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Evolution Of Hotel Industry Essay Sample

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Evolution Of Hotel Industry Essay Sample

Premier Inn is the UK’s largest hotel brand, with over 50,000 rooms and more than 650 hotels. Originally opening under the “Travel Inn” brand name in 1987, it has been owned by Whitbread during its entire operation and was set up to compete with the Travelodge brand which was at the time owned by Forte. The company provides 70% of the total earnings of Whitbread. Premier Inn operates hotels at a variety of locations including city centres, suburbs and airports. The chain started trading in 1987 as ‘Travel Inn’. In 2004, Whitbread acquired another hotel chain, Premier Lodge for £505 million. This added an additional 141 hotels to the existing portfolio and Whitbread re-branded every hotel as “Premier Travel Inn”, which was shortened to “Premier Inn” later in 2007.


Ginger is an Indian hotel chain, established by Roots Corporation Limited, and part of the Tata Group, a new brand under a category called “Smart Basics Hotels”. The first hotel was opened in Whitefield, Bangalore in June, 2004. Roots Corporation Limited is a fully owned subsidiary of The Indian Hotels Company Limited (IHCL). IHCL, part of the Tata Group is India’s largest hotel chain with more than 70 properties in India and abroad and over 100 years’ presence in India’s hospitality sector. It initially charged Rs 999/night in 2004. Today it charges Rs 1500-2000/night. There are 25 Ginger Hotels in India.

Detailed analysis of premier Inn

Premier Inn is the largest budget hotel group of United Kingdom. Their target market is budget travellers and backpackers. Also Premier inn is used by middle income group and business visitors Operations

1. Marketing strategies
Online booking channel
82% book online
Best available rates are not flexible
Up to one year in advance, no-cancellation, non-amendable
At least £12 extra to get flexible rate
Premier Inn manages daily fluctuation better through:
Price incent

Detailed analysis of Ginger Hotels

1 Market
Ginger hotel comes under budget hotel which is a part of Tata groups. Their target market is middle income class group and students who go out on budget trips to travel different places. Also Ginger hotel can be used for long stay as the hotel rates starts at a very minimal cost. They provide rooms at very low cost for affordable travel.

2 Operations

“Please help yourself” is a line that can be seen on most of the brochures and booklets in a ginger hotel and it aptly reflects its most distinguishing feature It is not uncommon for guest to use the self-service check in, identify their room and carry their luggage to the room. As soon as a guest enters ginger hotel he/she would come across several operation with the self service facility. Some elements of self-service are described below

3 – Self-service check in
4 – Give and take counter
5 – Smart get set
6 – Smart knick knacks
7 – Smart mart

3. Marketing Strategies

They took assistance from Dr.Prahalad. He suggested bottom –up approach to arrive at a price and the service offering. They surveyed managers and business travellers of midsized company which gave them a fair idea of Rs 1000 per night per room. Sizes of the room were kept small around 180 square feet as compared to 250-400 square feet of premium segment hotel. The company cut down room service and applied the concept of help yourself which helped in operating the hotel with 25 people as compared to 250 people in a premium hotel

PESTLE Analysis OF Premier Inn

There are certain factors in macro-environment that could affect decision making and strategies of organizations. Sudden Changes in Tax, Imposition of Laws, Increasing or Reducing Trade Barriers, Cultural & Demographic Changes and Changes in Political Environment & Government Policy are some of the key examples of macro environment. These changes could bring certain positives as well as negatives for every business. PESTEL (Political, Economic, Social, Technological, Environmental and Legal) Analysis is a tool which is widely used by business managers for analysis of these critical factors. It is very helpful for development of strategic decision making. The Premier Inn’s PESTLE Analysis below critically evaluates and identifies different strategic in a competitive and dynamic environment. 1 Political

Positive and pragmatic collaboration with UK Government has brought Hospitality Industry into key success area of economic development in UK. Hospitality is the UK’s fifth largest industry, directly employing more than 2.4 m people and contributing over £34bn in gross tax revenues. As the generator of eight per cent of total employment, the industry is ahead of the financial services, transport and communications, and constructions sectors. Prime Minister David Cameron has recognised that tourism is one of five ‘big-ticket’ industries of the future and one that the government ‘should get behind’ especially as for every 0.5% increase in the UK’s share of the global tourism can add £2.7b to the economy and create 50,000 jobs.

