Porters Five Force Analysis on Whitbreads competitiveness in Hotel Essay

Porters Five Force Analysis on Whitbreads competitiveness in Hotel Industry - Essay Example The researcher states that until the last years of 20th century, Whitbread has long been concentrating on brewing, but it has started its own restaurants, pub partnerships, inns, health and fitness service, drinks etc and has recognized that this will eventually give greater benefits to the business than the marketing potential of brewing. When it comes to hotel industry, the threat of new entrants is a big issue since it requires relatively less initial investment. The threat of new entrants in the case of brewing is also same, but hotel industry is more likely to attract customers if the hotel or restaurant can provide unique quality of goods and services. Differentiation matters a lot to hotel industry. A restaurant that is able to differentiate its products through innovation can substantially achieve significant competitive advantage. Whitbread’s Annual report reported that innovation has been critically significant strategy to its business as it listened to its customers for valuable research and thus its products and services were constantly adapted to changes. As shown in the figure above, Whitbread has identified that the contribution from restaurants, hotels and health and fitness were much better than that of other sectors and this showed how competitive the company can be in hotel industry. As far as hotel industry is concerned, threat of substitutes is greater since there are close substitutes available in the market. Confectionaries such as small treats, chocolates, soft drinks, packaged food or drinks are close substitutes.... Whitbread’s Annual report (1999, p. 15) reported that innovation has been critically significant strategy to its business as it listened to its customers for valuable research and thus its products and services were constantly adapted to changes. As shown in the figure above, Whitbread has identified that the contribution from restaurants, hotels and health and fitness were much better than that of other sectors and this showed how competitive the company can be in hotel industry. Threats of Substitutes As far as hotel industry is concerned, threat of substitutes is greater since there are close substitutes available in the market. Confectionaries such as small treats, chocolates, soft drinks, packaged food or drinks are close substitutes. Apart from this, the switching costs will be less for customers as they can easily obtain substitutes. But, threat of the substitutes to the services provided by hotel industry seems less significant as hotel industry can attract and retain its customers by facilitating supreme quality services. Restaurants, resorts and hotels have greater opportunities to convert the existing customers to loyal customers if they provide highly valuable services (Hayes and Miller, 2010, p. 365). Bargaining power of Suppliers Suppliers in the hotel industry are farmers, companies, retailers or wholesaler. As far as hotel industry is concerned, the demand for fresh and quality materials will be higher and suppliers of quality fruits or food items have relatively medium bargaining power. Since there are large numbers of suppliers available in the market, bargaining power is relatively less. Bargaining power of buyers For customers of hotel industry, there