The combined forces of an economic recession and H1N1 epidemic are causing the hotel industry to suffer in a time

of great challenge. Business travel is down because of the recession and the pandemic has significantly reduced tourism. This paper considers three types of hoteliers in current market conditions in light of Porters theories. Now more than ever Porters well regarded thoughts on business strategy and the !nternet first published in "##1 are crucial to consider and they contribute to an analysis and criti$ue of the hotel industrys internet strategy. !n his Harvard Business %eview article of "##1 Porter said &To find the answer we need to look beyond the immediate market signals to the two fundamental factors that determine profitability' !ndustry structure which determines the profitability of the average competitor and sustainable competitive advantage which allows a company to outperform the average competitor( )Porter "##1*. This paper e+amines the five forces which impact competitiveness within and thus the profitability of a competitor in the hotel industry. ,rom the guidance provided in the ,ive ,actor -odel recommendations are made to enhance and refine internet strategy for the considered hotel chains.

Hotels The hotels chosen for this paper are' .intage !nns primarily located in Niagara/on/the/0ake 1anada 2heraton Hotel chain and Best 3estern Hotel 1hain. &4very business must design a strategy for achieving its goals consisting of marketing strategy and compatible technological strategy and sourcing strategy(. )5otler 6 5eller "##7* &To identify rivals in the international hotel industry current practice is to use price segment and pro+imity( )-atthew "###*. !n previous work -ichael Porter outlined three additional generic strategies that could be used. These are' overall cost leadership differentiation and focus. &The point to be understood here is that any company can have a core competence but it is competitive competence which gives them a chance to win. ,or e+ample %it8/1arlton ,airmont 0oews ,our 2easons !ntern/1ontinental 3 Hotel Hotel 2ofitel 0e -eridien are ruling the hospitality industry. This is because of there ability to set up state of the art hotels and their ability to provide e+ceptional customer service with focus on customer relationship management. The customer relationship is a uni$ue selling point )92P*. The &2ervice( is both their core competitiveness and also their competitive competence( )Trehan "##:* Porters ,ive ,actor -odel ;ccording to Porter )"##1* the internet is an enabling technology that can be used within the conte+t of a good business strategy in any industry. ;lthough the !nternet alters industry structures and levels the competitive ground often dampening profitability in the industry it can be used to encourage and promote greater profitability if properly implemented. The five forces that impact competitiveness which are outlined in Porters 1<=# work are' barriers to entry threat of substitutes bargaining power of buyers and sellers and the rivalry among e+isting competitors. !n "##1 Porter considered these factors in light of the internet technologies. The influence of the internet has been profound especially in the hotel industry. ;ccording to Porter each factor has a different relevance or impact on different businesses so they are presented below in order of impact for hotels. Porter indicates that the great parado+ of the internet is that the benefits it creates such as making information

easily available reducing purchasing hassles and marketing which allow customers to find what is of interest are the very things that make it more difficult for companies to &capture those benefits as profits.( )"##1*. The most important determinant of a marketplaces profit potential is the intrinsic power of buyers and sellers. Threat of 2ubstitute >oods !n the hotel industry there is usually another hotel ?ust around the corner. They appear in all price ranges with varying levels of service and amenities. The constant challenge will always be to get the guest to choose your hotel over the competitor. The internet makes the overall market more efficient while e+panding the si8e of the potential market and creating new substitution threats. >iven the potency of this threat a superb internet presence is vital. ;nother ongoing threat is that another hotel chain may erode your customer base with a newly formulated internet approach or marketing campaign. This is supported by the following $uote from 0uck and 0ancaster )"##@*' &The development of value chain process analysis supported by collaborative event management over the !nternet the structuring and the sharing of customer focused value chain data powerfully enhance the performance of value chains and of electronic commerce.( Bargaining Power of Buyers Business persons choosing a hotel for business travel are savvy consumers and they are comfortable with computer technology. !t has become very simple for them to go online and book a hotel. They no longer need travel agents corporate travel consultants or middle men of any kind to determine where they will stay. Porters model predicts this elimination of intermediaries. Tourists are more and more capable of using the internet in the same way but in another fulfillment of Porters model they are more often bonding together in a novel way. They are finding internet businesses like cheaphotels.com which will negotiate or discover bargains for them. Both of these processes shift the bargaining power to the end user as the Porter model predicts and these same freedoms reduce the cost of switching so that loyalty is a thing of the past unless a particular hotel uses its one time opportunity when a customer stays at the hotel to deeply impress the customer with a uni$ue and valuable differentiator. %ivalry among e+isting competitors The rivalry among competitors in the hotel industry is fierce. 3hen potential customers can learn about a hotel on line the internet reduces the differences among competitors. People tend to seek the best price for the best e+perience and the tendency is to reduce price to be competitive. The internet covers wide geographical areas so the market is widened increasing the number of competitors. ,or e+ample someone who wants to spend the day in the historic town of Niagara/on/the/'0ake can easily choose a hotel in a near by town if the amenities or the price are better. .ariable and fi+ed costs can be different in areas that are more e+pensive to live and work making it more difficult for a hotel in Niagara on the 0ake to

