HOS802: Hospitality Management Report on Lantern Hotel Business

This report analyzes the current state of the hospitality industry in Australia, with a specific focus on the business processes of the Lantern Hotel, a 4.5-star establishment in Sydney. The analysis employs PESTLE and Porter's Five Forces frameworks to assess the external environment and competitive dynamics. The PESTLE analysis examines the political, economic, social, technological, legal, and environmental factors influencing the industry, highlighting government support, economic growth, cultural diversity, and technological advancements. The Porter's Five Forces analysis evaluates the threats of new entrants, bargaining power of suppliers and buyers, the threat of substitute products, and rivalry among competitors, revealing insights into market competitiveness. Based on these analyses, the report offers recommendations for Lantern Hotels, including product innovation, skilled labor acquisition, corporate social responsibility initiatives, and strategic collaborations. The report concludes that while the Lantern Hotel operates successfully, it must adapt to maintain its competitive edge and capitalize on opportunities within the dynamic Australian hospitality sector, ensuring sustainable growth.

Running head: HOTEL BUSINESS
HOTEL BUSINESS
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Introduction:
The aim of this position report is to discuss current situation of hospitality industry in
Australia. In this particular report the Business Process of Lantern Hotel will be analysed which
is a 4.5 star hotel headquartered in Sydney (Lanternhotels.com.au 2020). In order to understand
the external environment of Australia porter's five forces analysis and PESTLE analysis will be
done so that the company gets proper idea of the changing situation in the hospitality industry of
Australia. Based on the analysis of these two techniques recommendation will be provided so
that Lantern Hotels can transform its weaknesses into strengths and grab all the opportunities
undermining threats.
PESTLE analysis:
The PESTEL analysis of Australia has identified critical impact of macro environment
factors. These include political economic, social, technological, legal and environmental. All of
these factors manipulate a company that to operate successfully or to face threats to lose the
competition (Achinas et al., 2019).
Political factors:
The political factors of Australia is somewhat supportive of business and allow the
companies operate successfully in any part of this country. Transparency in the political parties
lead to reduction of corruption and effective legislation. The hotels here get support from the
government as tourism is one of the most important sectors invested by the government. Proper
maintenance of the tourist spots and transportation along with proper infrastructure has supported
this industry to flourish in Australia (Ma et al., 2016). Therefore political system has led the
hotel chains like Lantern hotel to operate successfully.

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Economic factors:
The GDP rate of this country is constantly growing therefore it has become a choice for
the investors of every kind of business. This ranks 13th largest economy in the world therefore
the buying capacity of the clients is high in terms of both the domestic as well as International
tourists. Companies also use Australia to be headquarter for foreign companies especially in case
of Asian operation. This is due to the fact that Australia has become a low cost location for
business relocation till date (Ban & Ramsaran, 2017). This is why the economic situation can
help this company to expand its business in all over Australia but the threat of economic
recession is also high for which the organization needs to take needed precautions.
Social factors:
Australia has been a home for highly skilled labours and professionals of every kind this
is the reason why many of the international companies have chosen Australia to be operational
centre in case of doing business in the Eastern part of the globe (Australia, 2020). Australia has
accepted cultural diversity in such a way that is supportive of tourism business. in addition to this
the domestic tourists have proper understanding of quality which allow the hotel chains to offer
the best quality service to both Australian as well as foreign tourists.
Legal factors:
The legal system of Australia is robust therefore proper policies associated with export
import and corporate taxes align with most of the Western countries. Many of the European and
American hotel chains have entered Australian hospitality sector because of this transparent and
supportive legal system.
Technological factors:

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The Government of Australia invests usually in developing technological advancement in
every level of business. This is the reason why communication with customers and providing
them with any type of hell at any point of time has become easy (Islam & Mamun, 2017).
Information and Communication Technology, automation process and uses of machinery in
growing infrastructure are the factors for which the Australian hospitality industry have
flourished.
Environmental factors:
Australia is home to many species of flora and fauna therefore the government has taken
proper initiative to restore them and utilise to attract people from different parts of the world.
The government regulations have insured that the companies need to follow proper process of
waste management and pollution control so that the natural environment is not destroyed by
human activity.
Porter’s five forces analysis:
Porter’s five forces analysis is a strategic management tool that helps to analyse industry
and discuss underlying levers of profitability. This particular hotel group can use porter’s five
forces analysis to understand how different competitive forces can influence profitability and the
managers can develop strategies to get the best result.
Lantern hotel group is one of the most important and popular hotels in Australia. over the
years this particular group has redefined its ways of doing business in hospitality industry but the
situation is constantly changing therefore the company needs to be flexible enough to bring
changes in their operation and gain competitive advantage as much as possible.

