Analyzing the Hospitality Industry's Task Environment

35
The Value Adding Manager
Environmental Analysis Exercise – Task Environment
Overviewofexercise to be completed
The purpose of this exercise is to guide the learner through the environmental scanning effort in a step-by-step process. More specifically, the learner will be
asked to evaluate the forces driving change in the hospitality industry as identified by an analysis of the task environment of the organization.
Objectives ofexercise
Upon completion of this exercise the learner shall possess a comprehensive understanding of the task environment. This includes a careful look at competitors,
suppliers, regulators, and the customer. Potential competitors and substitute products are also analyzed along with identifying the industry wide critical success
factors,and value drivers.
Task to be performed
The following tasks should be performed in the sequence suggested. The forms are provided as a guide to assist in this process.
1. Analysis of the task environment by completing all the forms attaching to this exercise.
Criteria for evaluation:
1. Executive summary: Using your analysis of the task environment along with the descriptions of the forces driving change as identified in the reading materials
and your prior analysis of the remote environment provide an evaluation of this immediate environment of your organization. This should be a narrative of no
more than three typewritten pages. In this narrative you must identify what you consider to be the most important issues that face your firm from this
environmental category. You must be able to link these issues with the forces that you identified in your remote analysis.
2. A thorough description of your company’s business and financial performance
3. A thorough description of the domain your firm is competing in. This includes the geographical market, and customer targeted.
 You must be sure to relate how the customer, supplier, regulator, and competitor are impacted by the forces you identified in your remote analysis. Be
sure to conduct a comprehensive review of the causal analysis with respect to all the factors in the remote environment on the customer. Key trends must
be identified.
 You must provide an assessment of what you consider to be probable new competitors that may result from the forces in the remote environment. The
same holds true for possible substitute products that are available. Key trends mustbe identified.
 It is imperative that the critical success factors necessary to compete successfully in your domain must be defined and understood. You must not only
describe them in detail but must compare how your firm performs against each of its competitors on each factor. Special emphasis should be directed
toward knowing whether your firm leads the industry or is in some other follow-on position. Key trends must be identified.
4. You must be able to identify the key value drivers that operate at your domain level and what quantitative and qualitative information is available to help you
understand these drivers. Key trends must be identified.
5. A thorough explanation about relationships among forces driving change and external and internal value drivers
6. A thorough description and estimation of industry demand and supply

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Part II: Task Environment
Industry Value Drivers Analysis
In the section of Industry Value Drivers, many important factors are found which are major factors directly influencing the profitability of a
hospitality enterprise. For instance, industry labor cost and travel expenditure and other factors are included. These drivers are industry wide and
affect all firms more or less equally. They can be considered as important indices that will ultimately affect the organization and therefore must be
tracked and forecasted. In the relationship worksheet part, hotel industry/task environment value drivers that can be affected by external drivers are
described based on the three important factors which are included in the external environment analysis. In this part, the relationship between external
and industry value drivers are found and discussed. For example, fiscal policies like tax rate can affect customers’ travel expenditure and such change
can have influence on the occupancy rate and the whole tourism market. The decreasing trend about the exchange rate of U.S. dollar and the National
Travel and Tourism Strategy are encouraging international tourists and workforce to come to America. The occupancy rate and the market can also
be benefit from those policies. At the same time, labor demand, labor cost, retaining skilled employees, cross-culture training and the requirement of
sustainable development are becoming big challenges to hotels.
Industry Segment Analysis and Porter’s Five Forces
Industry Critical Success Factors consist of those variables which are a must for survival for the industry components. For the hotel industry, few
factors have been identified as the survival kits for hotels:
1. Customer service: Hotel industry being the service oriented industry has to focus on quality of service offered to customers. Upscale and
midscale hotels are in better position than low-scale hotels in terms of quality service.
2. Advertising/ Social Media: Social media has been rising as one of the main sources of advertising tool for the industry to carry out sales and
marketing approach reaching millions of customers.
3. Customer Loyalty program: Loyalty program is ranked fourth among reasons why customers select a particular hotel.
4. Some of the other critical success factors of hotel industry are hotel chain, amenities, imitation and central reservation system.
Porter’s five forces analysis assist in visualizing the position, strength and weaknesses of the industry associated to five aspects:
1. Threat of new entrants: High competition, large hotel chains, high capital investment requirements create barriers for new entries, whereas, low
government and legal barriers, availability of leasing facility through real estates may encourage new entries. Hence, the industry possesses
medium entry barrier.
2. Power of buyers: The factors that provide power to the buyers are high competition among the hotels, large portion of price sensitive customers,
easy access to the hotel information and low switching costs.
3. Power of suppliers: Hotel industry suppliers have low bargaining power because of high no. of available suppliers, easy substitutes, and low
switching barrier to another supplier.
Executive Summary

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4. Power of substitutes: The power of substitutes are fairly low, however, it is expected to increase due to easy access of information to customers,
competitive prices and personal service offered.
5. Rivalry among competitors: Higher rivalry among competitors brings benefits to the industry through quality o service, product differentiation
and better deals for customers.
In summary, despite the industry is mature and has high competition within, it enjoys favorable growth due to expected increase in international
tourist arrivals and domestic travel.
Overall Supply and Demand
Demand in Hospitality Industry
The actual demand (number of customers) in the hotel market place in America over the past five years is described in this part. Affected by the
economic recession between 2008 and 2009, the whole industry in US was attacked too. It started a trend of resurrection in 2010. After the policy of
National Travel and Tourism Strategy was announced in 2011, the situation of US tourism started going back to an acceptable level. Based upon the
forces identified in the general analysis and value drivers in the internal and external environment analysis, the future demand in five years is
predicted in this part too. The phenomenon of population growing seems to be a consistency trend in many years, so tourists arrivals for business and
leisure activities will increase. On the other hand, as discussed in the industry analysis part, the exchange rate of US dollar is in a process of
decreasing and other currencies in some countries like China are becoming relatively strong. So the cost of goods and services are relatively cheaper
in America and especially tourists from other countries would be able to travel cheaply. The factor which is playing the most important role for
America’s tourism is the NTTS plan, such strategy sets a goal of drawing 100 million international visitors by 2021 and it has many specific policies
being implemented for the goal. After the prediction of increasing trend and the analysis of customer number between 2004 and 2012, a regression is
done to predict the demand for the year between 2013 and 2017.
Supply in Hospitality Industry
Based on the data of total hotel rooms in the U.S., supply in the hospitality industry is increasing yearly from 2008 to 2012. In 2008, there are total of
257,012 hotel rooms, 263,952 rooms in 2009, 272,398 rooms in 2010, 277,846 in 2011, and 294,517 in 2012. The growth rate of hotel rooms
changed from in 2.7% 2008, 3.2% in 2009, 2.0% in 2010, 0.6% in 2011, to 3.5% in 2012. Moreover, from 2004 to 2006, during the three years,
growth rate for total hotel rooms in the U.S. wasn’t exceed 1%. That means the supply side is getting recovery in the current years.
Marriott &Its Competitors
The Marriott International Inc. is a world operator, franchisor and licensor of hotels,, corporate housing properties and timeshare properties under
numerous brand names at different price and service point. Its vision is to be the #1 hospitality companies in the world. Its properties consist of 53%
franchise, 44% managed, 2% leases contract, and less than 1% franchised by unconsolidated joint venture.

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Throughout the project, InterContinental Hotels Group (IHG), Hyatt Hotel Corporation (H), Starwood Hotels & Resorts Worldwide Inc (HOT) were
chosen as major competitor because they were three major companies that not only has the scale to compete but also grow aggressively and develop
brands that follows the trends of the new lifestyle segment.
InterContinental (with 85% franchised, 15% managed and less than 1% own and lease) is the biggest hotel corporation in the world in terms of the
room numbers. Moreover, the brand “Hotel Indigo” is the pioneer brand in the new “lifestyle segment” of the industry. Just like many other hotel
companies, IHG is very aggressive on expanding its operation by increasing properties at multiple market, it would always been the most influential
player of the hospitality industry.
Hyatt (with 53% managed, 24% franchised, 22% owned) is one of the few hotels that has mentioned and emphasis its competitive strength in the
annual report. There are 7 major strengths such as Hyatt is a recognized world class brand, who has deep culture and experienced management team,
and who provide high quality service in selected market…etc. However, they are also the only hotel group that focus and invest heavily in
innovation. Example includes eliminating de-personalized service, creative approach provide healthy food and beverage option to guest…etc. Being
innovative is really critical to performance of a hotel.
Starwood hotels, (48% managed, 46% franchised, 5% owned) is one of the few companies who focus on relative small segments; in this case: high-end
segment. They also diversify the market in developed worlds. Their financial statements indicate their corporate strategies really work well.
Financial Ratio Analysis
Evaluating the financial ratios in liquidity, leverage, activity/ efficiency, profitability, growth and operation ratio, the performances basically
positively correlate with the industry performance. Marriott is not the company that has the best performance among competitors, we believe it’s
because they are operating in too many segments; therefore, could not maximize its operating efficiency. Overall speaking, Hyatt is the company that
has the best performance on financial ratios, due to its efficient performance.
Branding strategy for Marriot
Based on our analysis, we proposed that branding strategy is one way Marriot International can do to overcome the future uncertainty and diversity in
hospitality industry. Based on National Travel and Tourism Strategy, the tourism inbound market is going to increase in the following 10 years. Most
new customers in the market will come from foreign countries to improve new hotel demands. Providing more hotels becomes a strategy for hotel
brands. Additionally, Asian visitors are part of the main target market considered in National Travel and Tourism Strategy. Since lifestyle hotel
brand is an increasing concept in hotel brand, what is the concept of lifestyle in Asian customers’ mind? It’s an opportunity for Marriot International
to think about create a lifestyle hotel brand for Asian visitors in the U.S. On the other hand, diversity and other minority issue in future American
society should also be considered. Structure of family, races, and generation are all possible factors to create new hotel brands. For example, in our
first project, we mentioned that LGBT is an increasing market should be concerned by hospitality industry. This year, there is one Gay hotel opened
in New York City to serve the segment. Segment of hotels are no longer simply use how many services will be provided. Style and other differences
can also be a powerful segment for planning hospitality branding.

