The Firm and the Environment The Case of Essay Example | Topics and Well Written Essays - 1250 words

The Firm and the Environment The Case of - Essay Example The main focus of the hospitality sector is to adopt the differentiation strategy and achieve competitive advantage. A lot of innovative practices are introduced and customer service and value added service play a major role in the hospitality industry. The paper analyses the industry using Michael Porters Five force Analysis and then the SWOT for the firm is done. Accommodation and food services makes up about 8.1 percent of all employment. (U.S. Bureau of Labor Statistics). Employment in the accommodation and food services industries is predicted to grow 18% between 2002 and 2012, adding more than 1.6 million new jobs. (U.S. Bureau of Labor Statistics). Of the 8,740,000 total workers employed in the accommodation and food services industry in 2003, 5,343,000 works full-time (61%), while 3,397,000 work part-time (39%). (Annual average for 2003, according to the Current Population Survey, a joint project of the U.S. Bureau of Labor Statistics and Census Bureau). The Total Industry Investment is $1,765,000 and the total leveraged resources are $5,900,000 Profit and average room rate at the UK's chain hotels continued to increase in November, according to the latest HotStats survey from TRI Hospitality Consulting. Across the total UK sample of 462 hotels, income before fixed charges (IBFC) - also known as gross operating profit - rose by 5.6 per cent to 52.81 per available room. Average room rate increased by 7.4 per cent to 95.03 in November, a similar rate of growth to the 7.2 per cent achieved during the year so far. In London, profit grew by 7.9 per cent to 82.19 per available room. London's hoteliers continued to achieve rate growth at near annual levels with an 8.9 per cent increase taking average room rate to a new high of 125.85. - Jonathan Langston, UK Chain Hotels Market Review November 2007 | TRI Hospitality, www.trihc.com Michael Porters Five Force Analysis Threat of New entrants: The Entry barriers include Capital The capital outlay needed for starting up the operation in this industry is huge ($60 - $70 million), since the leasing expenses and the taxes are high. The capital includes land and building, infrastructure etc. Labor: In this industry the retention rate is high when compared to the others because of the demand for the experienced chefs in the industry. Retaining skilled labor is a major issue for a new entrant. Tax Structure: Hoteliers have to bear huge taxes levied on them by the government for property, water, electricity etc. Beside the high entry barriers, new entrants in this industry are high in recent days. Threat of substitutes: The growth of Home business restricts travel to a certain extent. So people consider their homes as substitutes for hotels. Rivalry: There is a fierce price war going between existing