SWOT Analysis

1. Customer base of over 143000 members

2. 40+ resorts in various locations
3. Brand presence is quite high due to excellent
advertiing
4. New under explored and lesser known locations (eg.
Ashtamudi in Kerala)

5. High Brand Recall

6. Homely ambience and arrangements adds to its

Strength warmth as a hospitality company
1. Quality of services and infrastructure is not constant
throughout the brand.
2. Company policies regarding booking of rooms does
not always go well with customers (need to book 6
months prior)
Weakness 3. Constant political disturbances within the country
1. Incredible India campaign has had a positive
influence on influx of foreigners traveling to India. Club
Mahindra should have programs for foreigners.
2. With reducing spending capacities, domestic travel is
Opportunity increasing India
1. International hospitality giants are entering all
markets and catering to all segments in this sector
2. Economic downturn might have an effect on equity
Threats capital of the company
PORTER’S FIVE FORCES MODEL

Porter‘s model is based on the insight that a corporate strategy should meet the
opportunities and threats in the organizations external environment.
Especially,competitive strategy should base on and understanding of industry
structures andthe way they change. Porter has identified five competitive forces
that shape everyindustry and every market. These forces determine the intensity of
competitionand hence the profitability and attractiveness of an industry. The
objective of corporate strategy should be to modify these competitive forces in a
way that
improves the position of the organization. Porter‘s model supports analysis of the
driving forces in an industry. Based on the information derived from the
FiveForces Analysis, management can decide how to influence or to exploit
particularcharacteristics of their industry.
1.

BARGAINING POWER OF SUPPLIERS

The term 'suppliers' comprises all sources for inputs that are needed inorder to
provide goods or services.

The high class hotels are operating by few hotel chains like-TAJ,EIH, ITC&THE
LEELA PALACE so they have a control over theindustry.

There are no substitutes for spas and five star hotels.

The hotels customers are fragmented, so they have to reduce theirbargaining power
to attract the customers.
54

The Taj, ITC& Oberoi are having various rates and tariffs becausethey are having
their own brand image.

The hotel chains are operating different services like Spas, Boatels,Resorts, City
Centers, Heritage HOTELS, etc.'
2.

BARGAINING POWER OF CUSTOMERS

Similarly, the bargaining power of customers determines how muchcustomers can
impose pressure on margins and volumes.

The hotel industry is one of the most invested in its fixed assets. So theyare trying
to recover their amount quickly.

The suppliers are providing better information about them to attract thecustomers.
Here the buyers are highly informed.

If the hotel price changes are moderate, the Customers have low marginsand are
price sensitive.

Some unseasoned timings the hotels are offering discounts and incentivesto reduce
the bargaining power of buyers.
3.

THREAT OF NEW ENTRANTS

The competition in an industry will be the higher; the easier it is for
othercompanies to enter this industry. In such a situation, new entrants
couldchange major determinants of the market environment (e.g. market
shares,prices, customer loyalty) at any time. There is always a latent pressure
forreaction and adjustment for existing players in this industry.
55

The foreign hotel chains are tied up with Indian hotels to reduce the initial
cost and using the latter‘s brand name.

Brand loyalty of customers like TAJ, ITC, and LEELA PALACE affectsthe new
entrants.

Access to raw materials and Distribution channels are controlled byExisting

players like TAJ, ITC, and LEELA PALACE.

The cost of land in India is high at 50% of total project cost as against 15%abroad.
This acts as a major deterrent to the Indian hotel industry.

In India the expenditure tax, luxury tax and sales tax inflate the hotel bill byover
30%. Effective tax in the South East Asian countries works out to only4-5%.
4.

THREAT OF SUBSTITUTES
A threat from substitutes exists if there are alternative products with lowerprices of
better performance parameters for the same purpose. They couldpotentially attract
a significant proportion of market volume and hencereduce the potential sales
volume for existing players. This category alsorelates to complementary products.

Brand loyalty of customers (TAJ, ITC, LEELA PALACE, etc,) isdominating the
substitutes.

The hotel relationship with customer and costs also the reasons toswitching to
substitutes.
The price variation of same class hotel services from various brands is oneof the
reasons to choose a substitute.

The present demand and supply of hotel rooms is one of the reasons tochoose a
substitute.

More fixed cost and switching costs affects the business.

5.

COMPETITIVE RIVALRY BETWEEN EXISTING PLAYERS

This force describes the intensity of competition between existing
players(companies) in an industry. High competitive pressure results in pressureon
prices, margins, and hence, on profitability for every single company inthe industry.

The top competitors in hotel industry are having the same services like fivestar,
spas, boatels and motels, heritage hotels and palaces.

The healthy competition among the all players is helping to increase theindustry
growth.

Intense in metro cities, slowly picking up in secondary cities.