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Strategy analysis hotel industry


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A strategic analysis of the Milan hotel industry, trends and perspectives.

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Strategy analysis hotel industry

  1. 1. BUSINESS STRATEGY Federica Elena Ratti di Desio Levi Natalia Sergeevna Popova Vanessa Bocchi Matteo Maione
  2. 2. 1) The client market the firms in the industry intend to serve • Milan had 10 milions tourists in 2013 with an increase of international arrivals of the 15% from 2009 to 2013 Russia 114.188 19,8% France 87.314 U.S.A 86.399 0,38% 0,45%
  3. 3. Commercial Mix The commercial mix of Milan is composed: • Primarily of Business (41%) and Fair (31%), for a total of 72%. • Leisure customers individual is equal to 15% • Groups represents a more modest 5%. • The segment is represented by the less developed Congress, which originates only 4% •Leisure is increasing specially during weekends (+7,2% more than 2012) Camera di Commercio Milano
  4. 4. Rate variation 2012-2013 Camera di Commercio Milano
  5. 5. 2) The characteristics and long-term profitability of the industry • Milan hotel industry has 975 hotels • 16068 workers -43% from 2012 Occupancy 61,4% ADR 130,99 RevPar 80,45
  6. 6. 7% 4,3% -7% 3,6% -4,9% 5,4% -8% -6% -4% -2% 0% 2% 4% 6% 8% Center Central Station Rho Fiera Fiera City Linate North Milan RevPar var. 2012-2013
  7. 7. RevPar Milan Camera di Commercio Milano
  8. 8. What about the Future? • 20 mln tourists 6 mln international • +10% revenues • Increasing of cultural tourim • Reduction of seasonability
  9. 9. 3)The strategic groups which can be identified in the industry
  10. 10. Business Model 1 – Local Independent Hotel Milan remains the stalwart of independent small hotels (usually 3*) Locals Hotels are distinguished by a management and operating philosophy focused on maximum efficiency and flexibility and they will have a strong competitive advantage over its national competitors (with the types of market segments solicited) These efforts have made it possible to reduce decision-making times, take prompt advantage of new business opportunities, optimize operating processes and achieve a highly flexible cost structure, which can minimizes the business risks.
  11. 11. Every hotel is unique and appears as a “pearl” in collection. Every hotel has got same features such as quality standards, service level and comfort. Mostly luxury hotels are using this business model. As a rule these hotels will be owned by Hotel Company. Such a hotel chain assumes a high level in management decentralization. This practice helps to create uniqueness, individuality of the hotel and close connections with strategic partners and repeat guests. The main advantage of «hotel collection» is that this business model allows hotel to target different target markets with different preferences. Business Model 2 – Hotel Collection
  12. 12. Business Model 3 – Hotel Chain Is the chain created from the similar units which producing and selling standard design hotel product and managed by franchising or management contract. With requirement of identical properties, traditional hotel chains will try to build their own hotel with developer companies. For example, we can find in Milan Hilton, Marriott, Four Seasons, Sheraton. This Model Conception is the tendency to maximize unification and standardization of hotel chain.
  13. 13. 3) Strategy adopted by Armani Hotel Armani Hotel Competitors number of segments two geographic scope vertical integration medium global local one number of segments
  14. 14. High competitiveness Buyers Substitutes Suppliers Potential Entrants Michael Porter 5 forces analysis
  15. 15. • Luxury • Individual • Focus on small segment of buyers Strategy: focus differentiation leadership The company’s vision is to become the ultimate hotel management company, with a passion for excellence and innovation, honouring the individuality and heritage of its hotel.