7/29/2019 Good Hotel - Competitive Environment
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Intensity of Competition Very Strong
Large national chains have a majority of the market share in the
lodging industryo These chains, such as Ritz- Carlton and Starwood,
are creating their own green hotels
(ex. Starwoods H) as well to capture market share.
Lodging industry suffers from chronic overcapacity due to the
tendency to build capacity inuptimes, and this causes over capacity
in downtimes.
As of 2008, the overall lodging industry is facing one of the
longest downturns in statisticalhistory.
o Due to increasing unemployment, decreasing conference and
business travel, stagnantGDP and foreclosures
o Standard & Poor forecasts further decline in 2010 (55-56%
drop in expected occupancyrate)
o RevPAR (ratio used to tell how well a company filled rooms and
what it could charge)declined 17% in 2009, forecasted to decreased
another 3.6% in 2010
San Francisco hotel room supply and demand is forecasted to be
stagnant.o Occupancy and RevPAR isnt projected to recover until
2011 -2012o 2010 is expected to be a weak year for conventions
Convention centres account for 35% of annual demand for hotel
rooms
Power of Buyers Strong
San Fran Hotel Guest Profiles (2009) Primary reason for visit:o
Leisure 39.7%o Convention 35.3%o Transient Business 22.1%o Other
2.9%
People are willing to pay more for a green hotel o Almost 50% of
US leisure travelers are willing to pay higher rates for
environmentally
friendly services according to a 2008 Travel Industry
Association study. 60% of those would pay a 9% premium
o 28% of US business travelers willing to pay a 10% premium for
green hotel services Important customer segment for green lodging
is known as Lifestyles of Health and
Sustainability (LOHAS) o Focused on health and fitness,
environment, individualism and sustainability.o
About 38 million people (17% of US population)o Spending power
of $209 billion/yearo Younger consumers are a major driver of
growth in this segment
LOHAS subsegment of touristso 5% of US travel and tourism
marketo $77 billion market
4.5 million overnight visitors to San Francisco stayed in
commercial accommodations in 2009.
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Growing number of travelers using social media (34% increase
from 2008-2009) Prices should be set competitively, but not so low
as to attract the wrong clientele.
Power of Suppliers - Weak
Employees at green hotels should be educated on environmental
protection so they can in turneducate and answer customer
questions.
Suppliers to green hotels should be environmentally conscious
themselves
Threat of New Entrants - Moderate
Boutique and lifestyle hotels like Good Hotel were typically
owned by individuals and companieswith small collections.
o Not as capital intensive as setting up a chain.
Threat of Substitutes - Moderate
Business may be moving away from actual conferences in favour of
virtual conferenceso Views that luxury and meetings are dirty words
o Lower costso Less time consuming
Travelers can choose to stay at a friends or familys home, a low
-budget motel, B&B, or higher-end hotel.
