Thecontemporary business environment is faced by rapid improvements intechnology and competition, which has compelled firms to come up withstrategies that will enhance their competitive advantage. Strategicmanagement forms a pillar to the formulation and implementation ofstrategies that aim at positioning the firm at a strategic positionin the marketing while enhancing the firm’s competitive advantage.A detailed understanding of the dynamics characterizing the modernday’s firm’s internal and external environment is vital for thedevelopment of these strategies. In the context of this review,analysis of both the internal and external environments of Travelodgeis carried out. Travelodge is a hospitality and hotel industry thatoperates a number of hotels in the United Kingdom market. The hotelis a key player in the UK market and plays a key role in shaping thehospitality industry overall the UK. Travelodge hotel is under theownership of Dubai International Capital and hires approximately5,500 employees. The organization uses winning organizational andmarketing strategies, which keeps it at the top of the hotel industryin UK (check figure 1 in the appendix). The website of the hotelcurrently attracts around 2.2 million visitors every month. Most ofthe reservations are usually made online, which is an indication thatthe hotel employs online marketing as its prime strategy to winningits customers. In most cases, its customers come from Australia,India, Japan, United States, and Canada. The hotel competes with alarge number of both existing and upcoming hotels (check its growthin the appendix in figure 2) and thus, carries out a wide range ofstrategies aimed at improving its competitive advantage.
Travelodgeoperates under the umbrella of the mission statement ‘To providehospitality services with value for money in mind for budge consciousguests.’ It is argued that the rationale behind this statement isthat the reason more people don’t stay in hotels is simply becausethey cannot find a good quality hotel where they want to stay at aprice that is right for them. Bearing this in mind it is evidentthat Travelodge has attempted to provide high quality services foraffordable prices thus its rapid growth.
Asituational analysis of Travelodge would be effective in determiningthe internal and external dynamics surrounding the firm and itsoperations within the UK market. In addition, it is essential inanalysis the overall UK hospitality and hotel industry. Such ananalysis is essential in determining major strategies to enable thefirm to secure sustainable growth and survival in the market.
Themarket environment is increasingly dynamic and thus, it is essentialto carry out a structured, continuous, as well as detailed analysisof the main dimensions that characterize such an environment. Such ananalysis would best be carried out through a PESTLE analysis thatwill involve a number of factors including the political, economic,social, technological, legal, as well as environment factors(Henry, 2011).
Majorpolitical factors that have impacted the UK market include terrorism,which is a key issue in the neighboring Middle East region. Inaddition, the UK market is surrounded by areas that have politicalinstability(Parry, 2015).These factors reduce the number of visitors to the region, whichreduces sales levels for such hospitality firms as Travelodge. The UKgovernment has provided enough security to reduce the impact of suchpolitical factors.
TheUK market is faced by favorable economic factors characterized byrising economic growth and employment rates. In addition, thestability of the Euro results to stable foreign exchange rates thatmake it easy for customers, especially foreign ones, to prefer suchhotels as Travelodge as favorable destinations(Brotherton, 2012).
TheUK market is dominated by a growing population that increases themarket for firms. In addition, the population is featured by anincreasing percentage of persons above the majority age and that havethe capacity to be employed, which provides a ready market for theservices of such firms as Travelodge(Parry, 2015).
Theincreasing advancement of technology across the globe has had a greatimpact on the UK market with the market being characterized by majortechnological advancements such as the internet, social media, aswell as new technologies of doing business(Brotherton, 2012).Travelodge has been able to use online booking service, as well ascheck-in to enable customers secure and inquire about services.Travelodge has also been able to cheaply promote its services overthe internet, as well as the social media.
TheUK government ensures favorable legislations that encourage touriststo consider London a major destination. In addition, the governmenthas encouraged increase in security check-ups to ensure security forvisitors to hospitality venues, which in turn favors such firms asTravelodge(Brotherton, 2012).However, legislations requiring heavy regulatory requirements bygovernment authorities lead to a challenge to the smooth operation ofthe company.
Therising global awareness on environmental sustainability has led to asituation where firms, including Travelodge have carried outoperations that have reduced impact on the environment. The UKenvironmental authorities have also put up regulations to ensure thatfirms are in compliance with responsible environmental regulations.
Amicro analysis would help in understanding where the power ofTravelodge lies in the hospitality and hotel market situation,especially in comparison with Premier Inn, which is the strongestcompetitor in the UK hospitality industry. The Porter’s Five Forceswould be essential in analyzing the strength of the firm’scompetitive position within the UK market(Henry, 2011).Such forces include:
Thecompetition is intense in the UK market Premier Inn offers stiffcompetition owing to its great size and higher bed capacity ascompared to Travelodge(Premier, 2015).The main competitive forces in this case include the quality ofcustomer services, bed capacity, number of rooms, as well asreputation.
Inthe UK hospitality industry, mew entrants are usually low inhigh-profile hotels such as Travelodge and Premier Inn(Parry, 2015).Such is because such entry requires huge capital outlay. In addition,high regulatory requirements reduce the entry of new firms in themarket.
Inthe local market, hospitality companies like Travelodge have greatcompetition. However, in providing high-profile services, bothTravelodge and Premier Inn do not have high competition since theyare market leaders in the hospitality industry.
Throughstrategic sourcing, Travelodge provides services by benchmarking suchhigh-profile hotels as Premier Inn in order to ensure that theyoptimize value to the customers(Parry, 2015).The growing rates of employment and rising income levels of the UKbuyers leads to higher purchasing power and thus, bargaining power bycustomers.