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Porter’s five forces analysis has five factors to be discussed which include threat of new
entrants, bargaining power of suppliers, bargaining power of buyers, threat from the substitute
products, and rivalry among the existing competitors.
Threats of new entrants:
In Australian hospitality industry threats of new entrants is high because the Government
of this country has allowed the related companies to enter this market and expand their operation.
the natural tourist region and other places in this country we have been secured in such a way
that they attract people from different parts of the world (Lewis, 2017). this is the reason why in
this particular market new companies and new international hotel chains are extremely a willing
to enter this business in Australian hospitality sector this is the reason why threats of new
entrants can have any impact on this particular hotel (Australia, 2020).
Bargaining power of suppliers:
The Bargaining power of suppliers is extremely low in the hospitality sector of Australia
because it is a subject to trained labour force. This hotel chain is not subjected to bargaining
power of suppliers therefore feel any pressure from competitors (Moreno-Izquierdo, Ramón-
Rodríguez & Perles-Ribes, 2016).
Threat of substitute product:
Threat of substitute product is high in hospitality sector of Australia because of high
concentration of competitors. The cities and other tourist areas are concentrated with numerous
hotels with more or less similar features (Bell & Ruhanen, 2016). This is the reason why the
customers can get cheap accommodation with high quality service. The target audience of this

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particular Hotel is cost conscious people therefore this hotel can face competition of
differentiation.
Bargaining power of the customers:
The bargaining power of the customers in Australian hospitality industry is however high
because they are highly demanding. They want to avail services by paying minimum price as
possible. However in the case of Lantern hotel chain, the main target groups are Traveller groups
and business travellers. This is the reason why the company does not feel much pressure of
bargaining power of the clients and they do not seek for increasing discounts.
Rivalry among competitors:
The rivalry among existing competitors in the hospitality industry of Australia is
extremely high. Is the government provides Full support to the tourism Agencies and develop
proper infrastructure for tourism sector to grow therefore a huge number of Companies have
come to attend the business in this sector. In Australia the number of tourists in a peak season is
so high that the accommodation problems used to take place but now a lot of hotel chains have
expanded in this particular market to increase concentration of hotels.
Recommendation:
Firstly, Lantern hotels need to focus more on the innovation of new products and
services. This will give the organisation competitive advantage over the Rival hotel chains
operating simultaneously in the hospitality industry of Australia. This will also bring new
customer as the number of tourists visiting Australia is continuously increasing.
Secondly the organisation needs to incorporate more skilled labours and if possible
outsourcing employees from European countries. The organisational culture as more or less

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similar to both these regions, therefore the company will enhance quality of service in one hand
and reduced any scope for conflict.
Thirdly the organisation has very limited scope for corporate social responsibility
therefore it needs to take an active part in in different environmental campaigns so that the
clients who are visiting the hotels feel that they are connected with something needed for
supporting environment. The organisation can start collaboration with different environmental
Agencies for NGOs who work for environment and invest for restoring natural calamity taking
place in different parts of Australia.
Finally the organisation needs to somehow collaborate with chosen competitors in order
to increase market size. It is not possible for one hotel to cater every demand of clients therefore
while operating collaboratively with some competitors this organisation will get to know every
shuttle feature of this particular market.
Conclusion:
Therefore it can be concluded that Lantern Hotel chain is operating successfully in the
Australian hospitality sector but there are some aspects which can bother this operation among
which increasing competition economic threats and environmental degradation can be named. In
order to sustain in this competitive market this particular hotels in needs to bring differentiation
in business so that it can enhance market size and enlarge customer base. This is how it will be
able to develop sustainable growth in terms of the company as well as this particular industry of
Australia.

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References:
Achinas, S., Horjus, J., Achinas, V. and Euverink, G.J.W., 2019. A PESTLE Analysis of
Biofuels Energy Industry in Europe. Sustainability, 11(21), p.5981.
Australia, T. (2020). Discover Aboriginal Experiences: exclusive accommodation-Tourism
Australia.
Australia, T. (2020). Social media means big business for Australian tourism.
Ban, J., & Ramsaran, R. R. (2017). An exploratory examination of service quality attributes in
the ecotourism industry. Journal of Travel & Tourism Marketing, 34(1), 132-148.
Bell, C., & Ruhanen, L. (2016). The diffusion and adoption of eco-innovations amongst tourism
businesses: the role of the social system. Tourism Recreation Research, 41(3), 291-301.
Islam, F. R., & Mamun, K. A. (2017). Possibilities and challenges of implementing renewable
energy in the light of PESTLE & SWOT analyses for island countries. In Smart Energy
Grid Design for Island Countries (pp. 1-19). Springer, Cham.
Lanternhotels.com.au. (2020). Lantern Hotels – Sydney. Retrieved 19 March 2020, from
http://lanternhotels.com.au/
Lewis, R. (2017). Porter's Five Forces of competitive advantage.
Ma, E., Liu, Y., Li, J., & Chen, S. (2016). Anticipating Chinese tourists arrivals in Australia: A
time series analysis. Tourism management perspectives, 17, 50-58.

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Moreno-Izquierdo, L., Ramón-Rodríguez, A. B., & Perles-Ribes, J. F. (2016). Pricing strategies
of the European low-cost carriers explained using Porter's Five Forces Model. Tourism
Economics, 22(2), 293-310.