MARKET: Competitors

·     Identify direct and indirect (and potential) competitors. DO NOT INDICATE THAT THERE IS NO COMPETITION.  Make a realistic assessment of their strengths and weaknesses. Discuss the 3 or 4 key competitors and why customers buy from them, and determine why customers might leave them.

Direct competitors for my proposed venture are hotels that compete in the luxury segment in the Atlanta lodging marketplace.  These include:  The Four Seasons Hotel; The Westin Buckhead; The Mandarin Oriental; The Ritz Carlton Atlanta.  Customers purchase from them due to the fact that they offer a high level of personal service. 

·         Assess the substitute and/or alternative products/ services and list the companies that supply them, both domestic and foreign, as appropriate. 

Substitute would include lodging concepts that compete in the mid-range service level category.  There are over 50 such hotels in the Atlanta marketplace and hundreds nationwide. 

·         Discuss the current advantages and disadvantages of competitor products and the extent to which they are not meeting customer needs.

Current advantages that competitors have include:  strong brand and market presence; excellent and convenient locations.  Disadvantages include; the inability to personalize experiences at the highest levels. 

·         Compare competing and substitute products or services on the basis of market share, sales, distribution methods, economies of scale, and production.  Review the financial position, resources, costs, and profitability of the competition and their profit trends. 

Typically, midrange hotels capture over 60% of lodging in all major markets, while the luxury segment captures approximately 5% of the market since this segment is smaller in terms of customers.  Lodging products are distributed through travel intermediaries which can be electronic (online travel agents-OTA) or directly via hotel’s website or via travel intermediaries such as travel agents or travel whole sellers.  Chain hotel companies typically have economies of scale given their size. Given the fragmented nature of the industry, it is often difficult to ascertain financial performance of individual competing hotel since such information is often reported as a composite, for those that are publicly traded entities.   

·         Compare also important attributes such as quality, price, performance, delivery, timing, service, warranties, and pertinent features of your product/service with those of competitors.

My proposed venture will compete in the luxury segment of the lodging industry and as such, will provide guests with typical industry warranties such as guarantee reservations.  As is the norm in the industry, there will be simultaneous production and consumption of services.   Below is a summary table of my venture r5elative to typical competitors. 

Product & Services	Typical Extended Stay	Typical Boutique Style	Proposed Venture
Business Center	No	Yes	Yes
Concierge Services	No	Yes	Yes
In-room Dining	No	Yes	Yes
On premise Laundry	Yes	No	Yes
Full Service Spa & Fitness facilities	No	Sometimes	Yes
Full Service restaurant	No	Sometimes	Yes
Meeting Space	No	Sometimes	Yes
Outdoor Pool	Sometimes	Sometimes	Yes

·         Compare the fundamental value that is added or created by your product or service, in terms of economic benefits to the customer and to your competitors.

For lodging facilities, value added activities are centered on the quality and condition of the physical resources such as the hotel, location of the physical facilities and servicescape.  Equally important are the ways hotels use the physical facility to generate value for customers, which is typically achieved through the various levels of support services offered.  Essentially, lodging facilities compete on these factors.  Where possible, lodging facilities attempt to use these factors to develop product-services that are unique, have some level of non-substitutability and cannot be easily imitated.  For hotels, value added activities are achieved through a combination of core activities and support activities, which are provided at the corporate (or ownership level for independent hotels) and property levels.   Core and support activities work synergistically to provide value.  Core activities are directly related to the lodging facility’s interface with guests.  These activities include reservation processing, check in and check out, in-room services, as well as advertising since lodging guests experience advertising directly.  Support activities allow lodging activities to function and provide core activities at a high level.  This includes management of the facility, maintenance and purchasing.   In general, the cumulative effect of value-chain activities and the way they are linked together by a lodging facility, and with the external environment will determine the lodging facility’s performance relative to its competitors. 

The proposed venture’s value added activities will be a combination of its core and support activities.   Will.  At its core, the venture will be a hybrid concept between a boutique style upper scale hotel and an extended stay hotel.  As such, it will offer guests the possibility of staying in the hotel for extended periods (periods of seven days or more), in an upscale, quaint environment or servicescape typical of a boutique type hotel.  This combination will add value to its targeted clientele as currently, this combination does not exist in the Atlanta marketplace. 

Indicate any knowledge of competitors’ actions, or lack of action, that could lead you to new or improved products and an advantageous position.  Why aren’t they doing what you will be doing?  Discuss whether competitors are simply sluggish or non-responsive or are asleep at the wheel.

The lodging industry is dynamic as it relates to developing products and services.  However, there is a tendency to focus on growth in terms of numbers of units as opposed to service innovation.  Furthermore, there is also a wait and see approach as firms in the segment wait to see what competitors are doing so that they can copy innovations.  Hence, this presents an opportunity for me to introduce a new product concept. 

Indicate who are the service, pricing, performance, cost, and quality leaders. Discuss why any companies have entered or dropped out of the market in recent years.

The service, price and quality leader in the industry is Four Seasons Hotels and Resorts. 

From what you know about competitors’ operations, explain why they are vulnerable and why you can capture a share of their business. What makes you think it will be possible to compete with them.

The lodging industry can be considered as a laggard industry as innovation is slow.  As such, the concept that I will introduce will be innovative and will capture a segment whose needs are currently unmet.