2 Social
The social circles and changing life styles & living standards has brought many social and cultural changes around the world. As the living costs are increasing, people prefer low cost products/services accompanied with highest standard of value for money. These social changes are bringing different thought patterns. These social changes also influencing the hospitality sector around the world. Following are certain key thinking patterns which are influencing consumer’s behaviour in decision makings. Preferences to strong branded products

High value for money
Easy accessibility
Responsiveness to customer demands
Extensive geographic coverage of the hotel network
Online and centralized reservation systems
Variables room rates
Quality standards
Discount and promotion offer for repeat business
Customer feedback
Premier Inn is focused on customer satisfactions and keeping revitalizing there business strategy with changing social values and customer preferences. They offer to their customers a 100% money-back guarantee of a good quality room, comfortable surroundings and friendly service (Whitbread Co). They are committed to understand their customers better than anyone else. 3 Technological

Technology is one of the variables that could directly influence the business operations. The operations of hospitability does not involves high level of technology and the focus of technology is budget hotel sector is directly linked with availability of electrical appliances and availability of IT services for comfort of customers. The use of latest development in IT helps in maintain smooth functioning for hotel chains across the region. It also helps them to develop centralized supply chain management systems.

4 Environmental
The care of environment and social responsibility are considered as the centre stage of customer’s preferences and expectations. Now-a-day customer are more vigilant and normally favours the organization who cares about environment and give due diligence to adopt business operations which help’s in reducing pollution and proper waste disposals. They CSR mainly includes following six priority areas:


5 Legal
The minimum wage rate has been increased 15.5% by UK Government (Low Pay Commission Report National Minimum Wage, 2009) that would costs an increase in operating cost of budget hotels. This would increase cost of production which hampers the policy to offer competitive prices to customers.


Parent Company
Tata Group
Hotels and Resorts
Tourism & Hospitality
Tagline/ Slogan
Please help yourselves
One of the first premier Indian hospitality group to start budgetary hotels STP
Executive level employees, Regular business travellers
Target Group
Middle class, high tech youths
Small properties with smart basics and high tech


Political factors
1 Government policy affects the business very deep.
2 The arrival of low cost airlines have given domestic tourist a host of options.
3 Government focus a tourism industry opening up opportunities for the hotel industry.
4 Moreover the government decision to substantially update 28 regional airports in smaller towns and privatisation and expansion of Delhi and Mumbai airport industry in India.

Economical factors
1. In economic effect industry has to check out that what the GDP of the industry is the GDP of the hotel industry its is contributed to 13.21% in 2012.
2. The hotel industry in India is going through an increasing phase one of the major reason for the increase in demand for hotel room in the country seen till recently is the beam in the overall economy and high graph
in shelter like information technology.
3. Now slow down fear is now hovering on the sector.

Socio/cultural factors
Socio factors include
1. Population
India is the second largest populated country in the world with more than 140 crore people therefore due to high population there is more demand of hotels during the time of wedding season and they get more occupancy. 2. Income level

Now a day’s income of people is increasing day by day so if income will increase people will tend travel more. 3. Language
One it also plays an important role as India is the large country there are different languages spoken in different states so it was a challenge for ginger hotel group to open their branches in every state of the country. Technological factors

1 status of technology includes advanced technology moderated technology suitable infrastructure for technology. Ginger hotels uses moderate technology with advanced sign-in sign-out function and CCTV cameras installed in most of the common areas of the hotel.
Premier INN



Premier INN

Threats of new entrants is very high
As the sector is growing rapidly and also Government is encouraging and facilitating the sector on priority basis so the threat of potential new entrants is very high Huge capital investment is required for setting up a geographically spread budget hotel chain Very difficult to be more competitive in hotel chain and hospitality business High entry barriers due to maintain and supplying quality food to customers of hotels Substitute products entry is high

Maintain customer satisfaction and comfort creates low room for substitute As budget hotel sector falls in service sector, so customers bargaining power is very high

Threats of substitute is very high
The bed and breakfast hotels are main threats
These hotels not required huge capital so its easy to start a hotels B&B located in tourist hotspot like Malacca city town
So customers has more options

Degree of rivalry

Rivalry among competitors can lead to an aggressive pricing and promotion in battles to benefit and attract more customers. In hotel industry, there is low switching cost for consumer, they can change hotel anytime so degree rivalry is very high.

