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The Hotel market

The Hotel market. A Sector Review Robert Berrisford Tom Cherry Sally Wetherall Ailsa Gentles. UK hotel market past five years current standing Hotel market In 1990’s Future of hotel market?. Relevant Analytical tools Boston Matrix Porters 5 Forces PEST SWOT Stakeholder analysis

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The Hotel market

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  1. The Hotel market A Sector Review Robert Berrisford Tom Cherry Sally Wetherall Ailsa Gentles

  2. UK hotel market • past five years • current standing • Hotel market In 1990’s • Future of hotel market?

  3. Relevant Analytical tools • Boston Matrix • Porters 5 Forces • PEST • SWOT • Stakeholder analysis • Directional Policy Matrix

  4. UK Hotel market

  5. Market Overview • 60 Public and Private • Expand through acquisitions • Growing International brands • Franchised brands and budget hotels • Major investment by big chains

  6. UK Hotel market

  7. Share of market • Granada (9%) • Forte, UK’s largest Hotel chain • Posthouse, Travelodge • Whitbread Hotel company (6%) • Marriott uk • Travel Inn • Six Continents (5%) • Holiday Inn • Intercontinental

  8. HIGH Granada Group plc 9% share, 3.9% growth Whitbread plc 6.6% share,-0.7% growth LOW Thistle Hotels plc 4.5% share, 0.1% growth Hilton Group 6.0% share,-8.1% growth Boston Matrix MARKET SHARE MARKET GROWTH HIGH LOW

  9. Porters 5 Forces Competitive rivalry: 4 main players Granada Group Whitbread plc Hilton Group Thistle Hotels Potential entrants. Expensive to compete against the main players. Long time needed to establish a respectable name and build up customer loyalty Suppliers Many suppliers for hotels so quality and price are key factors for hotels to consider when purchasing. Supplier power is low in the hotel industry as the hotels are able to pick and choose from a large number of suppliers Buyers Large amount of buyers so price and quality has to be competitive to be attractive Substitutes Many hotels so there can be a lot of product-for-product substitution. Doing without also a form of substitution. Invest in video conferencing saving on air fares and time

  10. Changes • Increased demand for Budget hotels • Increased small hotels • Middle sized (51-199 rooms) Maintained • Large increase in over 200 rooms • Overseas • Conference

  11. Whitbread PLC

  12. Whitbread plc • Y2000 Turnover £3.0 Billion • + 0.3% on 1999 • profit £256 Million • - 15% • Bought Swallow £578 Million

  13. Granada

  14. Granada • 1999 turnover £4.3 Billion • +6% on 1998 • Profit £881 million • +14% on 1998 • Largest branded chain Under Forte • Le Meridien, Posthouse, travelodge and Heritage. • Interests In UK TV among others • Hotels + Restaurants 2/3 of revenue

  15. PEST Analysis for hotels • Political/Legal • Monopolies Employment law • Economic Factors • Life cycles Recession Disposable income • Sociocultural Factors • Lifestyle changes Population demographics Attitudes • Technological • New developments Rates of obsolescence

  16. Stakeholder analysis Level of Interest high Low Low Power high

  17. Directional policy matrix Business strength Strong Average Weak Granada Group plc Forte Market attractiveness High Medium Low Travelodge Heritage

  18. Strengths • The current UK market size is worth £10.3 billion. • Huge growth in large hotels doubling in Value between 1996 and 2000 (now worth £289.2 million) • Small hotels with less than 50 rooms form 92% of the market in terms of value.

  19. Weaknesses • Future market uncertain after the events of September the 11th. • Business restricting travel expenses to cut costs • Technology advances in video conferencing

  20. Opportunities • Population uncertainty about air travel encourages more UK holiday makers to holiday internally. • Increasing demand for budget style hotels. • Increasing demand for short break offers.

  21. Threats • Numbers of foreign visitors have fallen dramatically causing severe financial worries particularly for London business orientated hotels. • Uncertain future • Global economic slowdown will hit hospitality hardest. • Business travelers all but disappeared.

  22. Forecast • Forecast to grow by 16% to £12 Billion by 2005 • Economic slowdown • little conferencing • more short breaks • Reduced International Travel • affect large hotels

  23. 1996-2000 V 2000-2004

  24. Competitive Strategies In 90’s • Frequent Flier Programs • Cost containment, price discounting, niche marketing • revenue maximization • databases for customer tracking

  25. Future of UK Hotel Industry • Economic slowdown • large hotels • conferencing • Decreased air travel • Large hotels • Foot and Mouth • Small rural hotels

  26. Really That Peachy?

  27. Future of UK Hotel Industry • End Of hotel Industry? • Consolidate for next three years • Specialized conferencing • Not a good time to enter market

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