Porter's Model Global Hotel Industry

Global Hotel Industry
I. Porter’s Five Forces analysis
Threat of rivalry is high because:
• The most part of the market is controlled by few companies with the same or similar strategy, size and capacity. Big companies around the world such as Hilton Hotels, Four Seasons, etc. have absorbed the little companies and few have remained. (For ex. Multibrand Strategy has been adopted by most of the companies, and this has strengthen the companies who were already strong and weakened the weak ones, at the point that some of them had to exit the market)
• Customers don’t have a really defined preference, so as soon as one hotel stops satisfying their needs or another company offers them a better service or product they’ll switch.
• Companies have to invest in R&D in order to satisfy customer’s needs and to create loyalty.
• The high rivalry in the market has caused an overrated expansion on the capacity and strength of the leaders.
Supplier Power is low because:
• There are different categories of suppliers of products and services in the hotel market supply market so they are segmented and don’t have much power by themselves.
• However they have a strong and good relationship with the hotels (ex. Ritz Carlton alliance with Bulgari) and this helps the Hotels to gain Competitive Advantage. But as suppliers have greater benefits with the hotels than by themselves, they stay with them and are loyal. Hotels may find the way to keep having CA without agreements with luxury suppliers but is better for the luxury suppliers to stay with the hotels as their product is being promoted.
• They cannot threat the hotel with Forward Vertical