which, if high, can even bite of a good chunk of the manufacturers profit by simply supplying raw materials at a higher price.

The last one is the Barriers to Entry, which is the principle key in the hands of the old firms to keep new firms from entering the market. Porter's five forces train a new competitor to scrutinize these 5 important forces before taking decisions pertaining to strategies your firm might be keen to pursue. Porter is quick to provide antidotes to deal with each of the force he so carefully describes. To combat either of the forces he outlines 3 different types of strategies; the corporate level strategy, the business unit level strategy and the functional or departmental level strategy.

These strategies ought to be utilized for successfully confronting and overpowering the problems posed by any of the 5 forces he outlines. From the parameter of the paper it could be stated that Kempinski Hotels did exactly this and thus the entry was made possible with comparative smoothness. 3) In the context of hospitality industry in UAE it can be stated that the Kempinski Hotels made a late movement into the market of UAE. It is a certainty that the first movers enjoy a considerable advantage of over the late movers and in this case hotels like Marco Polo Hotel, Millennium Hotel, Landmark Suites Hotel, Lotus Grand Hotel and Rimal Rotana all penetrated the UAE hospitality market on an earlier date than the Kempinski Hotels.

However, with their brand equity of the mother concern and with the incorporation of the effective business strategies the Kempinski Hotels compromised the disadvantages of late entry and came out as winners in the long term. (King, 34-5)4) Kempinski Hotels started their campaigns in UAE in a high note. Like all successful organizations they followed the path of strategic management and became successful. With the boom of tourism industry in UAE it was logical that there would be a heady demand for accommodation and thus the market can be stated as well secured.

It has been reported that the average room occupancy in 5 and 6 star hotels range from 75% to 90% which is extremely high under all conditions. Under such circumstances it would relevant to mention that the basics of the product are already well positioned as the Kempinski Hot