Part 2

Read the documents provided in Part 2 of the 'Materials'.

Analyse one of the industries where the company operates, considering the structure of competition and the competitive forces within the industry. Based on that analysis, discuss the attractiveness of the industry. Refer to the theories and frameworks presented in Week 7 and 8 and apply them to the specific case.

Guidance:

In this part you should conduct an industry analysis of the UK Hotel industry. Doing so is likely to include consideration of the topics you studied inWeeks 7and8. You should present your analysis as an assessment of the industry: a good answer will propose a detailed picture of the industry supported by data and reflections detailing the main outcomes of the analysis in a final paragraph and coming to a clear conclusion. You should include in your answer the following points:

The analysis of industry competition: you need to identify the type of industry and its features. You can use the Excel template in Week 7,Activity 7.5and the data provided on the market shares in TMA 02 Materials to calculate the concentration indexes, discuss their values (seeSection 4) and the lifecycle phase of the industry (seeSection 6).

The six forces analysis: a fundamental part of the answer is the analysis of the six forces which is the focus of Week 8. The guidance inSection 8helps you structure your answer and the PowerPoint file provided inActivity 8.3can be used to made a diagram of the six forces as a demonstration. You should discuss the contents of the diagram in the text, presenting the outcomes of the analysis.

You should enrich your answer by applying one of the following topics: hypercompetition (Week 7Section 6.2), analysis of the exit barriers (Week 8Section 2.3), the identification of the type of industry according to the entry barriers (Week 8Section 5.1),or the presence of strategic groups (Week 8Section 10).

Materials

Part 2

1 A Definition of the Hospitality Industry

The industry includes hotels that provide accommodation to UK residents and international guests. These establishments often also have other facilities, including restaurants, recreational areas, conference rooms and convention centres, and some offer laundry services and parking.

2. Hotel Industry Products and Services [in order of service provision and quality]

• Luxury hotels
• Upscale hotels
• Midscale hotels
• Economy hotels

3 Hotel Industry Activities

• Providing accommodation
• Hosting meetings, conferences and events

4 Key Upstream - Supplying Industries

• Fruit & Vegetable Wholesaling in the UK
• Meat Wholesaling in the UK
• Dairy Product, Egg & Edible Oil Wholesaling in the UK
• Alcoholic Beverage Wholesaling in the UK
• Juice, Mineral Water & Soft Drink Wholesaling in the UK
• Household Appliance & Television Wholesaling in the UK
• Furniture, Carpet & Lighting Wholesaling in the UK

Source: IbisWorld (2021)

5 Overview of the UK Hotel Industry

The UK Hotels industry is estimated to be worth approximately 5.8bn in 2021. Industry revenue has shrank at a compound annual rate of (21.5%) over the five years through 2020-21. The Hotels industry performed well at the start of the past five-year period. The weak pound had made the United Kingdom an affordable destination for international tourists, while weak consumer confidence led to a rise in domestic tourism over the period. Families have increasingly forgone overseas holidays, instead favouring staycations, benefiting domestic hotel occupancy rates. However, the COVID-19 (coronavirus) pandemic is expected to significantly disrupt the industry.

Lockdown measures have resulted in hotels closing for a significant part of 2020-21, contributing to an estimated 72.1% plunge in revenue. These forced business closures, combined with travel restrictions are expected to significantly reduce industry demand in the current year.

During the five years through 2025-26, industry revenue is forecast to rise at a compound annual rate of 26.9% to reach 19 billion. The vaccine roll-out and anticipated easing of restrictions from the start of 2020-21 is expected to support demand from domestic consumers. Improving disposable incomes and rising consumer and business confidence are anticipated to support revenue recovery over the period, although this could also encourage more overseas travel.

The end of the transition period is unlikely to deter inbound EU tourism, although the new immigration system could reduce the industry's labour supply and weigh on margins. Websites such as Airbnb are anticipated to pose an increasing threat to industry operators over the next five years.

Market value of the UK Hotel Industry 2015-2026 (in billion GBP)

Market Value (Ebn) 25 21.4 21.5 19.3 19.4 20.5 20.6 20 17.2 15.3 15 IIIIII 12.0 10 8.4 5.8 5 ill 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Market value of the UK Hotel Industry 2015-2026 (in billion GBP)Premier Inn 66% Holday Inn 51% Hilton 50% Walt Disney Parks and Resorts 48% Travelodge 47% Marriott 43% Ritz 41% Savoy Hotel 41% Ibis 39%% Haven Holidays 36% 0% 10% 20% 30% 40% 50% 60% 70% 80% Share of respondentsPremier Inn 75,478 Travelodge 41,876 Holiday Inn 20,529 Holiday Inn Express 17,411 Hilton 14,215 Britannia hotels 10,221 Print the statistic including description 6 and metadata. DoubleTree 10,188 ibis 9,557 Best Western 8,890 Marriott 8,490 0 10,000 20,000 30.000 40,000 50,000 60,000 70.000 80,000 90.... Number of hotel roomsOccupancy London ADR - London RevPAR - London 2022 Average daily rate 56% 2022 E112.30 Revenue per available room E63.70 (+32.9% vs 2021) 2022 (+63.7% vs 2021) (+110.5% vs 2021) Regions Regions Regions 63% E67.00 E42.00 (+25.4% VS 2021) E (+8.9% vs 2021) (+32.5% vs 2021) Source: Econometric forecasts: PWC September 2021, Benchmarking data: STR Hotels Forecast in numbers 2022 - Moderate rebound scenario (Pw, 2021a)Airbnb revenue 2000 1500 Revenue ($mm) 1000 500 .lull Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Source: Company dataAirbnb VS competitors: revenue 15 Expedia.com Booking.com 12 4.8 Airbnb 1.5 Skyscanner TripAdvisor 0.4 2 A 6 8 10 12 14 16 Source: Company dataAirbnb rivals Rivals Subsidiaries and other websites Expedia Group Expedia.com, trivago, HomeAway, Vrbo, Hotels.com Tripadvisor Flipkey, Housetrip, Viator Booking Holdings Bookings.com, Priceline, Agoda, Kayak