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Company Analysis
This information helps to understand the company’s business model, market, and financial conditions. Provide a description of the following:
a. Primary business
Marriott claimed itself as a worldwide operator, franchisor and licensor of hotels, corporate housing properties and timeshare properties under numerous brand
names at different price and service points. Marriot own very few of the lodging properties, but have invest more effort and expertise on managing, franchising,
and licensing. Marriott also operate, market, and develop residential properties and provide service to home/condominium owner associations.
b. Organizational goals: vision, mission, or/and strategic objectives
The vision of Marriot is “to be the #1 hospitalitycompanies in the world. “ It purpose, value, strategy, and success measurements are as follows:
 Purpose: open doors to a world of opportunity for our people, customers, owners & franchisees,investors, business alliances and communities.
 Value: put people first, pursue excellence, embrace change,act with integrity, and serve our world.
 Strategy: next generation travelers, brand distinction, portfolio power, technology leadership, owner preference,global growth
 Success measurement– Customer loyalty, corporate profitability and growth are the measurement Marriot used to evaluate its success.
c. Properties (number of units by brand, location (states/domestic/international), and ownership structure (company owned, franchised, joint venture,
management contract,etc)
The following table details the number of Marriott units by brands for both U.S. domestic level and international level with its ownership structure. To
summarize, 53% of the properties are franchise, 44% are management contract, 2% are lease, and only less than 1 % is franchised by unconsolidated joint
venture.
Company-Operated Franchised / Licensed Other
Brand Properties Properties Properties
U.S. Locations
Marriott Hotels & Resorts 138 184 —
Marriott Conference Centers 10 — —
JW Marriott 14 7 —
Renaissance Hotels 38 40 —
Renaissance ClubSport — 2 —
Autograph Collection — 17 —

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The Ritz-Carlton 39 — —
The Ritz-Carlton-Residential 29 — —
EDITION — — —
Courtyard 282 523 —
Fairfield Inn & Suites 3 664 —
SpringHill Suites 34 251 —
Residence Inn 134 463 —
TownePlace Suites 29 171 —
Timeshare (2) — 50 —
Total U.S. Locations 750 2,372 —
Non-U.S. Locations
Marriott Hotels & Resorts 135 35 —
JW Marriott 29 3 —
Renaissance Hotels 54 20 —
Autograph Collection — 5 5
The Ritz-Carlton 39 — —
The Ritz-Carlton-Residential 3 — —
The Ritz-Carlton Serviced
Apartments
4 — —
EDITION 1 — —
Bulgari Hotels & Resorts 2 — —
Marriott Executive Apartments 22 1 —
AC Hotels by Marriott — — 80
Courtyard 59 49 —
Fairfield Inn & Suites — 13 —
SpringHill Suites — 2 —
Residence Inn 4 16 —
TownePlace Suites — 1 —
Timeshare (2) — 14 —
Total Non-U.S. Locations 352 159 85

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Grand Total 1,102 2,531 85
(Source of Table, MAR 10K)
d. Financial Performance:
Ratio information for hotel companies is retrieved from Morningstar.com. Our primary company is Marriot International, Inc. Industry average is
calculated by averaging ratios of Marriott International, Inc. (MAR), InterContinental Hotels Group (IHG), Hyatt Hotels Corporation (H), Starwood
Hotels & Resorts Worldwide Inc (HOT), Choice Hotels International, Inc. (CHH), and Wyndham Worldwide Corporation (WYN). Period of
investigation is from 2007 to 2011 due to some unavailability of key ratios of companies. Moreover, throughout the report, all information regarding
MAR, IHG, H, and HOT are retrieved from company’s annual report and SEC 10K filing.
Category Ratio 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Evaluation of your company’s financial ratios
Marriott Industry Average (Strength, Neutral, or Weakness)& Reasons
Liquidity Current
ratio
1.24 1.33 1.25 1.35 0.52 1 1 1.4 1.4 1.2
Current ratio measures company’s ability to meet short term obligation as its
due, if the ratio is too high it means the company has too much cash on hand
and not using it efficiently; if the ratio is too low the company might has risk
of missing the debt obligation. The best ratio may be close to the industry
average. MAR's current ratio is evaluated as NEUTRAL, because it has
stayed close with the industry average, and most of the time it's slightly
higher, meaning they are able to meet their short term debt obligation with
little extra cash for otheroperation use.
Leverage
Debt to
equity
1.95 2.16 1.96 1.7 -2.33 4.8 1.3 2.8 1.7 1
Debt to equity ratio measures the proportion of equity and debt the company
is using to finance its asset. Hospitality firm usually use more debt than firm
in other industry because its inexpensive and it's easy to obtain. However,
using too much debt would increase firm's interest obligation, and increase the
firm's risk. The industry has a trend of decrease the use of its debt, to reduce
the risk, but due to the financial crisis the economy is not performing well and
causing the low occupancy rate of hotels, so many hotel has increased their
debt for hotel renovation during the period of early recession. and try to lower
it later. MAR's debt to equity ratio is evaluated STRONG because MAR in
this category has lower debt to equity ratio on average than the industry, but
still using a fair amount of debt, means MAR is utilizing its capital efficiently
by taking advantage of characteristics of debt and has on average lower risk
than the industry.

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Activity /
Efficiency
Asset
Turnover
1.45 1.44 1.3 1.38 1.65 0.9 0.9 0.8 0.8 0.9
Asset turnover measures how the company's asset is making money. The
higher the ratio, the more money the asset is making. In this case, MAR has
always outperformed the industry for the last five years, indicating strong
efficiency of the company.
Profitability
Gross
profit
margin
15.1 12.6 11.3 12.6 10.4 36.7 36.3 31.9 33.9 34.6
Gross profit is the very first measure of the firm's profitability, calculating by
sales revenue deducting by the cost of goods sales. MAR's Groff Profit
Margin is evaluated as WEAK, because while the industry whole industry
has an average of over 30% gross profit margin, MAR only has a little over
10%, due to their higher cost of delivering better quality of service.
Return on
assets
7.94 4.06 -4.11 5.42 2.66 11.6 6.3 5.9 9 9.3
Return on asset measure the how much money return the company's asset is
generating, the higher return the better. MAR's return on asset is evaluated
as WEAK, because not only the return is always much below the industry's
average, but on 2008, while the industry is earning 6.3% return, MAR is at -
4.11%.
Growth
Year over
Year
Sales
Growth
%
6.83 -0.85 -15.3 7.18 5.35 9.5 1 -15 5.8 7.9
MAR's sale's growth is evaluated as NEUTRAL. MAR has similar growth
with the industry, even though the number shows they are not growing as
much as the average industry, but MAR does has a steady rate, and after the
2008 financial crisis, it was able to adjust its strategy in response for the
market, then maintain the growth to later on.
Year over
Year Net
Income
Growth
%
-0.48 -1.96 -2.32 -0.57 1.88 0.45 -0.40 -0.74 1.10 0.48
Net income is the amount of pure profit that the company is making. The
higher the net income the better. MAR's net income growth is evaluated as
WEAK, because MAR’s net income growth has much higher variation than
the industry average, which indicates higher uncertainty and risk.
Operation
Operating
Margin
9.15 6.1 -1.39 5.94 4.27 -7.5 155.1 87.6 26.3 3.4
The operating margin is a good indicator for firm's profitability and operating
efficiency. MAR's operating margin is evaluated as STRONG, because
even the ratio seems quite low, MAR has a much stable operation margin
comparing to the whole industry, which also indicates the firm has high
control over its operation so unsystematic risk is lowerits shareholders.

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Competitive Environment (or Task/Industry Environment)
This environment is immediate environment surrounding a firm. Segments of the competitive environment include Competitors/Potential Entrants,
Customers/Buying Groups, Suppliers, and Substitutes.
1. Domain
Provide a thorough definition of the domain in which your firm competes. This should include a description of the key competitors, geography and other variables
that serve to carefully define the environment in which you compete.
Domain Definition
Variable Summary of Variables
Geographic Market
Regardless of The American
market, Asia, Europe, and Middle
East & Africa are also geographic
areas where Marriott compete with
competitors.
MARRIOTT INTERNATIONAL, INC. (NYSE:MAR) is a leading lodging company with more than 3,400 lodging
properties in 68 countries and territories. Evolving diversity and inclusion goals to support global growth is a business
imperative for Marriott. Approximately 36 percent of room pipeline and two-thirds of our 42,000 rooms under
construction are outside the United States. To support this rapid growth, the company has opened new development
offices in Africa, Brazil, and India which are all staffed by local professionals who fully understand the cultural norms
and practices of their respective markets.
Global regions: Asia
In China, Marriot’s largest market outside North America, the company aims to more than double its presence to 120
hotels by 2015. In India, Marriot expect to grow from 12 to 100 hotels across seven brands by 2015.
Global regions: Europe
Marriott has 180 hotels in Europe, and plans to double its presence by 2015, fuelled by a joint venture with AC Hotels in
Spain, Italy and Portugal, increasing sales focus in Russia, and agreements to open new hotels in France, Germany, and
Poland.
Global regions: Middle East & Africa
As Marriot grows, our community ties deepen, aligning with issues that are important to the people who live where we
operate hotels all over the world. In international markets like the Middle East, growing wealth is creating more travelers
and providing greater new hotel development opportunities.
Industry Segment
There are 6 segments in Marriott’s
hotel brands. For each segment,
brands of Marriott face different
competitors.
1. Iconic Luxury
Focusing on the diverse tastes of the upscale and luxury guest, with lodging experiences ranging from treasured
landmarks to adventurous retreats.
Target market: guest who has the means and desire to experience only the finest, guest who enjoys genuine care and
comfort
2. Luxury Brands
Promising an extraordinary guest experience that is keenly focused on the distinct needs and expectations of the upper

