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Hospitality Industry Overview
Transcript of Hospitality Industry Overview
Key Success Factors
Quality of their building and infrastructure
Product offerings of the hotel
Staff providing the service
Strong staff team
Value for money
Porter's Five Forces Analysis
Threat of new Entrants
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitutes
In the hospitality industry there is usually another hotel just around the corner
They appear in all price ranges, with varying levels of service and amenities
The constant challenge has always been, to get the guest to choose your hotel over the competitor
The internet makes the overall market more efficient while expanding the size of the potential market and creating new substitution threats
Given the potency of this threat a superb internet presence is vital
Advent of Internet/online Bookings has shifted the bargaining power sharply towards the customer
Although it can vary seasonally or on certain special occassions
The freedom of picking between options has reduced the customer switching cost and made customer loyalty almost obsolete
However, this can be changed if the particular hotel uses its one time opportunity when a guest stays at the hotel to deeply impress the customer with unique and valuable differentiators
While this is not a substantial threat in the hotel industry it can have impact especially in the area of labor
The other supplies that are needed by hotels are also easier to attain through various channels
The initial investment in the hotel industry creates quite a big barrier to entry
A presence on the internet reduces upstart marketing costs somewhat, and gives the new competitor access to potential suppliers and resources
A vital barrier is differentiation. A hotel that can differential itself by location, by service, amenities or some other quality has the potential to attract and keep its clients
Expertise is another big barrier in this industry
Overall Impact :
The rivalry among competitors in the hotel industry is fierce.
When potential customers can learn about a hotel on line, the internet reduces the differences among competitors.
People tend to seek the best price for the best experience and the tendency is to reduce price to be competitive.
What is Zostel All About?
Started on August 15 2013, Zostel offers secure, hygienic, centrally-located and pocket friendly accommodation to young travellers and is currently present in two cities- Jaipur and Jodhpur
There are seven co-founders, four from Indian Institute of Management Calcutta -Akhil Malik, Paavan Nanda, Dharamveer Singh Chouhan and Tarun Tiwari. Two are from IIT BHU Chetan Singh Chauhan and Abhishek Bhutra who are managing Zostel’s properties and MDI Gurgaon alumni Siddharth Janghu.
The idea of having something like Zostel came when a bunch of seven students found it difficult to get a place free from untidy rooms, stinking washrooms with super costly charges
Zostel hence provides spacious AC dorms, common kitchen, laundry service, TV, Internet, library, board games and other interactive facilities all under Rs. 500
As of now Zostel does not face any competition as it has forayed into a new domain of Backpacker's Hostels
The big players are unlikely to enter this domain any time soon
The small local budget hotels form their major competitors, but it is highly unorganized
The only budget hotel chain in India as of now is Ginger, which as of now largely deals in the Business Segment
How Zostel Implemented the Blue Ocean Strategy
The Age Old prevailing concept of providing guests with private rooms only
Awareness about the concept of Backpacking trips and sharing your room with the world
High Cost elements involved in Hospitality Industry (Luxurious Rooms, Plush Interiors etc )
This leads to
Secure, hygienic, centrally-located and pocket friendly
for young travellers
Zostel's Unique Marketing Strategies
Live It Now! Campaign
An interview with one of the co-founders helped us identify the following challenges
Cheap Accomodation - Synonymous with bad accomodation in India
Misplaced notions about the hostels concept in India
Real Estate industry and associated issues with red tapes
Future Expansion Strategy
Zostel plans to come up with 4 new hostels in next 1 year
One of the co-founder also revealed that they might look at franchise based model for future expansion
As per Current revenue capacity, they can generate maximum revenue of 350*52*30= 5.46Lacs pm
With the popularity of Marketing campaigns, they need to pay more stress on rapid expansion of the facilities
Delayed expansion may create an adverse effect on their marketing effort
This campaign generated a revenue of 4mn$ for Tourism Australia
Overall 37000 applications were received from over 190 countries
Zostel's 'Best Internship Campaign' has already garnered 67000 plus applications