Last Updated 18 Jan 2021

Bargaining Power of Customers

Category Customer, Internet, Tax
Words 469 (1 page)
Views 251

The capital outlay needed for starting up the operation in this industry is huge ($60 – $70 million), since the leasing expenses and the taxes are high. The capital includes land and building, infrastructure etc. Labor: In this industry the retention rate is high when compared to the others because of the demand for the experienced chefs in the industry. Finding and Retaining skilled labor is a major issue for a new entrant. Tax Structure: Hoteliers have to bear huge taxes levied on them by the government for property, water, electricity etc.

Beside the high entry barriers, new entrants in this industry are high in recent days.

Threat of substitutes:

Order custom essay Bargaining Power of Customers with free plagiarism report

GET ORIGINAL PAPER

• The growth of Home business restricts travel to a certain extent. So people consider their homes as substitutes for hotels.

Rivalry:

• There is a fierce price war going between existing players.

• The growing popularity of resorts can be a huge challenge to Hoteliers and other players in the hospitality industry. Bargaining Power of Suppliers The bargaining power of suppliers can be crucial. The suppliers are whole sale dealers of grocery and the like.

The suppliers have undergone a drastic change over the years and with it their bargaining power also has increased. The following diagram shows the transition in the grocery market from 2000 to present. In 2000, there were a number of players in the field, subsequently, it got narrowed down and a consolidation is seen in this market. This increases the bargaining power of the suppliers. Here the customer is the hospitality enterprises. The bargaining power of customers has grown drastically in this internet era. The customer is well informed in all aspects including price, service etc.

and their decision making is very rational. A lot of online services provide a comparison of hotels and customers can bargain more considering these aspects. The customers include Corporate, Individual households etc. As suggested by Michael Porter, stronger the forces, difficult it is to enter and survive in the industry. For Hospitality industry, all forces are very strong indicating the level of competition and fierceness of the industry. To combat these challenges, the following strategies are adopted by the hospitality enterprise. Read also introduction for online reservation system

Technology Focus Strategy: Hospitality Sector Internet Strategies

In 2008 approximately 40% of all hotel bookings will be generated from the Internet (one-third in 2007, 29% in 2006). At least another third of all hotel bookings will be influenced by the Internet, but done offline (call center, walk-ins, group bookings, etc). By the end of 2010, over 45% of all hotel bookings will be completed online (Merrill Lynch). Now, more than 13 years after the first online hotel booking, hoteliers taking full advantage of this dramatic channel shift from offline to online. Thus technology acts as a key success factor for attaining competitive advantage. This has increased customer loyalty in this environment .

Bargaining Power of Customers essay

This essay was written by a fellow student. You can use it as an example when writing your own essay or use it as a source, but you need cite it.

Get professional help and free up your time for more important courses

Starting from 3 hours delivery 450+ experts on 30 subjects
get essay help 124  experts online

Did you know that we have over 70,000 essays on 3,000 topics in our database?

Cite this page

Explore how the human body functions as one unit in harmony in order to life

Bargaining Power of Customers. (2018, Jun 25). Retrieved from https://phdessay.com/bargaining-power-of-customers/

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Save time and let our verified experts help you.

Hire writer