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high-end guest.
Target market: Sophisticated, self-assured travelers who seek a hotel experience that embodies confident sophistication
without pretense
3. Lifestyle/Collections Brands
Engaging sophisticated travelers with energetic environments, imaginative dining and highly attentive service.
Target market: customers who are rich and young and are novelty seekers; customers who are intellectually curious, fun
loving, inspired, adventuresome, exuberant, engaged; younger traveler looking for a cosmopolitan hotel in a great city
location; travelers who seek independent, high-personality destination hotels
4. Signature Brand
Among the most trusted names in the hospitality industry, Marriott expertly caters to the spectrum of needs of business
and leisure travelers as well as those planning meetings and events.
Target market: customers who seeks balance between work and travel, time with family, friends and colleagues, and
pursuing interests that calm and rejuvenate
5. Select Service
Cost-conscious and purposefully designed to accommodate a broad range of guest categories, with an eye towards
providing environments that are efficient, comfortable and convenient.
Target market: smart business travelers; lifestyle traveler in the upper moderate tier; business travelers across North
America
6. Extended Stay Brands
Spacious suites and rooms with superior efficiencies designed to accommodate guests with the comforts of home while
on travel for longer periods;
Target market: Upscale frequent business travelers and extended stay business travelers; guests who at ease for the long
haul, with thoughtful spaces for both working and living; traveling corporate executives

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1) Geographic Market Area
*The “List all the geographic sources of your customer by level of business volume generated”, “What is the average geographic distance your customer must
travel to receive your products and services?” and “What is the most frequent mode of travel used by your customer?” are deleted in this project for these three
questions not fit the case hotel company for some reasons. First, Marriot owns more than 10 hotel brands with different target and location for each brand. It’s
not a single-brand hotel with customers from a specific region. Besides, diverse locations and brands of hotels make “level of business volume generated” not
meaningful. Second, geographic distance is efficient to analyze restaurant industry rather than hotel companies with several brands at different segments. That
is, long and short geographic distance can be an advantage based on different target market and segment of the hotel brand.
a. International tourists of main regions (U.S. Travel Association, http://www.ustravel.org/research/international-research)
Country Summary Prediction
China With a 1.5 billion person population and soaring GDP
growth, China is a fast-growing market for inbound
travel to the United States. Chinese travelers visited the
U.S. in substantial numbers in 2011, and forecasts
project strong growth will continue. More than any other
travelers to the U.S.,Chinese spent the most on
American goods and services per visit in 2011.
India Indians traveling to the United States continue to spend
at a high rate. India’s average visitor spending in 2011
was higher than all other countries, except for China.
Improving realGDP and exchange rates should improve
future arrivals and spending amounts by a greater
margin.

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Brazil With a population of nearly 200 million and a GDP
exceeding $2 trillion, Brazil is a particularly ripe market
for travel to the United States. Brazilian travelers visited
the U.S. in strong numbers in 2011, continuing a five-
year trend of positive growth. These visitations continue
to have a significant impact on the U.S. trade balance
with Brazil.
Canada The U.S. is the most popular international destination for
Canadian travelers. Approximately 63% of all Canadian
residents traveling internationally visited the U.S. in
2009.
Mexico The U.S. is the most popular international destination for
Mexican travelers. Approximately 87% of all Mexican
residents traveling internationally visited the U.S. in
2009.

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UK In 2009, the U.S. received a total of $11.4 billion from
U.K. visitors, a decrease of 31.6% compared to 2008.
$8.8 billion was spent on travel while in the U.S.,and
$2.7 billion was spent on international airfare. Total
spending, including spending on international airfare,
per U.K. arrival to the U.S. averaged $2,931 in 2009, a
decrease of 20.0% compared to 2008.
Japan 2,918,268 residents of Japan visited the U.S. in 2009
representing a 10.2% decline from 2008, the fourth
consecutive annual decline and the lowest number of
arrivals from Japan since 1988. Monthly arrivals for
November 2010 were 265,615, about 14% better than
arrivals for November 2009, and year to date through
November 2010 has shown a 17% improvement over the
same period of 2009.
Germany A total of 1,686,825 residents of Germany visited the
U.S. in 2009 – a 5.4% drop from the 2008 total. Monthly
arrivals for Nov 2010 totaled 113,175, about 1% higher
than November 2009 arrivals. Year-to-date arrivals
through November 2010 are 2.9% higher than for the
same period in 2009. Looking towards the end of 2010,
arrivals are expected to increase by 1.1%, for a total of
1,705,000 visitors.

48
France A total of 1,204,490 residents of France visited the U.S.
in 2009, a 3.2% decline from the 2008 total of
1,244,000. Despite the decline, 2009 arrivals from
France represent the second largest number in history.
Monthly arrivals for November 2010 totaled 86,234,
25% higher than November 2009 arrivals. Year-to-date
arrivals through November 2010 are 12% higher than for
the same period in 2009. Looking to the end of 2010,
arrivals are expected to increase by 2.0%, for a total of
1,230,000 visitors.
Australia A total of 723,576 residents of Australia visited the U.S.
in 2009, a 4.9% increase from 2008. Total Australia
arrivals in 2010 are forecasted to increase by 18%% to
854,000. Monthly arrivals for November 2010 totaled
80,809, an increase of 15.1% compared to November
2009. Through the first eleven months of 2010, arrivals
from Australia were up 24.8% compared to the first
eleven months of 2009.
Italy A total of 753,310 residents of Italy visited the U.S. in
2009, a 3.4% decline from the 2008 total of 779,463.
Monthly arrivals for November 2010 totaled 57,670,
about 22% higher than November 2009 arrivals. Year-
to-date arrivals through November 2010 are 12% higher
than for the same period in 2009. Looking to the end of
2010, arrivals are expected to increase by 5.7%, for a
total of 795,000 visitors.

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South
Korea
A total of 743,846 residents of South Korea visited the
U.S. in 2009, representing a 2.1% decline from 2008.
Monthly arrivals for November 2010 totaled 80,737 for
an increase of 63% compared to November 2009. Year
to date through November, arrivals have improved 53%
in 2010 compared to the same period in 2009. Looking
to 2010, arrivals are expected to increase by 31%, for a
total of 975,000 visitors.
b. Insert a map of your geographic market area in this space
Hotel brands Major location Map
Europe
Asia
America
Europe
Asia

50
America
Europe
Asia
Europe
America
Europe
Africa
Asia
Europe

51
America
Europe
America
Europe
Asia
Africa
Oceania
America
Europe
Asia
Oceania
America

52
America
America
Europe
Asia
America
America
Europe
Asia

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2) Industry Segment Analysis
a. Industry/Segment Critical Success Factors
Using key words familiar to
you, list the critical success
factors for this industry
segment
Describe in more complete detail what each of these success
factors are and how they are measured.
Additionally, be sure to indicate the key trends occurring in
eachand link to significant value drivers.
Sources
Industry leader and describe why
you believe this is the case
Customer Service
Hotel employees are the first and last impression of the property to
the customers and are responsible for providing excellent customer
service. The main commodity of the industry is the service. It is a
critical success factor for the industry to survive and grow in the
market.
Customer service is measured through Guest Satisfaction Score or
Mystery shoppers. According to American Customer Satisfaction
Index (ACSI), a national economic indicator of customer evaluations
of the quality of goods and services, ACSI scores of hotels are on
continuous rise since 2007. Market Matrix revealed that Guest
satisfaction with hotels had shifted upward in the second quarter of
2011 with Upper Midscale Hotels and Luxury Hotels posting the
biggest gains.
http://www.hotelnewsre
source.com/article5760
4Trends___Guest_Satis
faction_with_Hotels_E
dged_Upwards_in_the_
Second_Quarter_of___
__.html
http://www.hotelnewsn
ow.com/Articles.aspx/9
096/Comparing-
customer-satisfaction-
across-sectors
http://news.yahoo.com/
hotel-guest-satisfaction-
scores-dip-
161500794.html
According to the J.D. Power press
release, Ritz-Carlton has secured the
highest guest satisfaction score in the
luxury category for the third year in a
row, Hilton Garden Inn and SpringHill
Suites in the upscale category, Holiday
Inn in the mid-scale full service category
for the second year and Homewood
Suites in extended stay category. Ritz-
Carlton scored the highest score
(864/1000) in any brand or category,
according to USA Today. The overall
hotel industry score is 757/1000) in 2012
which is 7 points lower than in 2011.
Advertising/ Social Media The role of advertisement is inevitable in any industry. It is one of the
best and effective ways of reaching to the customers, creating the
image and making the service/product’s existence known to them.
With the advancement in technology, advertising is not limited only
to TV, newspaper or radio but also different online sources like
company websites, social medias like Facebook, twitter, online blogs
and mobile.
The effectiveness of advertisement can be measured by the percent of
the customers it touches. Word of mouth also creates additional chain
reaction among customers which is basically free advertising.
Based on the research by Coyle Hospitality Group in 2012, 86% of
the respondents (restaurants and hotel companies) use social media
for sales and marketing activities; 89% use Facebook, 63% use social
media to improve customer loyalty, 44% have a dedicated social
media staff and more than 50% plan to increase the social media
http://www.bighospitali
ty.co.uk/Trends-
Reports/Marriot-tops-
list-of-World-s-10-
Best-Hotel-Chains-in-
terms-of-online-
performance
http://hotelemarketer.co
m/2010/10/01/future-
of-display-advertising-
is-the-hotel-industry-
ready/
http://www.coylehospit
ality.com/news/2012-
According to the report, conducted by
global brand analyst Heardable, Marriott
hotel chain topped the list with the
highest scores which was based on the
chains’ online presence, mobile readiness,
social network participation and search
engine optimization (SEO).