reduce their prices to the level of one in nearby 2t. 1atharines. Barriers to 4ntry The initial investment in the hotel industry creates $uite a barrier to entry but certain barriers to entering the hotel market are reduced by the internet. ; presence on the internet reduces upstart marketing costs somewhat and gives the new competitor access to potential suppliers and resources. 4ven a bed and breakfast can use the websites of large chains to understand the key marketing concepts and the lures for customers. 2witching costs are usually nil for a consumer. )-cNurlin "##7* ; vital barrier would be differentiation. ; hotel that can differential itself by location by service amenities or some other $uality has the potential to attract and keep its clients. ;nother barrier to entry would be e+pertise. 9nfortunately in a mobile society employees fre$uently leave one hotel chain to work in another and they take that e+pertise in terms of training or of e+perience with them. !t is in the areas of e+pertise and of differentiation that a hotel can make the greatest impact on its client and thereby on its bottom line. !n fact many established companies have synergies between their established business and online technology. Bargaining power of suppliers 3hile this is not a substantial threat in the hotel industry it can have impact especially in the area of labor. 3ith an aging population there are fewer people to fill service industry ?obs and hotels which can attract e+cellent staff have a greater chance of providing e+cellent and e+ceptional e+periences to their clientele. ;s part of their internet strategy all hotel chains should have a section on recruitment for employment. The other supplies that are needed by hotels are also easier to attain through internet channels whether originated by the supplier or by the hotel chain. 3ith their products in greater demand by greater numbers of hoteliers suppliers gain some measure of power by competition for their offerings. %ecommendations ;ll of the hotels listed above can benefit from internet applications that produce greater value in the value chain. The firms infastructure can benefit from financial and 4%P systems. 1ommunicating with investors can also be done by internet. Human resources can be managed by the internet as part of the overall strategy as well providing internet based self service personnel and benefits web based training internet based sharing of information and knowledge and electronic time and e+pense reporting. .alue can be increased by standardi8ing technology across multiple locations forming knowledge directories and allowing real time access to online booking information. ,inally every hotel could benefit by online inventory control and forecasting systems with suppliers. These improvements can all lead to greater profitability )Porter "##1* 4ach type of hotel needs to identify its uni$ue strengths and target market and align its internet strategy to support that identity 3ill the chain choose to be low cost or to command a premium priceA Bistinguishing oneself from the competition becomes vital. This can be

enhanced by superior technology through superior inputs through better training of staff or through better management. Bifferentiation adds value but the internet makes it hard to maintain those distinctive strategic positions because it eases change to best practices and it improves operational effectiveness. Never the less such distinctions make the business more profitable. By its basic nature the hotel industry is fragmented. The internet makes it easier for travelers from far and wide to learn about the hotel or to order a room but the customer must still come to the hotel for the service. This makes it more likely that the profitability will be there for when sale is easy to transact and complete the profit margin usually decreases. Porter points out similar e+amples with %eal 4state and with furniture sales. Bealing directly is great for hotels. Cther than travel agencies who arranged hotel stays the hotel business has always been a face to face business and this normally sustains the economic value of the transaction. ,or all of these chains the internet complements rather than cannibali8es established ways of doing business. !t becomes one more link in the value chain. 4very chain listed below should use its website to attract employees and to communicate a philosophy of management. !n the employment section the designers must remember that they are communicating not only to potential employees but also communicating the service standards that the guests can e+pect.

