Value Curve Analysis

Market analysis 5

Market Analysis of Hotel Business

Tyran Hunt

University of Maryland

October 25, 2020

Market analysis of hotel business

Introduction

The hotel industry is among the most competitive industry that requires business owners to be more analytical for both internal and external business environment. The industry is growing faster due to the existence of several services that are offered, which gives the business organization an opportunity of specializing in areas that5 they have a competitive advantage over the competitors. This paper addresses the hotel industry analyzing the market by considering the strategies being used by the competitors to improve the efficiency of operations. It will cover demographic changes, technological changes, market segmentation, political influence, and cultural changes.

Demographic changes and its influence on the hotel industry

Demographic factors include characteristics of the population customers such as age, sex, income level, level of education, lifestyle. The success of the business in the hotel industry depends on how strategies are formulated considering demographic factors because the preferences and needs of the customers changes with changes in the demographic factors. With the increase in the national income, there has been a steady increase in per capita income, making the potential customers in the hostel industry demand high-quality products and services as they are willing to pay more. The business has to strategize and brand its services and products to be of high quality to meet the needs and preferences of the potential customers hence being competitive in the market.

When managing the hotel business, it is important to understand the education level of the target population for the business to be competitive over the competitors. A business that understands the needs of the customers is the ones that have a larger market share. Customers who are most educated are concerned about the quality of services and products. They are will to spend any amount provided the diet is balanced and products prepared of high quality, unlike customers of a low level of education. To have a competitive advantage, the business will have to target mostly educated customers through market segmentation so that the total revenue can be maximized with only a few customers. Educated customers are knowledgeable about the importance of having good quality products and services hence making it easier to sell to them a higher price that will enable the organization to achieve profit maximization.

Changes in the lifestyle also influence the operation and success of the hotel business. With changes in technology, the business world is changing into a global village where a change in trend in a certain region easily diffuse to another part of the world and changes the decision-making process of the customers. When the society is still not developed, individuals are concerned about the basic needs. Therefore, for the business to be competitive, it must provide basic products and services since customers have a little surplus that can be used for luxury products and services. With changes in technology and education level, individuals are changing their lifestyle and focusing on quality and luxury services to achieve their desired goal of self-actualization. Therefore, at that level, the hotel business needs to provide recreation facilities to improve the quality of services produced.

Age and sex of customers also influence how they decide to use the product or request the services of the business organization. Therefore, to acquire a competitive advantage over the competitor’s strategies, need to be formulated to address the needs of both the elderly and the youth, as well as male and female. To succeed the business have to segment the market based on gender then sub-divided the gender-based on age, so that product and services are designed based on the identified segments.

Changes in competition strategies by the competitors

There is a high level of competition in the hotel business. Most of the products and services are hard to differentiate. The only thing is how the services are offered. Therefore, for the business to be competitive in the market, it has to improve service delivery and the quality of the products because the product being offered in the hotel industry is the same. There are many hotel businesses in the industry, and the strategies being used by each competitor are different. Some competitors use a price completion strategy to charge a lower price for the same product or services in the same market. Some business capitalizes on the advancement of technology and provides a high level of efficiency and quality. At the same time, other nosiness organization uses quality as a strength for completion in the market.

The hotel business needs to understand the marketing strategy being used by the competitors before selecting the best counter-strategy to give it a competitive advantage. Considering the change in trend regarding lifestyle and technology, for the organization to maximize profit, it has to consider quality. Although its production cost is high, it compensated by charging at a high price, which will not have an impact on the demand for business products and services. For customers with a high level of education and income, their price elasticity is inelastic. A slight change in the price for the products and services does not influence the demand for the same products or services.

Political and economic factors

Politics affect the operations of the hotel business, and the management board needs to have a flexible organizational structure that accommodates any political legislations and policies that are formulated when the business is in operation. It is difficult to predict the influence of the political decision on the operation of the business because it keeps changing. When the administration change, policies also change. For the business to be on the safer side, it needs to follow government regulation and avoid taking sides in the political divide to remain competitive. Economic factors that need to be considered include the interest rate. Because the business will require loans to finance and expand its activities, hence interest rate is a key determinant of the success of the organization in achieving profit maximization.