54
activities within next year.
Google has predicted that the display advertisement in 2015 will
include smartphones/mobile as number one screens for digital brands
to engage users, 75% of the web ads will be shared, discussed,
subscribed to and recommended in social media.
social-media-trends-in-
the-hospitality-industry/
Loyalty program for
customers
More people are selecting to stay at hotels which offer loyalty
programs. Loyalty programs now rank fourth among reasons why
customers select a hotel. Hence, it is necessary to improve the
benefits tied with the loyalty program.
According to the hospitalitynet.org, loyalty programs can be
evaluated by a measure called “loyalty program effectiveness”. This
measure collects the percentage of persons choosing hotels based on
their loyalty program membership. In 2002, 32% said the loyalty
program was the key factor in choosing the hotel which increased to
37% in 2007. Compared to 2010, 2011 saw an increase of 5% in elite
members in loyalty members.
Customers will continue to use loyalty programs with anticipation of
increase in the customer enrollment in such loyalty program in future.
Hotel brands are constantly improving and adding features in their
loyalty programs and will continue to do.
http://travel.usatoday.co
m/alliance/flights/board
ingarea/post/2011/10/L
oyalty-Traveler---
Hilton-HHonors-
ranked-highest-loyalty-
program-
effectiveness/556161/1
According to the USAToday, in 2011,
Hilton HHonors ranked the highest
loyalty program effectiveness, followed
by Marriott and Starwood. Marriott
Rewards had topped the list in 2009 and
2010 but the score decreased in 2011
leading it to the second position.
Hotel Chain Market is almost saturated for the hotel industry in the United States
and the only place the hotel chains can grow is beyond the United
States. Many hotel chains have extended their services and properties
around the world including franchising, merging and acquisition.
They are the main players of the hotel industry making the market
entry and survival of the independently owned small hoteliers too
difficult.
The size of the hotel chains is measured by the no. of rooms or
properties acquired by the group.
New regional hotel chains are emerging especially in Asia and in
Europe: 7 Days Group in China, European based Accor group in
Southeast Asia.
http://www.tourism-
review.com/top-10-
largest-hotel-groups-of-
the-world-news1988
http://www.hospitalityn
et.org/list/1-
10/154000431.html
Intercontinental Hotel Group has been the
largest hotel group in the world since
2004 with over 600,000 rooms in total. It
includes Holiday Inn Express,
CrownePlazza, Staybridge Suites and
Indigo boutique hotels.
Amenities Along with the room to stay, customers require additional amenities
in the hotels. Parking, pool, restaurants, duty-free shops, salon, fitness
center, room service and internet are some of the features customers
look at while choosing a hotel to stay. The industry can also be
segmented based on the amenities provided and these services offered
provide a base for the hotel to determine the selling price.
Amenities offered can have a significant impact on customers to drive
the business and win customers’ choices. For example, according to
http://news.yahoo.com/
hotel-guest-satisfaction-
scores-dip-
161500794.html
http://www.cntraveler.c
om/daily-
traveler/2012/04/hotel-
Many hotels are offering specialty service
to the customers of different categories
and are trying to lure those customers.
Luxury hotels will top the list with the
best and most amenities offered in
general. However, different categories of
customers may rate and regard hotels
based on their amenities requirements
fulfilled.

55
ABC News, guest satisfaction score was higher for those hotels who
offered free internet than that of hotels who charged for internet in
2012. Business travelers will target such hotels with free internet.
However, leisure travelers may have different need of amenities like
swimming pool, suites,late check-outs.
Some of the new amenities being offered which is creating a trend in
the industry are paperless check-in, wireless concierge (twitter),
check-out from TV screen, butler service, baby care, pet walker and
others.
amenities-perks-trends-
hot-list-2012
Imitation Product differentiation is the concept for the industry to create
competitive advantage over the competitors. It provides uniqueness
to the hotels and strengthens their sustainability. It is also an art of
capturing new target market (customers) who are looking for new
lodging experience other than mere known hotel chains.
In an effort to maintain their product differentiation feature, many
hotel chains use unique strategies and provide peculiar services to
attract the specific segment of customers. However, quick imitation of
such strategies is often common and vital for other hotel chains if they
want to compete for that segment of customers. If the hotel chains fail
to do so, they won’t be able to capture that new market and lose those
customers.
For example, a new rising trend being embraced by the hotel leaders
are boutique hotel chains under their hoods. Big chain hotels
understood what customers are being attracted to quickly establish
their version of boutique hotel. Marriott has Edition, IHC has Hotel
Indigo, Hyatt has Andaz and Starwood has Element and Aloft.
Another unique segment introduced by Marriott is Autograph
Collection which lets independent hotels that meet certain criteria
could effectively share benefits of being in the Marriott family
without actually carrying the Marriott name. These hotels also get to
maintain their unique personality, name and style.
http://www.hospitalityu
pgrade.com/_magazine/
magazine_Detail.asp?I
D=503
http://boutiquelodging.
wordpress.com/2010/10
/15/what-is-a-lifestyle-
hotel/
Hotel Indigo, the world’s first global
branded boutique, is the leader of lifestyle
hotel segment. Since its inception in
2004, it has experienced great success and
rapid growth. The concept has been
quickly imitated by other major hotel
chains to compete in this new segment.
Central Reservation System Reservation system is one of the essential focal point of distribution
channels of the hotel industry. It also assists the hotel brands to
manage all of their online marketing and sales, where they upload heir
rates and availabilities. It also acts as an information center for other
intermediaries (travel agencies) to see. Many large hotel chains have
their own CRS facilitating customers to book the hotel rooms based
on their needs and convenience.
According to the research done by statisticbrain.com in 2012, 57% of
the total hotel booking was made on the internet. The study also
http://en.wikipedia.org/
wiki/Hotel_reservation_
systems
http://www.hotel-
industry.co.uk/2011/04/
reservation-system/
http://www.marketingti
According toptenreviews.com, an online
survey service, Priceline has been voted
as the best third party online booking site
with a total score of 9.23 out of 10,
followed by hotels.com with 8.75 score
and hotelreservation.com with 8.65 score.
The review was based on website
features, hotel information, reservation
process and help and support.

56
showed that 65.4% of the total online booking was done through hotel
brand websites (e.g. Marriott.com) and third party websites were used
by 19.5%.
With the rise in online booking including through Smartphones, CRS
is adapting mobile friendly booking engines, apps and integrating
software in their system to accommodate the growing tech savvy
customers.
Priceline.com has revealed that, in 2012, almost half of the mobile
hotel bookers surveyed would book the hotel after leaving home and
on the road. According to statisticbrain.com, percent of same day
hotel reservation made from a smartphone was 65% in 2012.
These are the customers who make last-minute booking and the no.
continues to rise in future
mes.com/2012/11/new-
trends-on-mobile-hotel-
bookings/
http://hotel-booking-
services-
review.toptenreviews.c
om/
http://www.statisticbrai
n.com/internet-travel-
hotel-booking-statistics/

57
b. Porter’s Five Forces Analysis
Industry Forces Describe new entrants, buyers/buying groups,
suppliers, substitutes, competitors of your
industry
Evaluate the
strength ofeach
Porter’s five forces
for your industry
Explain the reasons for the
strength
Sources
Threat of new
entrants
Economies of Scale
Hotel chains may enjoy higher economics of scale
compared to the independent hotels due to centralized
reservation system, central management teams,
acquisition of raw materials, and production and labor
utilization. Presence of economies of scales also
brings absolute cost advantages to the industry which
brings the benefits of low cost of operations and low
service/ product charge.
Capital requirements
Building or investing in a new property usually
requires high capital. Hotel industry generally has
high sunk costs which again demands large capital
amount up front. If a hotel decides to leave the
market, the high sunk costs can’t be recovered on time
increasing the risk to entry. However, capital intensity
can be reduced with the negotiation of a franchise,
lease or management agreement with hotel builders,
owners and rest estates.
Access to distribution channels
The principles of channel distribution for hotel
industry differ from those used for manufacturing
goods. Such channels have to act to bring customers
to the consumption site/producers to consume
product/service. Industry leaders generally have their
own distribution channels (partially or completely
owned), sell through management and marketing
contracts, franchising and intermediaries (tour
operators, travel agents and specialty channels). Such
intermediaries are often controlled by the major
players limiting the access to independently owned
lodges.
Government and legal barriers
The hotel industry doesn’t have a strong government
Threat of new entrants
is medium in hotel
industry.
Because of high competition with large
hotel chains, high capital investment
requirements and difficulty in building
up image against the established hotel
chains, the hotel industry enjoys lower
threat of new entrants. However, low
government and legal barriers, increase
in use of online booking (reducing the
need of traditional distribution channels)
and leasing facility available through
real estates may make it easier for new
entrants to enter the industry and
survive.
Hence, due to the presence of both
strengths and weaknesses, the hotel
industry possesses medium entry barrier.
IBIS World Industry
Report Hotel and Motel
in the US
http://clients1.ibisworld.c
om/reports/us/industry/d
efault.aspx?entid=1661
http://hotelmule.com/wik
i/Economies-of-scale
http://www.marketing91.
com/absolute-cost-
advantage/
http://hotelmule.com/wik
i/Distribution-channels

