In the US the number of hostels has conventionally been low But as hotel chains

In the us the number of hostels has conventionally

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In the US, the number of hostels has conventionally been low. But, as hotel chains and private investors explore and take advantage of the upcoming travel trends, these enterprises are expected to grow in size and popularity resulting in an increase in the industry concentration. Overall, this industry is highly fragmented with many small enterprises competing. The competition is high, and the trend is increasing. The level of internal competition amongst competitors is spread in multiple areas like price, quality, and hospitality. The products/services are not standardized with each competitor providing an experience that is unique to that establishment to distinguish themselves by offering a wide range of complimentary products and services. Many establishments are niche and position themselves as party or wedding venues and places of historical significance. Also, the average profit margin of hostel chains has a slight advantage because of economies of scale. This increase in competition has resulted in more luxury options and state-of-the art initiatives to offer guests with comfort. However, the greatest threat of competitors in this industry comes from external competition. The external competition includes conventional motels and hotel chains as well as other types of accommodation like private homes, with most part coming from motels and camping grounds on a room rate basis. The accommodation sector has a wide range of options available across a range of prices. Previously, the operators in this industry competed with hotels by providing complimentary services. However, the external operators in hotels industry have undergone remodeling to also provide complimentary products/amenities. Also, traditional hotels are perceived as more receptive in terms of accommodating requests or responding to emergencies. It can be hard for home shares to improve on this. The guests in home shares value the local knowledge of the hosts, but this is just a perk for the guests who do not particularly seek this specialized knowledge. This has resulted in a power struggle to retain customers amongst all the forms of accommodation. CONCLUSION: To summarize, the Bed & Breakfast and Hostel accommodation industry is more inclined towards being a perfectly competitive market. Along with the high competition, the threat of substitutes in the market is high with the traditional hoteliers and the big players coming up as alternatives. For instance, the renowned hotel group Marriot recently launched Homes & Villas in April 2019 to capture the market share in the hotel alternatives segment. The bargaining power of the buyers is moderate with the presence of a large number of alternatives combined with low switching costs.
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  • Fall '08
  • Steven,L
  • Lodging, Hostel industry

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