Bargaining Power of Customers

Bargaining power of customers tend to be relatively greater when there is more hotel and competitor Therefore, it depends on location, some places only have one hotel and few hotel or some even have more than 10 hotels within one area. It means that if there are more hotel competitors within a tourist hotspot, bargaining power of customer will be higher because customer able to do comparison and hotel will use different type of promotion, prices, advertisement or other way to attract customer.

Bargaining Power of Suppliers
Bargaining power of supplier in hotel industry is very weak. Hotel is a service field and they need a lot of manpower to run their business and provide services to consumer, so hotel staff as their main supplier in-charge of daily operation each of hotel staff receive income every monthly and bonus every year and have the right to negotiate salary and resign the positi GINGER HOTELS

Threats of new entrants is very high
India’s growing economy there by attracting new competitors 100% F.D.I permissible
Low investment

Threats of substitute is very high
Mid size hotels

Degree of rivalry
Existing players
Unorganised hotel sector

Bargaining Power of Customers

High in metro cities due to increasing rooms
Bargaining Power of Suppliers
Limited due to higher competition


Premier inn
Ginger hotels

Target market is budget travellers and backpackers.
Target market is middle class students and small business travellers

Its a hotel where u get every service like a common hotel. You don’t have to worry about your luggage.

Its a self-check in hotel which forces the travellers to check in themselves as well to carry their bag themselves to their room. Which is not acceptable for many. It function globally. Apart from uk it also has branches in republic of Ireland, UAE, and India It functions only in India.

It has more than 650 hotels worldwide
It has 25 hotels in India.

Recommendations for Ginger Hotel
Ginger hotel should improve their infrastructure
They increase the number of employees in the hotel
They should remove self-check in facility
Ginger hotel should improve the room service facility
They should add wifi in there hotel
Recommendations for Premier Inn Hotel
It fits in mission and vision of Premier Inn as it is quite suitable, acceptable and feasible to initiate. It would help to get benefit from the growing hospitality industry The cost associated with this strategy would also not be high as they should have to explore franching offerings as well as investor’s are always interested to invest in growing sectors UK Government is also facilitating and encouraging for hopitality industry expansion

http://www.whitbread.co.uk/whitbread/ourbrands/customerfocus/html Oxford University Press http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm http://www.caterersearch.com/Articles/2007/12/12/317813/uk-budget-hotel-sector-to-double-in-size-in-two-decades.htm http://www.caterersearch.com/Articles/2007/11/02/317098/UK-budget-hotel-market-breaks-1631b-barrier.htm http://www.caterersearch.com/Articles/2008/01/23/317165/budget-hotels-welcome-bha-restructure-plans.htm British Hospitality Organization:

Critical success factors in UK budget hotel operations – BY: Bob Brotherton School of Food, Consumer, Tourism and Hospitality Management, Manchester Metropolitan University, Hollings Faculty, Manchester, UK http://www.scribd.com/doc/22765821/Bob-CHotelristical-Success-Factors-in-Budget-Hotel Johnson, Schools and Whittington (2008), Exploring Corporate Strategy: Text and Cases, 8th Edition Prentice Hall, ISBN:1405887338 Coultry M. (2008) Strategic Management in Action, 4th Edition Prentice Hall, ISBN:0132277476 Marketing Management 12th Edition By: Philip Kotler and Kevin Lane Keller RapidBI – Rapid Business Improvement, Business & Organizational Tools, Trainings and Services http://rapidbi.com/created/the-PESTLE-analysis-tool/


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