58
and legal barriers. Licenses are required based on the
different services offered such as gaming, liquor,
transportation, pool. These regulations do not provide
any strict barrier to entry.
Life cycle stage
The industry has reached its mature stage. The
continuing growth in domestic tourism and business
travel as well as increasing international visitors’ rate
will aid in rise in demand, however, lack of product
differentiation and brand image may adversely affect
new properties to compete with major players.
Power of
buyers/buying
groups
Price Sensitivity
Apart from luxury scale hotels, most of customers in
hotel industry are price sensitive and make hotel
choices based on price as one of the influential
factors. To cater such customers, major players have
mid-scale hotels, low-scale hotels and are capable of
offering discounts, promotions time to time to lure
these customers. Tech savvy customers are benefiting
from the high competition in the industry to find the
best price available in just few clicks.
Another factor that influences the price sensitivity
among customers is the economy. The industry is
slowly recovering from the recession of 07/08,
however customers have learnt during this time period
to get most out of less money.
Bargaining Power
Buyers have relatively higher bargaining power
because of high competition prevalent in the industry
especially in areas with high concentration of hotels.
Due to low switching costs, customers can easily
change and choose a hotel next block whichever
provides better services and deals.
The power of buying
groups is very high in
hotel industry.
The factors that provide power to the
buyers in the industry are high
competition among the hotels, the large
portion of price sensitive customers,
increase in use of technology to
book/search for hotels, low switching
costs for customers. These factors aid in
their bargaining power to control the
industry’s output.
IBIS World Industry
in the US
http://clients1.ibisworld.
com/reports/us/industry/
default.aspx?entid=1661
http://100percent.wikisp
aces.com/Michael+Porte
r+5+five+force
Power of
Suppliers
Labor supply
The hotel industry is profited with high labor supply.
The job requires manual work most of the time and is
less technical making job training easier. It can hire
less skilled employees easily and still continues to
survive. The substitution oflabor involves less effort
The power of suppliers
is low which is
beneficial for the
industry.
The no. of suppliers is relatively higher
and the substitutes are easily available.
Due to the switching cost being low for
the industry to change the supplier if
needed, the bargaining power of
suppliers has become low decreasing
IBIS World Industry
in the US

59
as well. With the continuous increase in total US
population, the US labor supply has been expected to
rise as well. The annual growth rate in labor force
(2010 to 2020) in all age is projected to be 0.7%.
Bargaining power
Other than labor, suppliers in the industry includes
property owners, real estate companies, interior
design,furnishing companies, architects, management
and training service providers, housekeeping materials
manufacturers and others.Due to availability of
higher no. of suppliers and their substitutes,low
switching cost to change the suppliers, the bargaining
power of suppliers are low in the industry.These
suppliers are wide and scattered due to low
concentration.
their influence to control the operation of
the industry. Similarly, labor supply is
higher for the hotel industry as it doesn’t
require high tech/skilled employees to do
the job. Trainings are easily available to
hire and replace the labors which
decrease the bargaining power of labor.
http://www.scribd.com/d
oc/47349495/Porters-
Five-Forces-Analysis-
for-Hotel-Industry
Bureau of Labor
Statistics
www.bls.gov
Power of
Substitutes
Buyer propensity to substitute
Many substitutes to hotels are emerging in the market
such as RV parks, bed-and –breakfast establishments,
hostels, timeshare, airbnb, momand pop hotels/motels
etc. With an increase in wide use of internet and other
tech devices to find places to stay, buyers are easily
finding alternatives for lodging which, in addition,
provide them a different experience than a
monotonous chain hotel.
Relative prices and performance of substitutes
The product/ service charge of most of the available
substitutes are competitive and favorable for
customers. Some of these substitutes like mom and
pop motels, B&B hotels are capable of providing
personalized services to the customers since their
property size is small and the owners are the working
staffs who have the power to make any decisions on
spot. These properties are easy to operate and
maintain and don’t have franchises.
The substitutes are
gaining popularity
along with the power
which can possibly
affect the industry.
The power of substitutes are fairly low,
however, it is expected to rise as more
and more customers will want to
experience unique service other than
regular hotel chains and the information
about these substitutes will be readily
available to them online. If these
substitutes can integrate product
differentiation and attract price-sensitive
customers through effective pricing
strategy, they can play a part of
competitor in the industry.
IBIS World Industry
in the US
http://themarketplaceofli
fe.blogspot.com/2011/02
/porters-five-factor-
model-and-hotel.html
Rivalry among
competitors
Concentration
Hotel industry size is large and allows multiple firms
to prosper. The availability of hotels is usually high in
specific areas like downtown, interstate and tourist
areas giving high bargaining power to customers.
Rivalry among
competitors is high.
Competition is fierce in
order to win big market
share and attract more
customers.
Due to low switching cost and low
concentration of hotels, the customers
can easily alter their choice of stay.
Availability of loyalty programs can
retain the customers but the industry
should remember that such program is
IBIS World Industry
in the US

60
Overall, the industry has a low-level of concentration,
with the top four players covering less than 20% of
the available market share in 2013.
Diversity of competitors
Large hotel chains have different hotel
segments/scales which cater customers with various
needs. These chains compete with each other based on
their segments, price and proximity since the service
each segment offers is diverse. Despite of few actual
differences in service, the hotels have customized
services to create product differentiation so that
customers perceive uniqueness in their brands.
Product Differentiation
High end hotel segments are already taking a lead in
the industry in terms of product differentiation.
Though the main goal of the industry is to provide
lodging to the customers, these hotels retain
customers by gathering as much information about
their customers as possible and try to exceed their
expectations by providing customized service.
Many hotel chains have introduced special segments
in order to differentiate themselves with the
competitors called lifestyle collections which offer
unique décor and give the feel of independent
boutique hotel while offering the same brand services.
Customer Loyalty
Customer loyalty program keeps the customers
coming to the hotel brands are one of the major
decision factors in choosing a hotel. Enrolling into
such program is usually free and customers are
inclined to get benefits from such program.
Switching costs
In the hotel industry, switching cost is relatively low
due to lack of obligation or contract, which makes it
easier for customers switch the brands without any
hesitation. Customer loyalty is probably the only
factor that may keep them away from competitors.
not an obligation but only a measure
which can be successful only if the hotel
can win the hearts of customers.
Fragmented structure of the industry and
higher rivalry feature among competitors
benefit the industry to create product
differentiation, quality service,
availability of wide range of services and
best deals for customers.
http://www.learningace.c
om/doc/5318945/3fad98
b8df282a7eb2c62531e5d
74773/lodging-binitap
http://boutiquelodging.w
ordpress.com/2010/10/1
5/what-is-a-lifestyle-
hotel/

61
3) Primary Competition
a. Properties, Products and Services
Name of Competitors Number or/and sales of units
(Geographic distribution, brands, ownership)
Description of their strengths and weakness
InterContinental Hotels
Group (IHG)
As of year-end 2011, there are 3832 franchised
properties (85%), 627 properties under management
contract (15%), 11 owned and leased property (<1%)
associate with IHG. IHG brands include
Intercontinental, Crowne Plaza, Holiday Inn, Holiday
Inn Express, Staybridge Suites, Candlewood Suites,
Hotel Indigo, and others. IHG operate properties in
many continents, including the Americas, Europe,
Asia, Middle East and Africa, and Greater China.
InterContinental is the biggest hotel corporation in
the world in terms of the room numbers. Moreover,
the brand “Hotel Indigo” is the pioneer brand in the
new “lifestyle segment” of the industry. Just like
many other hotel companies, IHG is very aggressive
on expanding its operation by increasing properties
at multiple market, it would always been the
mostinfluential player of the hospitality industry.
Hyatt Hotels Corporation
(H)
As year-end 2011, there are approximately 595
properties operated by H. 318 (53%) of the properties
are managed; 142 (24%) are franchised; and 135
(22%) are owned by H. Hyatt’s brand include Park
Hyatt, Andez, Hyatt, Grant Hyatt, Hyatt Place, Hyatt
Regency, Hyatt House, and Hyatt Residence Club.
Hyatt is one of the few hotels that has mentioned
and emphasis its competitive strength in the annual
report. There are 7 major strengths such as Hyatt is a
recognized world class brand, who has deep culture
and experienced management team, and who
provide high quality service in selected market…etc.
However, they are also the only hotel group that
focus and invest heavily in innovation. Example
includes eliminating de-personalized service,
creativeapproach provide healthy food and beverage
option to guest…etc. Being innovative is really
critical to performance of a hotel.
Starwood Hotels &
Resorts Worldwide Inc.
(HOT)
At year-end 2011, there are 1089 properties
worldwide operated by HOT, 518 (48%) are managed
and unconsolidated joint venture hotels; 499 (46%)
properties are franchised, 59 (5%) are owned by
HOT, and 13 (1%) are vacation ownership resorts and
stand-alone properties. HOT brands include St. Regis,
The Luxury collection, W Hotel, Westin, Le
Meridian, Sheraton, Four Point, Aloft, and Element.
Unlike many of large hotel groups which try to
capture customers in all segments, HOT focus on
only high-end segment. They also diversify the
market in developed worlds. Their financial
statements indicate their corporate strategies really
work well.

