ECONOMICS AND POLICY

Economics And Policy



Economics and Policy

Introduction

The paper enlighten the main microeconomic environmental factors for the hotel sector of UK, and further analyze the market structure of the same sector which discusses the product differentiation, barriers to entry, profit margin, and concentration ratios.

Industry Analysis

Going through the marketing insight, UK comprises about 13.6% of Europe's hotel industries. In the UK hotels and motels industry, the presence of strong international players boosts the rivalry level; however, unlike its counterparts globally, the UK industry was not affected by a decline recently and so may emerge from the recession period stronger. However the degree of rivalry remains high as players attempt to adapt to new, volatile market conditions.

The hospitality industry has been facing a lot of performance issues, which is being counting in negative because of the global economic downturn. Thus more hoteliers are searching for demand creators and are relying on the direct sales, as to cut out the intermediaries to boost the sales revenue, and tear off the competitors from the list (Brotherton, 2008, pp. 142). In the hospitality industry the consumer switching cost is negligible, and thus hotel competing on price alone will not be eligible for success, they need extra ingredient to have an edge and stand out of the competition, however brand recall, innovation and product differentiation is very essential elements which helps in attracting the customer, and retain them. Suppliers are also very essential to choose, they are the providers of various goods and services, and serves as a well qualified workforce (Brotherton, 2008, pp. 142). With respect to high reliance, on the advanced technologies, mobile communication channel has given a tremendous importance thus suppliers also got influence from these technologies and could exert strong power.

Globalization also serves as a key driver and could influence the industry; it helps in creating a space which could lead to significant opportunities in the industry. Some of these emerging industries, such as Tunisia and Egypt, which had previously provided strong areas for growth, have been hit by political disturbances (Brotherton, 2008, pp. 142). These events may have upset consumer confidence. How quickly these industries recover remains to be seen, but the currently volatile nature of the tourism industry as a whole, will directly affect the hotel and motels industry until confidence in the global economy is restored.

Current Performance

In the current scenario, the demand for hotels and motels are sloping in a negative direction. The major reason behind this negative slope is inflation, and the income in per capita. The global recession has impacted a lot, which in return impacted unemployment, and rate of domestic traveling which has declined the revenue of the overall all hospitality industry. Since, the hospitality industry highly relies on the foreign and domestic tourists, thus the decline in the domestic and international travel are the main factors which hinders the overall growth of the industry. In the year 2010, and 2011, the international travelling increased to 8.7% and ...