Question

If you worked at a hotel industry..

What would you identify the market structure (perfect competition, monopoly, oligopoly, and monopolistic competition) the hotel industry and how does it reflects and report the market share by all firms within the market. In addition, what other recent changes in market concentration and profitability in the hotel industry.

• Provide a forecast of the hotel industry over the next five years based on information gained from your research project initiative.

Answer 1

The hotel industry is characteristed by having a monopolistic competition as its market structure.With many firms selling differentiated product based on location, service and other characteristics. The strategy thus adopted is of price discrimination. Plus there are non price aspects on which firms compete.

This industry involves high entry cost,well wstablished brandnames and high start up costs.

The hotel industry stands at a $570 Bn worth worldwide with 7,00,000+ hotels and resorts with hotel room availability of  over 16.4mn.

Hotel Bookings in US alone grew to $185Bn from $116 Bn between 2009 to 2017.

From 2009 to 2017, US hotel gross bookings grew from $116 billion to $185 billion.

As for countries like India, the total market share stands at @22Bn and estimated to grow at 8.6% till 2025. The organized sector has been recorded to have a share of aroung 32% and is estimated to grow to 27% by 2025.

Some future hospitality trends would include use of Artificial Intelligence and Internet of Things to enhance customer experience, offering culturally immersive experiences, embrace sustainability and driving direct bookings.

More tha 30% of global travel business is done is Asia.

Although the stats for hotel industry seemed bright. But with the recent corona virus impact, hotel industry seems to be affected the maximum. US alone had a forecast outlook of an increse in Average Daily Rate by 2.6 in 2021 and a decrease in average occupancy by 0.1% in 2021. But post COVID 19, these statistics are expected to lower down further.