62
a. Competitors’ Financial Performance
b.
 Complete the following tablefor competitors
 Graph the last five years of the following ratios for your firm and major competitors, and the industry in which it competes.
 Describe the financial position of each competitor relative to its ability to meet its growth needs
Category Ratio 2007 2008
200
9
2010 2011 2007 2008
200
9
201
0
201
1
Evaluation of yourcompetitors’ financial ratios:
(Strength, Neutral, or Weakness)& Reasons
Liquidity Current
Ratio
Competitor 1 - IHG Competitor 2 - H Among the competitors, IHG has the strongest
liquidity ratio, because the number remains very stable
for the last 5 years despite of the recession,indicating
the efficient use of firm’s money. HOT follows, and H
has the worst performance among the competitors due to
its large variation.
0.58 0.48 0.4 0.49 0.67 1.53 1.62 4.02 3.63 2.8
Competitor 3 - HOT Industry Average
0.87 0.81 0.74 1.07 1.27 1 1 1.4 1.4 1.2
Leverage
Debt to
equity
Competitor 1 - IHG Competitor 2 - H Among the competitors, H has the strongest debt to
equity ratio. Due to its ownership structure,H has
relatively a lot less and quite stable among of debt
comparing to its competitors. HOT follows, and IHG
has the worst ratio in this categories due to its largest in
size.
18.9
6
-
291.37
*
9.56 4.58 1.22 0.23 0.19 0.32 0.3 0.25
1.73 2.16 1.62 1.3 0.88 4.8 1.3 2.8 1.7 1
Activity /
Efficiency
Asset
Turnover
Competitor 1 - IHG Competitor 2 - H The assetturnover ratio between MAR’s 3 major
competitors is pretty similar. None of them is
especially outstanding,indicating they are all operating
very efficiently.
0.48 0.55 0.51 0.57 0.61 0.6 0.62 0.5 0.49 0.5
0.65 0.61 0.51 0.55 0.58 0.9 0.9 0.8 0.8 0.9
Profitability
Gross profit
margin
Competitor 1 - IHG Competitor 2 - H Among the competitors, IHG has the strongest gross
profit margin. As gross margin potentially means the
profit % that a firm is making, H is performing
exceptional well among the competitors. HOT follows,
and H is about the same.
53.5 55.6 44.1 53.7 56.4 23.8 23.5 17.4 18.8 20
28.1 26.4 21.8 22.8 23.4 36.7 36.3 31.9 33.9 34.6
Return on
assets
Competitor 1 - IHG Competitor 2 - H Among the competitors, IHG has the strongest return
on assets. IHG was able to keep producing positive
return while some firms are suffering from the
recession.HOT has slightly betterperformance than H
in this category.
12.5
8
7.82 7.09 9.86
16.4
4
4.34 2.75
-
0.65
0.92 1.53
5.73 3.4 0.79 5.15 5.06 11.6 6.3 5.9 9 9.3
Growth
Year over
Year Sales
Growth %
Competitor 1 - IHG Competitor 2 - H In this category, all competitors are hit and performed
the same way as the economic recession. H performed
relatively stable,however is weak for the recovering;
HOT has higher variation and shows strong recovering
11.1
6
5.76 -17 5.85 8.6
N/A*
*
2.65
-
13.2
5.85 4.85

63
2.91 -4
-
20.2
7.62
10.9
1
9.5 1 -15 5.8 7.9
trend; IHG is about the average.
Year over
Year Net
Income
Growth %
Competitor 1 - IHG Competitor 2 - H Due to the impact of the economy recession,firms are
not performing very well in this category. IHG shows
its capability of handling the financials rather well
than other competitors. HOT follows with higher
variation; H performed the worst in such category.
-
0.42
-0.43
-
0.19
0.31 0.69
N/A*
*
-
0.37
-
1.25
-
2.53
0.71
-
0.48
-0.39
-
0.78
5.53 0.03 0.45 -0.4
-
0.74
1.1 0.48
Operation Operating
Margin
Competitor 1 - IHG Competitor 2 - H Among the competitors, IHG has outperformed the
industry operating margin. HOT and H are performed at
similar level.
26.8
1
21.74
-
0.65
26.8
4
34.8
4
10.3 9.49 1.44 3.06 4.14
13.9
4
10.48 0.55
11.8
3
11.2 -7.5
155.
1
87.6 26.3 3.4
*The extreme number of debt to equity ratio of IHG in 2008 is due to high level of debt and small negative book value of stock holder’s equity.
** Financial information is not available for H prior to 2007, therefore, the growth rate information is not available.
Financial Ratios in graphs

65
4) Target Market Descriptors
1 Criteria can include demographic or psychographic information or categories such as leisure or business traveler.
Primary criteria used to
describe your target
market1
Describe in detail the specifics for each criterion
at left. Be sure to include the size ofeach market
Sample brands
Income level
High income
*Size of each market is shown on the following
tables of each hotel brand. In each table, both
currently opened and pipline properties and rooms
of the brand are noted.
Bulgari Hotels & Resorts
The Ritz-Carlton
JW Marriott
Residence Inn by Marriott
Marriott Executive Apartments

66
market2
Sample brands
Need for novelty
Novelty seekers
EDITION Hotels
Renaissance Hotels
SpringHill Suites by Marriott
Length ofstay
Long stay travelers
Age
Young
EDITION Hotels
Another new brand that will be opened soon in this segment is Moxy

67
market3
Sample brands
Social class
CEO, Manager,high class
The Ritz-Carlton
Marriott Executive Apartments
Type ofdestination
Modern city, destination,
historical sites
Renaissance Hotels
AC Hotels by Marriott

68
market4
Sample brands
Type ofstay
With family or friends, for
business, for travel, for take
a rest, for short-term work,
for DIY life
Marriott Hotels & Resorts
Courtyard by Marriott
Fairfield Inn & Suites by Marriott
TownePlace Suites by Marriott

69
2. Industry Value Drivers
A value driver in the task/industry environment is a major factor directly influencing the profitability of a hospitality enterprise. It would include such
items as the industry labor cost, prices of raw material products such as red meat, potatoes or cleaning supplies, utilities, etc. These drivers are industry
wide and affect all firms more or less equally. They can be considered as important indices that will ultimately affect the organization and therefore must
be tracked and forecasted. Care must be taken to identify only the critical and relevant value drivers that will have significant impact upon the
organization.
Value Drivers Description and
Past Trends ofFactors
Causal Relationship and
Outlook ofValue Drivers
Source(s)
Key measuresofhotel
industry well-being
Hotel Sales
In 2011, the lodging industry generated
$21.6 billion in pretax income, a 20%
increase in year-over-year
comparisons. Total industry revenue
increased to $137.5 billion from $127.7
billion in 2010; the largest percentage
change in the last ten years.
Employment
The hotel industry pays $194.6
billion in related wages and salaries
and employs 1.8 million hotel
property workers. The industry
directly supports more than 7.5
million related jobs. Between 2004
and 2014, the Hospitality industry
is expected to add 17 percent in
wage and salary employment. By
the end of 2010, the largest
companies include portfolios that
include more than 6,000 hotels each
Hotel Sales
There is an increasing trend of hotel industry sales,
but we can’t ignore the economic recession. In such
a climate, many hoteliers will compete on rate, but
this only creates a downward spiral of price
competitiveness, and more pain for the long-term
growth and sustainability of hotels’ revenues once
the economy bounces back.
Employment
The increasing of wages and salaries will
increase the cost of hotels. Because such
increasing trend is happening in the whole
industry, hotels have difficulty retaining skilled
workers because of the negative image that the
industry faces.On the other hand, the industry
as a whole lacks consistency and portability in
training models and skill certifications. Many
employers provide internal training programs
for entry-level workers, which makes it difficult
to monitor the content of training and the skills
acquired, especially for the migrant workers.
http://www.ahla
.com/content.as
px?id=34706
http://www.you
nghotelier.com/
articles-
reviews/hotel-
revenue-
management-
and-revpar-
beating-the-
recession/
http://www.dole
ta.gov/brg/indpr
of/hospitality_pr
ofile.cfm
Migrant workers
in the
international
hotel
industry(Tom
Baum, 2012)

70
and employ more than 150,000
employees in up to 100 countries.
Globally the industry is highly
fragmented, with around 20 per cent of
the workforcelocated within
multinational enterprises.
Labor Cost of the Hospitality
Industry
Labor Cost of the Hospitality
Industry
High levels of cleanliness, comfort,
and convenience are based on
intelligent, dedicated, and highly
trained staff and those employees also
need convenience, safety,and security.
The wages and salaries have the same
importance here. The standard industry
measure of labor cost is expressed as
one’s labor cost percentage. It can be
computed for each profit center
individually or for the club as a whole.
Labor Cost Percentage = Labor Cost
($) / Sales ($)
The overall industry average labor cost
percentage,including all segments, is
in the range of 40 to 48%. Start-ups
may have much higher labor cost
percentages,in some cases exceeding
100%.
The importance of labor cost control
Our industry is not able to mechanize the manifold
and complex tasks of cleaning or maintaining a
hotel. Further, hospitality and service expectations
are deeply ingrained in our customers. Production
and service, because of its complexity and infinite
variables, is not likely to be taken over by machines
any time soon, no matter how sophisticated robotics
becomes. People are the most important part in our
industry and the labor cost should be satisfied and
also be controlled.
Labor Cost
Controls
( Ed
Rehkopf,
2009)
Labor Supply of the
Hospitality Industry
Labor Supply of the Hospitality
Industry
The number of available jobs in the
USA has increased by 22 million by
the end of 2011. Yet the labor force has
just increased by only 17 million,
according to the Bureau of Labor
Statistics. The US hospitality and
The influence of labor shrinking
Employees are going to be hopping from one
job to another and from one industry to another
as never before. They will not be as efficient
and effective as their predecessors were. As
consumers, we are going to feel like we’re not
enjoying the same standard of living that we
http://www.hisp
anicnashville.co
m/2006/01/hosp
itality-study-
labor-supply-
is.html

71
leisure industry has grown by 2.1
million jobs between 2002 and 2012
(17.8 percent) which represents a faster
increase than the 14.8 percent job
growth for all industries. The United
States can maintain a fairly brisk
growth in its labor supply over the
next 50 years without any change in
its current levels of fertility,
immigration and labor force
participation. Even if the United
States fertility rate were to fall from
2.1 to 1.8, the USA labor force
would continue to grow, although at
a considerably slower rate after
2015.
once had. In the USA, the tourism product-
service is the country’s top export. Tourism and
hospitality services consist of a heterogeneous
collection of firms and employees that provide
a memorable and pleasurable experience for
both domestic and international visitors. When
labor shortages impact the transportation,
lodging, food service and attraction companies,
there are fewer employees left to deliver the
high-quality service or experience. Therefore,
the quality of the service suffers. Poor service
results in negative experiences and visitors
decide not to return.
http://www.hosp
italitynet.org/ne
ws/4025796.htm
l
Travel Expenditure Travel Expenditure
Expenditures on travel for pleasure
declined sharply in response to the
recent recession, and had not yet
fully recovered by 2011. In 2008,
the first full year of the recession,
consumers reported expenditures
that were almost 3.5 percent lower
than those reported in 2007.
Reported expenditures declined
another 9.8 percent in 2009, the
year the recession officially ended.
Although expenditures increased
modestly (2.1 percent) in 2011, and
more robustly (5.5 percent) in 2012,
they were still lower than their 2007
peak.
Travel Expenditure
An important item to consider is that the
expenditures described so far represent the
average for all consumer units, whether or not
they travelled. To get a better idea of whether
changes observed in expenditures reflect a
change in travel patterns, as opposed to a
change in something else (such as prices for
travel), the percentage of consumers who
reported spending money on travel is useful.
Customer Preference Customer Preference
In hotel industry, customer
Customer Preference
Knowing a customer’s preferences may help
http://www.hyk
en.com/custome
r-experience-

