Luxury Hotel Porter Five Forces

Luxury Hotel Porter Five Forces



Luxury Hotel Porter Five Force

Introduction

Within the UK, luxury hotels that have fewer frills and lower prices have experienced rapid growth in recent years. The onset of the global economic downturn and UK recession in 2009 has had an impact on hotel performance, with occupancy levels falling and hotels responding by putting together more appealing packages or cutting rates. The following examines the existing competitors, potential competitors, substitute products, customers, and suppliers to the hotel industry are in a beneficial competitive environment over the next five years.

Existing Competitors

In January 2009, Bespoke Hotels took over management contracts for 13 properties from Folio Hotels, which went into administration in December 2008 having run into cash-flow difficulties. In summer 2009, the group acquired the Clumber Park Hotel & Spa in Nottinghamshire, which had recently undergone a complete refurbishment (Porter, 1980).

Two Park Inn Hotel sites (owned by the property investment group WG Mitchell) were put up for sale by the administrators in July 2009. The hotels are operated by Rezidor and sited in London and St Helen's. The sale followed WG Mitchell's appointment of Ernst and Young as administrators to 28 of its subsidiary companies in April 2009.

Principal Hayley acquired two flagship properties from the collapsed Real Hotel Group (RHG) in June 2009. The New Connaught Rooms in Covent Garden will be refurbished before reopening in autumn 2009 as the Grand Connaught Rooms. The Glasgow Central Hotel will undergo an extensive £20m refurbishment programme before reopening in February 2010.

Potential Competitors

While the majority of hotel businesses in the UK generate less than £1m per year in turnover, the larger UK brands and the international groups operate on a much more substantial scale. Within the UK market, the major players include subsidiaries of global hotel groups, as well as UK-owned companies.

The Hilton Hotel group operates in excess of 3,000 hotels encompassing around 500,000 rooms in more than 80 countries globally. Brands operated by the group include Hilton, Waldorf-Astoria Collection, Hilton Garden Inn, Hampton by Hilton, Doubletree by Hilton, Conrad Hotels & Resorts and Embassy Suites by Hilton.

InterContinental Hotels Group PLC (IHG) is the world's largest hotel operator in terms of room numbers. The group operates under a number of brands, including InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Express by Holiday Inn, Staybridge Suites and Candlewood Suites. The company operates more than 4,300 hotels and 630,000 guest ...