CORPORATE SUSTAINABILITY AND SOCIAL RESPONSBILITY

As a part of Tatas; Indias premier business house; Taj Hotels, have always believed in society and environment being integral stakeholders in our business along with its shareholders, customers, vendors and others !ver the last decade, the movement towards ecologically sound tourism has gained urgency and importance across the globe and we recogni"e that responsible practices in vogue are as diverse as the geographies Taj promote corporate citi"enship through our strategic public#private partnerships which encourage building livelihoods of less#advantaged youth and women The causes they promote include reducing malnutrition, promoting indigenous artisans and craftsmen and enhancing employability of identified target groups by sharing our core competencies as a leading hospitality company Taj have the uni$ue scope and opportunity to develop raw potential into a skilled workforce that is immediately employable by various players in the industry A majority of its community projects are focused around e%tending its key strengths in food production, kitchen management, housekeeping, customer service and spas to promote economic empowerment of candidates from vulnerable socio#economic backgrounds The group is fully

committed to the cause of building a sustainable environment by reducing the impact of its daily operations on the environment and improving operational efficiencies, resource conservation, reuse and recycling of key resources A glimpse of indicative projects undertaken by Taj group Tajs si%th &orporate 'ustainability (eport was submitted to the )nited *ations +lobal &ompact society in August, ,--. The )nited *ations +lobal &ompact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, safety / security, environment and anti#corruption This &orporate 'ustainability report also serves as their +(I 0+lobal (eporting Initiative1 as well as Triple 2ottom 3ine report The report focuses on identified priorities at IH&3 and responds to key stakeholder needs Taj plan to continue and further strengthen its commitment to the environment and societies in which we operate

EARTH
In an endeavour to reinstate its vision and efforts to boost sustainable tourism, Taj Hotels (esorts and 4alaces presented 5A(TH 05nvironment Awareness / (enewal at Taj Hotels1 this year Implementing schemes such as the +angroti +lacier &lean#)p 5%pedition, as well as designated 5arth rooms, which minimise environmental impact, Taj is one of Asias largest group of hotels to commit to energy conservation and environmental management 5A(TH has received certification from +reen +lobe, the only worldwide environmental certification program for travel and tourism The Taj began a century ago with a single landmark 6 The Taj 7ahal 4alace Hotel, 7umbai Today, the various Taj hotels, in all their variety and historical richness, are recognised internationally as the symbols of true Indian hospitality The &ompanys history is integral to Indias emergence into the global business and leisure travel community; and looking to the future, Taj Hotels (esorts and 4alaces is well positioned to meet the increase in travel activity with the rapid e%pansion of the Indian economy

Porter's 5 Forces Model

The state of competition in an industry depends on five basic forces, which are diagrammed above The collective strength of these forces determines the ultimate profit potential of an industry 8hatever their collective strength , the corporate strategists goal is to find a position in the industry where his or her company can best defend itself against these forces or can influence them in its favor

Contendin Forces T!re"ts o# Entr$%

*ew entrants to an industry bring new capacity, the desire to gain market share, and often substantial sources &ompanies diversifying through ac$uisition into the industry from other markets often leverage their resources to cause a shake up The seriousness of the threat of

entry depends on the barriers present nd on the reaction from e%isting competitors that the entrant can e%pect There are si% major sources of barriers to entry These are9 5conomies of scale 4roduct differentiation &apital re$uirements &ost disadvantages Independent of si"e Access to distribution channels +overnment policy

S&''liers%
'uppliers can e%ert bargaining power on participants in an industry by raising prices or reducing the $uality of purchased goods and services 4owerful suppliers, thereby, can s$uee"e profitability out of an industry unable to recover cost increases in its own prices The power of each important supplier group depends on a number of characteristics of its market situation and on the relative importance of its sales or purchases to the industry compared with its overall business A supplier group is powerful if it is dominated by a few companies and is more concentrated than the industry it sells Also if it poses a credible threat of integrating forward into the industrys business This provides a check against the industrys ability to improve the terms on which it purchases

