Note on the global hotel industry
1. Evaluate the hotel industry (you can use Porter’s Five Forces Model as a conceptual tool)
The five forces that impact competitiveness which are outlined in Porter’s 1980 work are: barriers to entry, threat of substitutes, bargaining power of buyers and sellers, and the rivalry among existing competitors.
2. Do the particularities of the Russian environment alter your analysis? What are the Russia-specific factors? How do they affect your analysis? Because of the majority of hotel brains are foreign hotel chains, and low willing of creating new markets except of upscale, luxury hotel, it will lead to intensified domestic competitiveness. On the other hand, it means there is a potential market for midscale customers. In addition, I will enter Russian market through joint venture or alliance to reduce high entry barriers. 3. Given the analysis you have made, would you make an investment in this industry? Where would you target your investment? What are the barriers to your investment? I would target my investment at least in two distinct level of customers, and expand the business to leisure destinations. Russian hotel industry is an attractive market, however, there are a variety of challenges such as the bureaucratic red tape, the need for political clout and connections, and high cost of land and zoning. 4. If one were involved in the business, how could they leverage their competencies effectively and increase competitiveness in the Russian market? The rise of the middle classes will drive significant new demand for both leisure and business hospitality. It will be a good opportunity for foreign companies to build a new market in midscale, and reduce the severe competition as well....
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