Case Study – 1
Booming Business Indian Hotel Industry
Summary
Govt of India classifies Hotels into seven categories- Five star Deluxe, five
Star, Four Star ,Three Star, Two Star, One Star,& Heritage hotels
Five Star Deluxe & Five Star : High quality services & facilities, target
mainly businessman & foreign Travelers , 30% hospitality industry Created
Three star & Four Star: Provide most of the services at lower cost due to
low tax rate, wide range travelers are coming
One Star & Two Star : Inexpensive accommodations for price conscious
travelers
Heritage Hotel : Palaces & fort before 1950 , converted into hotel
Some hotel in Unorganized sector serve Economy Tourists
a)Do you think the hotel industry is monopolistically
competitive? What all features of the industry are
suggestive the same?
Answer: i) Yes , I think the hotel industry is monopolistically
competitive.
( Monopolistic Competition : When many companies offer competing
products or services that are similar , but not perfect ,substitutes. There
is no barriers to entry this market.)
ii) There are different kind of features of the industry that are suggestive
of the same.
Many Competitors:
There are significant number of competitors across various
categories, ranging from 5- Star to Budget hotels . Wide range of
options for customers from domestic to international hotels
Ease to Entry & Exist :
For new Hotels , it is relatively easy to entry in budget segment.
For new commers , need investment , infrastructure & license. No
one can prevent their entry.
Non Price competition :
Hotels differentiate themselves not only by pricing but also
services, amenities, luxury offerings etc. These experiences can
retain customers. This indicates monopolistic in nature.
Product Differentiation:
All these hotels differentiate themselves based on various
factor such as Star ratings, amenities ,locations, various
facilities to attract customer. They can create their own
identity.
Independent Decision Making:
They have flexibility in catering to specific demands of
their specific target market & adjusting their strategies.
Consumer Preferences :
Consumers have diverse preferences when it comes to
choosing hotels. Some may prioritize luxury hotels or may
choose budget segment.
Monopolistic Competition in Short Run
Monopolistic Competition on Long Run
Comment on the differentiation offered
by hotels in India.
Service Quality & Amenities:
From 5 star to Budget friendly hotels attract the customers by their
services. This includes personalized attention, prompt response to
inquiries, well trained staff members are essential to delivering high
quality services. Hotels can differentiate themselves by providing
amenities like luxurious bedding , high quality bathroom ,
swimming pools, fitness centre etc.
Different Taste of Food:
Many hotels in India offer diverse type of food to cater different
tastes and preferences. These include various options like
traditional Indian Food, International dishes, etc.
Unique Experiences:
Heritage hotels provides their guests to experiencing rich history &
architecture of India. Some of hotels offers cultural programme,
cooking class, showcase local culture.
Environmental Friendly :
Hotels may have eco friendly initiatives such as water conservation ,
energy efficient system, waste management system etc can include.
Location:
Hotels can differentiate themselves by location to attract the tourists.
Business centre, , beachfront locations, transportation & connectivity
matters.
Brand Reputation:
Globally renowned hotel groups that have established a
reputation for luxury & high quality service often attract
their customers by brand name & reputation.
Ex : Taj , Leela palace etc.
In competitive market , hotels in India continuously
innovative and adapt to meet the evolving needs and
preferences the travelers.
Conclusion:
Overall , hotel industry in India demonstrates monopolistic
competition, with different kind of product offering & engaging
in non price competition.
With many new entrants in the market ,the hotel Industry is
likely become more susceptible to technology and
innovative disruptions to maintain the differentiation across
segments.
Thank You