72
serviceisn’t just about reacting to
what the customer wants.
Anticipating a customer’s needs is
as important as reacting. Knowing
and understanding your customer’s
preferences before they pay allows
you to create an even stronger
experience. Some hotels have a way
of tracking their guests’ likes,
dislikes and requests based on their
past hotel stays. A server at a
restaurant recognizes a guest and
asks if she wants the “usual.” Our
business should know what our
customers like – and dislike. In
other words, we should know
customers’ preferences.
sales, you must also look at this as a customer
service opportunity by adapting to these likes,
dislikes and any special requests a customer
might have. Adapting to customer preferences
is about giving the customer what they want,
the way they want it, and being easy to do
business with. And, that has everything to do
with creating “Customer Amazement.”
2/customer-
preference/
Energy saving
Situation of Energy saving
Competitive Advantage
Sustainable design will encourage community
support and facilitate and streamline permit
approvals. It may allow developers to stay ahead of
regulatory demands. It may even reduce the risks of
litigation, liability and even such disasters as fires
and floods. Sustainable design allows hotel facilities
to differentiate themselves from the competition.
They are able to gain increased market share by
targeting environmentally-conscious guests.A
sustainable hotel facility has a higher value to both
customers and investors. Customers will demand
environmentally-friendly and resource-efficient
accommodations, and investors are often willing to
pay a substantial premium to be part of a
development with social responsibility. The
potential for greater market share and increased
profits also add to the asset value.
Energy-
Efficiency
and
Conservation
in Hotels-
towards
Sustainable
Tourism(Dav
id
Rezachek&
Paulina
Bohdanowic
z)
http://www.g
reenthehotels
.com/eng/Bo
hdanowiczC
hurieKallhau
geMartinacH

73
While providing a significant boost to
many local and national economies, the
hotel industry constitutes one of the
most energy- and resource-intensive
branches of the tourist industry. The
energy use varies substantially between
different types of hotels, and is affected
by hotel size, class/category,the
number of rooms, customer profile,
location, climate zone, as well as by
the types of services and amenities
provided to guests.
awaii2001.pd
f
Social Media Social Media
In 2010, Facebook announced it had
over 500 million users; in the same
year,Twitter reported 75 million users.
On average,consumersspend more
than 5.5 hours per day participating on
social media Websites. Through online
communities, companies allow
consumers to becomeinvolved, directly
or indirectly, in creating new products
and brands. Overall, the popularity of
online communities has heavily
influenced many firms’marketing
activities in recent years.
Social media present a golden opportunity for
the hospitality industry to make greater contact
with its customers, with an ultimate goal of
developing a partnership for brand growth and
development. One great potential advantage of
social media is that guests are willing to share
information about their likes and dislikes. By
using appropriate analytic methods, hoteliers
can get a sense of what guests want generally
and how they react to the hotel specifically.
http://www.h
otelschool.co
rnell.edu/rese
arch/chr/pubs
/roundtablepr
oceedings/ro
undtable-
15500.html
International Tourists International Tourists
With an additional 39 million
international tourists, up from 872
million in 2011, international tourist
arrivals surpassed 930 million for the
first time in history in 2012. Demand
held well throughout the year, with a
stronger than expected fourth
quarter.By region, Asia and the Pacific
(+7%) was the best performer, while
by sub-region South-East Asia, North
Effect given by International Tourists
Themajority of international tourism still takes place
withinthe developed world,in recent years tourism
todeveloping countries is becoming a
significantphenomenon.New destinations are
increasing their market share, even in America,
more states and cities are becoming popular to
International tourists who pull up the demand and
supply.
http://media.
unwto.org/en
/press-
release/2013-
01-
28/internatio
nal-tourism-
continue-
robust-
growth-2013

74
Africa (both at +9%) and Central and
Eastern Europe (+8%) topped the
ranking.
The United States ranks first in receipts
and second in arrivals which means
that the market of United States will be
stable relatively.
Worldwide Events Worldwide Events
Worldwide Events like the Olympic
Games and the world exhibition
will provide a boost to retailing and
tourism. Big events are super
advertisements for countries and
regions. The effect given by them
will continue for a long time to
attract tourists.
Worldwide events can attract more tourists and
investors. Those events will increase the demand of
labor and rooms. So hotels should put recruitment
and construction into consideration. Even though
those processes will take more costs, but they are
still profitable for the whole industry.
http://www2.
unwto.org/en
/event

75
3. Relationship Worksheet: General/Remote and Task/Industry/Competitive Environment
Relationships among forces driving change and external and internal value drivers. Each cell should reflect your analysis of the key trends occurring for each
value driver and its relationship to each force.
Force driving change as
identified in the remote
analysis
External value drivers in remote
environment
External value drivers in task/industry
environment
Internal value drivers
Government’s Fiscal Policy
One of the key drivers in
external environment that
would impact the
hospitality industry is
government’s fiscal
policy. Especially during
the recent period that the
economy is in the process
of recovering from the
recession, all policies in
the stimulus package
should have some impact
to the overall
environment. Cutting tax
and give tax return is one
of the ways to increase
money supply that allow
company and the public
own more disposable
income.Based on the
multiplying effect,
increased cash flowing
can effectively motivate
the economy, because an
initial dollar in the market
would create much higher
value.
Tax Rate
Over the past 40 years, federal
revenues have ranged from nearly
21 percent of gross domestic
product (GDP) in fiscal year 2000
to less than 15 percent in fiscal
years 2009 and 2010, averaging 18
percent of GDP over that span.
Most of the revenuesabout 82
percent in 2010come from the
individual income tax and the
payroll taxes used to finance Social
Security, Medicare, and the federal
unemployment insurance program.
Other sources of revenues include
corporate income taxes, excise
taxes, estate and gift taxes, all
together about 13 percent of
revenues in 2010.
Exchange Rate/ Currency
Position
US dollar position is relatively
weak over the past four years to
other major currencies, such as
Japanese Yen, Chinese Yuan, and
the EURO. Only the EURO stays
relative volatile, US dollar
continuously depreciate to Chinese
Industry Value Drivers about Tax
Rate
1. Corporate Tax Rate
U.S. corporate taxes that were actually
paid (the effective rate) fell to a 40
year low of 12.1 percent in fiscal year
2011. The U.S. both taxes its
corporations less and raises less in
revenue from corporate taxes than its
foreign competitors. Such falling
trend is still happening right now and
it did affect many industries include
hospitality.
2. Travel Expenditure
Higher consumption tax rate may lead
customers to deduct travel expenses,
including meals and lodging. Lower
tax rate may have the opposite effect.
Industry Value Drivers about
Exchange Rate/ Currency Position
International Tourists
Over the last 4 years, as the
consequence of financial crisis, one of
the U.S. stimulus policies was to
depreciate the US dollar relative to
Corporate Tax Rate affects
Tax Expense
Overall tax expense is mostly
related to the Federal
Corporate Tax Rate. If there is
a lower tax rate, tax expense
will be lower and hotels can
higher operating expense to
make the management more
effective and service more
satisfied.
Occupancy Rate and Sales go
with travel expenditure and
number of International
Tourists
If the taxes rate is increased by
government’s policies,
customers will think about the
expenditure of traveling,
especially in the period of
economic recession. They may
cut the cost of traveling or
cancel travel plans. Such effect
given by taxes will affect
hotel’s sale and occupancy
rate.
When U.S. dollar is weaker
than other main countries’

76
Yuan and Japanese Yen. other currency. When U.S. dollar is
weak, other currency are relatively
strong, cost of goods and services are
relatively cheaper in the U.S. and
especially tourists from other
countries would be able to travel
relatively cheaply, and it should help
the overall U.S. economy. For
instance, the salary level of China is
increasing every year which means
that purchasing power of Chinese
people is very strong. There is a large
number of Chinese people have the
will to travel abroad, especially travel
in the U.S. because of the lower
exchange rate of U.S. dollar.
currency. People in those
countries will have the
incentive and ability to buy
American goods and services.
The travel market will be
expanded in that situation and
the sales and occupancy of
hotels will increase due to the
U.S. dollar’s weakness.
Aging and Diversity of U.S.
Population
Increase in the number of
immigrants, extending life
expectancy rate, better
health care facilities and
rise in health
consciousness are some of
the factors adding to the
rise in the U.S. population
growth rate. Population
increment can impact
almost every aspect of the
nation including economy,
ecology and socio-
cultural. As population
rise, environment is first
aspect to be affected. The
overall impact of
population increment is
huge and upon the lack of
U.S. Population growth rate and
Age Distribution
There has been an increase of 9.7%
in U.S. population last decade.
After considering the migrants, in
2011, the total growth rate was
0.96% and in 2012, the total
growth rate was 0.9. As of
February 07, 2013, the total U.S.
population is 315,290,147.
The U.S. population has continued
to grow older with average of
median age over 40 years.
Compared to 2000 census data,
2010 saw the highest increase in
the 45-64 age group i.e. 31.5%.
The second highest increase
percentage is of 65 years and over
with 15.1% whereas 18 to 44 age
group has 0.6% of increment
followed by 2.6% of increment in
Labor Demand
As the domestic population and
migrant population are growing, the
market of every business needs to be
expanded, also the hotel industry. Big
market does need large number of
domestic and minority employees.
Labor Supply
The US hospitality and leisure industry
has grown by 2.1 million jobs between
2002 and 2012 (17.8 percent) which
represents a faster increase than the 14.8
percent job growth for all industries. On
the other hand, to the extent that the
migrants tend to be of working age,
population growth in the urban areas will
have an immediate -- as opposed to a
lagged --effect on labor supply growth.
Different Preference for age groups
Labor Cost
Based on the increasing of
labor demand and market
expansion, labor cost such as
wage and salary and
compensation will be
increased. The competition of
retaining skilled employees is
a new trend of our industry.
Room Demand
When the market is being
expanded due to the growth of
population, more rooms and
branch hotels must be
constructed in different regions
in the U.S.
Steps for age groups
Many hotels and catering
establishments are adapting

