Porter's Five Forces Model Of Hotel Industry

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5. Methodology
The Porter’s five force model is used to evaluate the competitive environment of the company. PESTLE analysis is used to assess the external environment of the company. SWOT analysis is used to understand the external and internal facto This gives us the understanding of the external environment and challenges in which the industry is operating. I have also studied the internal environment at each of the Brands owned by IHCL to understand their competitive advantage in depth.
For collecting information for the study I have referred to the IHCL website, financial reports, and Tourism informations from various web sites, old and new newspapers, old industry reports and publications, statistical data published by various institutions,
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New entrants can have impact on prices, costs, and the investment rates which are necessary to compete. Due to rapid globalization and economic growth of Indian market International hotel chains have recognized the opportunity and had expansion plans. Hotel chains like Marriott , Hilton, Starwood Hotels and Accor Hotels were already operating in India and had great expansion plans. New International hotels chains were also eying the market for their entry and expansion. There are possibilities of entry of non-hospitality background companies into hotel sector which can also be a threat. For eg. Adani Group has already launched their hospitality business and are planning to have clubs and resorts across India. IHCL’s revenue, profits and leadership position can be at stake with the increase in number of new entrants in the market.
6.2. Bargaining power of suppliers
If suppliers are highly dependent on business for their revenues, then suppliers do not hold the power. Trade unions and labor contractors hold the power as hotels business is a high labor intensive business. The power of property owners is high as hotels chains are looking for prime properties for rapid expansions. Suppliers like GSA’s, tours and travel companies provide consistent and high volumes of business to the hotel, hence they too hold the power.
6.3. Bargaining power of
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Government policies from time to time have always been encouraging for the hotel and travel industry. 100% FDI is allowed in Hotel industry. Government’s initiatives in promoting Indian tourism through various initiatives of the State Tourism development corporations have resulted in increase in inbound tourists to India (Exhibit 5).
Five year Tax holidays and ease in External borrowing terms introduced by the respective Ministries have helped the opening of new hotels and also eased out their liquidation challenges of the initial years.
Issues relating to safety and security also had been a concern amongst foreign tourists. 2008 terrorist attacks in Mumbai has affected overall tourist flow to India due to safety and security issues. Though Taj being at the forefront of the events, has sailed through the after effect of the tragedy very fast– All credit to the Taj staff who displayed extreme sense of concern for their guests who were trapped in the hotel and helped them with necessities and also displayed great courage and helped them to escape safely. Also allowance of long term Visa and ‘Visa on arrival’ for many countries by the External Affairs Ministry helped improve the foreign tourist inflow.

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