Strategic Analysis of Hotel Chains

The assignment requires a comprehensive analysis of two hotel companies, Ramada resorts, Philip island and a fictional hotel company. The analysis includes VRIO (Valuable, Rare, Imitable, Organization) framework to identify the company's resources and capabilities, Porter's five forces to analyze the competitive environment, and PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis to assess the external factors affecting the hotel chain. The report concludes that both companies follow strategic concepts to achieve competitive advantage and highlights the importance of these strategies in identifying strengths and weaknesses as well as external factors.

Business Report

Table of Contents
Business Report...............................................................................................................................1
INTRODUCTION...........................................................................................................................1
Strategic concepts followed by Travelodge and Ramada Resort, Philip Island..............................1
Current strategy............................................................................................................................1
Internal situation..........................................................................................................................1
Current state of the industry.........................................................................................................2
External environment...................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Hospitality industry is one of the fastest growing industries in the world. It includes
various sectors like tourism, hotels and event planning. With the increasing competition, it has
become essential for companies to develop a strategy in order to attain competitive advantage in
the industry. Travelodge hotels operate in Australia and New Zealand with over 490 employees
working for them whereas Ramada hotels is a hospitality chain located in more than 60 countries
with 800 properties all around the world. The current report will provide critical analysis of
strategical concept and environment of Travelodge hotels, Australia and Ramada Resort in Philip
Island.
MAIN BODY
Current strategy
Mission: The mission of Travelodge hotel company is to provide value for money to its
customers by offering them modern facilities at a competitive price. Whereas, mission of
Ramada Resort, Philip Island is to make traveling accessible for its customers by spreading their
operations all around the world.
Vision: Travelodge company's vision is to diversify their activities in other parts of the world
and to increase their customer base by providing them quality services. Whereas, the vision of
Ramada Resort, Philip Island is to become the premium choice of customers by providing them
unique services that further improves their leisure experience.
In accordance with Porter Generic strategy which is focused on two areas that is market
where business competes and sources of competitive advantage. As per the strategical approach
both the hotels focus on different area of business.
Travelodge hotels follow low cost pricing approach as it helps them in increasing their
customer base. Also, the company believes in providing value to its customers which is possible
only by providing them services at a competitive price. The company has indulged in placing
bulk orders that allow them various discounts and benefits from the suppliers. On the other hand,
Ramada Resort, Philip Island follows the differentiation approach that allows them to offer
unique and special services to their customers that distinguish them from their competitors.
Unique services include providing WI-FI on an island, private beach and other facilities.

Moreover, differentiation approach has also helped in establishing a brand image of the
company (Della Corte, 2016).
Internal situation
The internal situation focuses on usage of resources and capabilities in an optimum
manner. VRIO stands for value, rare, inimitable and organized.
 Value: The resources used by Travelodge hotels create value for customers. It also helps
in reducing the future threat for the company.
The resources of Ramada resorts, Philip island are not used in an optimum manner. This has
given them competitive disadvantage and has proved to be expensive for the company.
 Rarity: Rarity is basically concerned with usage of resources that are scarce and have
alternative uses. Travelodge does not use any technology or services that are rarely
available, thus it has become a big challenge for the company to survive in the market for
a long run. In accordance with this, it can be said that firm has short term competitive
advantage. However, Ramada Resorts have the rare resources like the island view and
destination wedding facility that attracts customers and helps the company to overcome
their competitors (Santosa, 2018).
 Imitability: Travelodge company's major resources and services include creating value
for their customers by providing them services at a competitive price which is hard to
imitate by their competitors. Travelodge hotel offers tourist facilities and package also
which is hard to imitate by others. Thus, it is beneficial for them in the long run but the
company needs to use modern and latest technology which is difficult to copy by other
players in the market as this can be a beneficial move for them.
In Ramada resort's scenario, the resort offers all the luxury services and facilities on an
island which is unique and special and is difficult to copy for their competitors. Also, the hotel
company uses modern technology which is hard to copy therefore it can be helpful for the hotel
in their incessant growth.
 Organization: The last step in the VRIO model involves organization that emphasizes on
systematic working of the management, working environment, communication and other
processes. Both Travelodge and Ramada, Philip Islands have sound internal management