Technological changes

Technologies have become a big part of hospitality. It has improved services and experience. Technologies in the hotel industry are still a young aspect in this industry, and it seems it is only the beginning of seeming to be much to come. Some of the future trends are artificial intelligence, Chatbots, big data, robots, smart rooms, mobile use, electronic payment, self-service, blockchain technology, and demand workforce.

Chatbots are made to interact with the customer throughout the journey and help in service provision where necessary. Artificial intelligence will help smoothen multiple tasks at once (booking guests, data collecting, managing inventory, and many more (Alotaibi, 2020). With customer expectations, internet services will be personalized. Electronic payment will soon take over; using a robot is a new emerging trend in years to come.

This is a mobile generation, and this is giving rise to a mobile experience where the guests book and check-in and out through the phone to paying through the phone Kibe, Ogutu & Ojwach, 2019). More of a virtual employee. A smart room is another future technology waiting to grow. Rooms are built with equipment that works seamlessly to provide experience. Virtual windows, room temperature, lighting, and keyless doors help to improve guest service. The technologies have come to smoothen all operations in the hotel industry, from housekeeping, front desk, and room service to bookkeeping operations.

I will seek to improve customer service by digitalizing room booking will be the internet. This would be enabled by transacting online and using contactless payment. This would ease of operation and save time for the traveller.

Cultural changes

For many years the hotel industry has been offering services that provide accommodation to the guests or lodging. Many authors realized that it deals with the hotels and refers to overnight accommodation such as hostels and guest houses. Several factors affect the industries in both cultural way and social. Digital methods of technology have affected the hostel industry. It has done away with the old way the customer had to travel to the front desk to get their services, but nowadays, they order items online and later get access to them. Like in mobile banking, a client can get the services in their smartphone or even the computer and later make the booking without making any movement. Secondly, nowadays people are more educated than in the olden days. In the early years, they understood the difference between the brands, but nowadays, the customers can do the research and understand the hotel instructions clearly. ("8 factors that have changed the way we travel", 2020)

The most uncontrollable factor is that the hotel owner cannot predict whether the country can get a disaster that may affect the hotel industry. Recently it has become tougher to get a good worker who is dedicated to working since the youth has immigrated to other places meaning that when the aging population leaves the industry for retirement, they leave the gap for the new generation. Currently, the industry is combining business and pleasure travel by taking road trips and also adding vacation. This entices the youth traveller who may want to spend time in their leisure activities, such as touring in different places.in conclusion, the availability of technology has contributed to the worker's competition, hence creating pressure on the workers. ("Changes in society and their impact on the hospitality industry.", 2020)

Conclusion

Market analysis is important because it allows managers of the business to strategize on how to be competitive in the business market. The external business environment needs to be considered, including the existence of the competitors, changes in technology, changes in demographic factors, and cultural changes. The hotel business needs to understand the marketing strategy being used by the competitors before selecting the best counter-strategy to give it a competitive advantage. Considering the change in trend regarding lifestyle and technology, for the organization to maximize profit, it has to consider quality. However, its production cost is high, but it compensated by charging at a high price, which will not have an impact on the demand for the business products and services.

References

8 factors that have changed the way we travel. (2020). Retrieved 25 October 2020, from https://www.hotelmanagement.net/operate/8-factors-have-changed-way-we-travel

Alotaibi, E. (2020). Application of Machine Learning in the Hotel Industry: A Critical Review. Journal of Association of Arab Universities for Tourism and Hospitality, 18(3), 78-96.

Changes in society and their impact on the hospitality industry. (, 2020). Retrieved 25 October 2020, from https://justanotherblogwordpresscomblog.wordpress.com/2016/04/07/changes-in-society- and- their-impact-on-the-hospitality-industry/

Kibe, J., Ogutu, H., & Ojwach, S. (2019). Efficacy of the Use of Mobile Applications on Front Office Operations; a Case Study Hilton Hotel Nairobi. Journal of Hospitality and Tourism Management, 2(1), 1-16.