B&$ers%
&ustomers likewise can force down prices, demand higher $uality or more services, and play competitors off against each other# all at the e%pense of industry profits A buyer group is powerful if it is concentrated or purchases in large volume 3arge volume buyers are particularly potent forces if heavy fi%ed costs characteri"e the industry# as they do in metal containers, corn refining, and bulk chemicals, for e%ample# which raise the stakes to keep capacity filled The product it purchases from the industry are standard or undifferentiated The buyers, sure that they always can find alternative suppliers, may play one company against another, as they do in aluminium e%trusion Another case can be when the products the buyer purchases from the industry from a component of its product and represent a significant fraction of its cost The buyers are likely to shop for a favorable price and purchase selectively 8hen the products sold by the industry in $uestion is a small fraction of buyers costs, buyers are usually much less price sensitive

S&(stit&tes%
2y placing a ceiling on the prices it can charge, substitute products or services limit the potential of an industry )nless it can upgrade the $uality of the product or differentiate it

somehow, the industry will suffer in earnings and possibly in growth 'ubstitutes not only limit profits in normal times but also reduce the bonana"a an industry can reap in boom times The producers of fiberglass insulation enjoyed unprecedented demand as a result of high energy costs and severe winter weather 2ut the industrys ability to raise prices was tempered by the plethora of insulation substitutes, including cellulose, rock wool and 'tyrofoam (ivalry of Taj among established firms9 !beroi hotels 3eela hotels IT& +rand 3e 7eridien 2argaining power of buyers is very low 2argaining power of suppliers is moderate Threat of new enterants9 :or Taj, competition in 7umbai has turned fierce as a result of new hotels, such as IT& +rand 7aratha, 3e 7eridien and Hyatt, coming up close to the airport, and enjoying ta% benefits too However in 2angalore, Taj continues to remain at the *o ; position because of the booming IT sector and lack of five#star rooms, chiefly to accomodate international passengers 4otential 5ntrants +lobal hotel groups entry 2uyers +lobal tourists 7edical tourists Industrialist people 'ubstitutes 'mall lodges

TH(5AT9 HI+H 0because of new class, 3ow otherwise1 &ustomers *eed +ood Hospitality Hygiene food and environment

S&ccess #"ctors #or T") !otels%

Technology related9#)sed of advance technology in hotel premises 7anufacturing# related9# High utili"ation of fi%ed assets <uality control know#how 'erving customer according to their specification =istribution#related9# 4resence of hotel chain at various places A strong network 7arketing related9# 2readth of product line and product selection 4ersonali"ed customer services A well#known and well#respected brand name

S*OT An"l$sis o# TA+ Hotels

'trengths 9 2rand loyalty &redibility Huge (eputation 4atent protection 8eakness9 High cost service *ot proper network in semi# urban 3ack of safety measure !pportunity 9 (ising income

+lobali"ation *ew +eographical location Threats 9 :luctuations in international tourist arrivals Increasing competition Terrorism

CONCLUSION
Taj Hotels (esorts and 4alaces is one of Asia>s largest and finest group of hotels The &ompany is rapidly emerging as a global brand by integrating an international network of lu%ury hotels within the chain Taj Hotels is part of the Tata +roup, India>s premier business house Taj 7ahal 4alace Hotel in 7umbai, India was the subject of many newscasts since *ovember ,?,,--@ The terrorist attacks not only killed and wounded many, but also caused major damage to the iconic hotel Tata, a pioneer industrialist and philanthropist, conceived the idea of building a hotel in the wake of the bubonic plague which had devastated 2ombay in the late ;@.-s Tata>s sole wish was to attract people to India, and incidentally to improve 2ombay The severely damaged hotel has to be rebuilt The si%th floor is gutted, and many of its restaurants, including the famous 8asabi, burnt and the splendid dome is shaken because of the many e%plosions The anti$ue chandeliers and priceless artwork are all lost forever 2ut the Taj 7ahal 4alace and Tower stands as an icon of the city of 7umbai, a symbol of both independence and dignity It will also stand in the future as a representation of the indomitable human spirit of the people of 7umbai displayed in the face of the greatest adversity

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