and communication which has led to optimum utilization of resources and helped them in
achieving cost advantages (Bel, 2018).
Communication plays a key role in the success of the company because it avoids overlapping of
work and wastage of resources which further helps the company in achieving profitability and
growth. Therefore, it has proved to be a success for Ramada Resorts and Travelodge hotel
company.
Thus, both the hotel companies have achieved the sustainable competitive advantage by
completing the VRIO framework.
Current state of the industry
Porter's five forces are
 Competition in the industry: The first force is concerned with the competition in the
hospitality industry and the player's stake in it. Ramada Resorts have a huge customer
base which has also helped in establishing a brand value for the company. This has given
them an edge over other players in the industry.
Whereas Travelodge hotels are comparatively new in the market therefore it is difficult for them
to achieve competitive advantage. Entry of new competitors can affect their profitability.
 Power of suppliers: Ramada resorts operate in 63 countries with around 811 hotels and it
has helped the hotel chain in achieving economies of scale. Also, the company holds
good relations with the suppliers which has turned out to be beneficial for them as they
achieve various discounts and credit facilities(Jones, Hillier & Comfort, 2017).
Travelodge hotels on the other hand, operate in only two countries with just 18 hotels therefore
they are unable to achieve cost advantages and benefits from their suppliers which affects their
profitability.
 Potential of new entrants in the industry: Hospitality industry is one of the largest
industries in the world in terms of revenue therefore it has led to continuous entry of new
player in this sector but Ramada hotels have established their brand image therefore it has
a minimum effect on them.
Entry of new players can have an adverse effect on the working of the Travelodge company.
 Threat of substitute products: Substitute products are those products that offer similar
goods and services as the company. It can be dangerous for both the hotel companies and

can affect their profitability as many hospitality companies are now offering similar
products at a minimum cost.
 Power of customers: Customer is the king of the market and they play a major role in the
success or failure of any company. Both the companies treat their customers with respect
and provide them quality services which has helped in increasing their customer base
even further (Aljaffal and et.al., 2019).
External environment
The external factors affecting the hotel industry in different locations are
Basis Travelodge hotels Ramada Resort, Philip Island
Political The major political factors
affecting Travelodge hotels are
political climate in tourist
destinations and the tariffs
charged by the government on
services provided by hotels.
The political factors affecting
Philip Island are reduced tax
rates in that region that has
proved to be beneficial for
them (Baum, 2019).
Economic The inflation in Australia has
led to Travelodge increasing
their hotel prices which has
further reduced their demand
in the country.
The raw materials required by
the resorts are fairly expensive
locally therefore they need to
obtain it from other cities
which increases their cost.
Social The hotel attracts both local
and international tourists
because of increasing spending
capacity of people.
The island does not attract
local tourists and this has
affected their profitability and
growth rate.
Technological The hotel uses obsolete
technology and it has affected
their profitability.
Although, located on an island
the resort still offers wifi and
other modern technological
services.

Legal The hotel complies with all the
legal rules and regulations
which has led to their smooth
working.
Ramada resorts, Philip island
also follows all the legal laws
and regulations in order to
maintain their brand image.
Environmental The Hotel company respects
the environment culture and
they actively plant more trees.
The hotel respects the
environment and does not
pollute the environment.
CONCLUSION
From the above statement it can be concluded that both the hotel companies follow strategic
concepts in order to achieve competitive advantage. The report also included VRIO analysis for
optimum utilization of resources, Porter's five forces in order to achieve profits sustainably and
PESTLE analysis to to analyze external environment. Thus, it can be stated that these strategies
play an important role in identifying the strengths and weakness of the hotel chain and the
external factors affecting them.

REFERENCES
Books and journals
Aljaffal, T and et.al.,(2019). Investigating environmental sustainability education in
undergraduate hospitality management curricula within New South Wales (NSW),
Australia. In CAUTHE 2019: Sustainability of Tourism, Hospitality & Events in a
Disruptive Digital Age: Proceedings of the 29th Annual Conference (p. 298). Central
Queensland University, Australia.
Baum, T. (2019). Does the hospitality industry need or deserve talent?. International Journal of
Contemporary Hospitality Management.
Bel, R. (2018). A property rights theory of competitive advantage. Strategic Management
Journal, 39(6), 1678-1703.
Della Corte, V. (2016). The strategic environment of hotel chains. In The Routledge Handbook
of Hotel Chain Management (pp. 83-94). Routledge.
Jones, P., Hillier, D., & Comfort, D. (2017). The sustainable development goals and the tourism
and hospitality industry. Athens Journal of Tourism, 4(1), 7-17.
Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), 1806-1822.
Nicolae, P. (2018). Use of the PESTEL Model in the Management of the Tourism
Branch. Ovidius University Annals, Economic Sciences Series, 18(1), 370-375.
Palacios-Marques, D., Guijarro, M., & Carrilero, A. (2016). The use of customer-centric
philosophy in hotels to improve customer loyalty. Journal of Business & Industrial
Marketing, 31(3), 339-348.
Santosa, B. (2018). KELAPA GENJAH SEBAGAI SUMBER GULA DAN POTENSI
PENGEMBANGAN Dwarf Coconut as Sugar Source and Development
Potential. Perspektif, 17(1), 76-83.
Online
VRIO framework analysis. 2019. [ONLINE] Available through:
<https://www.clearpointstrategy.com/vrio-framework/>