77
supply of their demands,
there can be some serious
consequences affecting
the entire nation.
under 18 age group.
Minority Population Growth rate
The minority population in U.S
covered 37% of total population in
2012. Hispanic and Asian
populations are the fastest growing
minority groups in U.S. The Asian
population increased by 3% from
2011 to 2012 while Hispanic
increased by 3.1%.
Age (demographic) can have a huge
influence on the type of destination
travelled to and the type of
accommodation required. Younger
adults may be attracted to more 'active
holidays', orentertainment, therefore
they would be attracted to
accommodation that offers bars,
restaurants, nightclubs, watersports
and excursions, or is conveniently
located to nightlife and activities.
Older tourists, on the other hand, may
want holidays that involve more
'passive' pursuits or more safe and
secure activities.
tothe needs of this growing
population, including having
facilities for elderly guests,
such asramps for wheelchairs,
and separate dining times and
activities.
Minority Population Problems
As more and more minority
groups enter the hospitality
industry of the United States,
managing cultural diversity is
becoming a challenging issue.
Many employers in this
industry continue thinking that
the minority workers were low
skilled. But a cultural
diversified environment with
reasonable portion of minority
employees can attract more
minority customers.Language
training and cross-culture-gap
training are necessary and
helpful to minority employees,
especially to immigrant
employees and expatriate
managers.
National Travel and
Tourism Strategy
In 2011, 62 million
international tourists
visited the United States
and pumped a record $153
billion into local
economies, helping to
support the 7.6 million
jobs in our travel and
National Travel and Tourism
Strategy
This is a national policy proposed
by President Obama in 2011. The
goal of this policy is to make the
U.S. as the number one nation in
tourism industry and achieve 100
million international visitors by
2021. After the start of this policy
in May, 2012, several strategies are
Industry expansion
The Strategy sets a goal of drawing
100 million international visitors by
2021, which is expected to generate
$250 billion annually in visitor
spending by 2012. The strategy also
encourages more Americans to travel
within the United States. So the
market of hotel and tourism will be
expanded more.
Occupancy Rate
The occupancy rate will
increase after the NTTS
happening.
Training
Hotel needs enough talents to
serve the increasing
international visitors. Training
systems should be set up based

78
tourism industry. These
numbers make tourism
America’s number one
service export. That’s why
the White House released
a new National Travel and
Tourism Strategy today,
charting a new course
toward making America a
more attractive and
accessible destination than
ever before.
under plan with an independent
organization:Brand USA.
Several policies like VISA
application, business training, and
industrial counseling are also
generated to support National
Travel and Tourism Strategy.
Taken together, National Travel
and Tourism Strategy is a key
driver that combines several
departments and stakeholders
together to prosper tourism and
hospitality industry in the
following 10 years.
Job creation
Based on the NTTS, more employees are
demanded and more job position will be
created for the whole hospitality industry.
Co-Branding
Consumers in the 21st Century have
become increasingly aware of the
quality of the products and services
they seek, especially after the NTTS
was on the way, and now search for
added value in these items. The
philosophy behind co-branding is to
generate additional market through
customer awareness by forming
alliances with one or more brands.
on the need providing high
service quality and memorable
experiences.
Challenges of Co-Branding
Co-branding in the hospitality
industry can also be difficult
and complicated. Hotel
management teams have to be
sure that partnering with a
branded food and beverage
outlet, for example, will not
result in direct competition
with the hotel’s existing in-
house food and beverage
services; rather, the alliance
should complement the hotel’s
established amenities.
Labor Supply
As the market is being
expanded by NTTS, more
labor will be needed for the
whole industry. Hotels have to
prepare for new plans and
standards for recruitment and
training.

79
4. Overall supply and demand analysis
What is the overall demandand supply of the industry/segment where your firm is?
a. Demand (This means number of customers or the number of rooms sold)
 Describe the actual demand in the market place over the past five years and the key value drivers that affected the past demand.
Spending on tourism and hotels is closely related to the economic cycle. Certainly, spending on leisure activities such as holidays tends to be one
of the first things that consumers cut back in times of recession. The travel and hotel industry is further affected by reduced demand from the
business sector since travel is one of the first areas that the corporate sector axes when the economy slows. Not surprisingly, the downturn of
2008–09 had a pronounced impact on the sector.Tourist arrivals for business, leisure, and other purposes declined in America by 4% in 2009 to
583million. The global economic crisis, also aggravated by the uncertainty around the A(H1N1) pandemic, turned 2009 into one of the toughest
years for the tourism sector.However, there were signs of improvement in 2010, when arrivals grew by 2%. By contrast, The United States
welcomed 620 million visitors in 2011, 25 million more than the year before.Fortunately, after the start of National Travel and Tourism Strategy,
International tourists arrivals in the U.S. grew in 2012 and helped the total tourist number reach700 million (according to the latest UNWTO
World Tourism Barometer).
 Describe the customer of tomorrow and the demand in the future. This must be based upon the forces identified in the general analysis, the
domain definition, value drivers and all other dimensions of the task/industry/competitive environment.
1. Under the background of population growing situation, the hospitality market will expand in the future which is a big trend for the
industry. Tourist arrivals for business and leisure activities will increase in the future.
2. There were no major changes in the rankings of the first 10 destinations by international tourist arrivals and receipts in 2012. France,
the United States, and Spain continue to be leaders in both arrivals and receipts. The United States ranks first in receipts and second in
arrivals which means that the market of United States will be stable relatively.
3. The National Travel and Tourism Strategy sets a goal of drawing 100 million international visitors by 2021, which is expected
to generate $250 billion annually in visitor spending. The policies given by the strategy will attract more visitors and the
market will be expanded more.
4. When U.S. dollar is weak, other currencies are relatively strong, cost of goods and services are relatively cheaper in the
U.S. and especially tourists from other countries would be able to travel relatively cheaply. The level of income in those
developing counties like China is improving every year and the consumption level will be higher.Chinese expenditure on
international tourism has been the fastest to grow in the last decade, up from seventh position as recently as 2008. Even
during the 2009 economic downturn, tourism expenditure by China increased by 21%andChinese tourists splurged
US$43.7 billion on their travels only in the United States.
5. Big events like both the 2014 Soccer World Cup and the 2016 Olympic Games will be held in Brazil, South America.
Sports fans go to those events may have the possibility to be attracted by the biggest sports country in the world, America.
The influences and the ‘tourism climate’ given by the Olympic Games will continue many years like the case of Beijing
which affected the region of East Asia for a long time. That’s a big reason that the demand will increase in the future five
years.

80
6. Social media played a very important role in the last five years and it will continue to be the link between hotel industry
and customers. Based on the high technical Internet development, the speed of information such as advertisement of hotels
and comments given by consumers will be much higher than before. More people will get familiar with this industry and
will have the will to travel in different cities or countries.
 Complete the following tables based on the past demand trends and your estimation of future industry demand.
After the analyzing of the increasing trend of demand and based on the tourist arrivals number between 2004 and 2013, a regression is done for
the prediction. During the process of regression, the number of 2013 is deleted because it might be an outlier and the reason of being lower than
2012 can’t be found. (y = 24.433x + 449.83 R² = 0.9028)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
(est.)
2014
(est.)
2015
(est.)
2016
(est.)
2017
(est.)
Number of customers
(million) 475 490 519 559 607 583 595 620 700 694 718 743 767 791
(http://www.nationmaster.com/graph/eco_tou_arr-economy-tourist-arrivals&date=2007)
 Graph the industry demand
0
100
200
300
400
500
600
700
800
900
2008200920102011201220132014201520162017
Number of
customers

81
b. Supply (This means number of restaurants, number of seats, number of hotels, number of rooms available)
 Describe thekey value drivers that affected the past supply.
 Awareness of sustainability and green practices
 Energy saving and waste management
 Social media in brand communication and customer services
 Lifestyle brand becomes popular
 Recovery from financial crisis
 Application of technology in services and products
 Estimate the supply of the industry/segment in the future. This must be based upon the forces identified in the general analysis, the
domain definition, value drivers and all other dimensions of the task/industry/competitive environment.
1. Steady Growth of Overall Population inthe U.S.
 Domestic tourism market will be bigger than before
 Consist of the society will be more diverse
 More labor supply in hospitality industry
 Diverse value system and lifestyle based on diverse society
2. National Travel and Tourism Strategy
 More hotels will be established
 More hotel brands will be created to fit the need of international visitors
 Rebranding will still be a trend in hospitality industry
 Inbound market will increase in the following 10 years
 More labor forces will be needed
 Employee training and session plan will be a key concern of executives
Supply in hospitality industry is shown in the following table. The growth rate used to predict the number from 2013 to 2017 is
the average growth rate from 2008 to 2012 (2.4%).
Hospitality Industry 2008 2009 2010 2011 2012 2013
(est.)
2014
(est.)
2015
(est.)
2016
(est.)
2017
(est.)
Number of rooms 257012 263952 272398 277846 294517 301585 308823 316235 323825 331597

82
Number of hotel rooms in hospitality in the U.S.
0
50000
100000
150000
200000
250000
300000
350000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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