Thesuppliers to the hospitality industry in the UK market have highbargaining power, which may lead to higher prices of supplies. Inaddition, the high demand of hotel supplies leads to a rise in thebargaining power of the suppliers.
Internalanalysis involves an evaluation of the internal factors strengthsand weaknesses, as well as the external factors opportunities andthreats that have an impact on the firm. Such an analysis is carriedout through the SWOT analysis.
Travelodgehas some vital capabilities and resources that are strengths to thefirm. One of the strengths of the hotel is that it employs innovativestrategies that make it possible to charge affordable prices. Priceis a critical element that creates competitive advantage. When anorganization charges very high prices, it is likely that customerswould run away from the organization and tend to identify with arival organization that can offer similar services at a lower price.Therefore, it is important for organizations to consider charging itscustomers affordable prices. This is a plus on the side of Travelodgebecause it is capable of maintaining competitive advantage throughkeeping its prices low. As a matter of fact, Travelodge emerges asthe cheapest chain hotel, which lets customers get value for theirmoney. Another strength of the hotel is its convenience. Travelodgehas the retail-style program for checking prices. This allowscustomers to browse and compare prices offered by the hotel and itscompetitors. Besides, the hotel has a strength in that it makes itscustomers feel special through its pre-stay checklist. The pre-staychecklist is a list of items that the hotel offers with the rate. Theprimary purpose of the pre-stay checklist is to help customers inunderstanding that the hotel provides the lowest charge, but it doesaway with any unnecessary items that expensive hotels offer.Travelodge offers necessary and practical items that a visitor wouldrequire for example, adequate amount o pillows, tea, and towel. Thehotel also offers personalized directions to its customers, which iscritical in aiding customers in locating a branch of the hotel oftheir choice. Furthermore, apart from giving its customers the optionof making reservations online, the hotel also provides a mobilebooking service. This allows customers to have the flexibility ofmaking reservations through the method that they prefer. In addition,the organization has well equipped rooms for accommodation that canallow a lot of visitors its 5000 hotels can accommodate asubstantial number of customers(Travelodge, 2015).Moreover, Travelodge is a well-established and popular brand in theUK market, which acts as a major strength due to the hotel.
Travelodgehas a major weakness because of its concentration within the citiesas opposed to a decentralized location that could see it cover awider market area. In addition, it is faced by a large debt thatamounted to £478 million in 2012(Travelodge, 2015).
Giventhe rising population in the UK, the company has the opportunity toexpand its operations, as well as increase its customer levels. Inaddition, the popular brand may present it with an opportunity toform partnership with key players in the hospitality industry.
Travelodgefaces a number of threats including the rising inflation rates acrossthe globe, especially following the process of recovery from therecent global crisis. Such may pose a threat to the currency value,which has a direct impact on the firm’s sales. In addition, theincreasing globalization of business operations may lead to entry offoreign hospitality firms that may threaten the competitive advantageof the firm.
MarketSize and Structure
TheUK hospitality and hotel market mainly concentrates on urban areasincluding London. The size of the market has been increasing with thehotel supply achieving an increase of an estimated 18,000 rooms peryear(Parry, 2015).In addition, room occupancy has been growing over the years.
Themarket structure of the hospitality industry, especially in thehigh-profile segment occupied by such firms as Premier Inn andTravelodge, depicts an oligopoly. In this market, there are a fewfirms that dominate the high tire of the market, which has resultedin collusion in order to reduce competition, as well as control theprices of products and services in the market.
Inoffering its products, Travelodge ensures that it matches itsproducts with what customer needs. Innovation is a critical aspect tothe company in offering its products and services to customers.Besides, the hotel ensures that it uses new designs.
Thehotel is currently operating in the United Kingdom market. Thismarket has competitors that are still in the hotel industry, but themarketing strategies of the hotel have made the organization secondlargest in the United Kingdom (shown in figure 1).
Theprice that the hotel charges its customers is affordable. The pricefor its services is exceedingly low, making it the cheapest chainhotel in the United Kingdom. The low price charged by the hotel iscritical in attracting customers.
Themarket, where Travelodge operates is filled with differentindividuals. Visitors usually come from United States, Australia, andChina among other areas. Because of the different cultures in themarket, the hotel is capable of offering different services. Itsemployees are usually equipped with adequate training for qualityservices.
Inorder to ensure that it offers satisfactory services to its customerswithout keeping customers for long, Travelodge usually allows itscustomers to use the online booking.
Inensuring that there is evidence of customer service, the hotelensures that visitors that receive their services are receipted. Thereceipts act as an evidence of customer payments.
Travelodgeensures that its services are well recognized through the use ofonline marketing. Through using the internet, it is capable ofreaching a wide range of its customers, as well as prospective ones.
Internaland Service Description
Thehotel and hospitality industry provides a wide range of services andconsists of a number of internal dynamics. On its part, Travelodgehotels’ internal is featured by newly refurbished designs, as wellas a common color scheme. The internal is also featured by LCDscreens, as well as other entertainment equipment(Travelodge, 2015).In most of the firm’s hotels, double rooms dominate while there areless family room and disabled persons’ rooms. However, all of theserooms feature free breakfast, wi-fi internet connection, and en-suitebedrooms.
Servicesare dominated by eating and drinking facilities that usually varybetween different destinations. Most of the roadside locations havehotel, as well as filling station services.
Differentchallenges face Travelodge, as well as other firms in the hotel andhospitality industry within the UK. Such include increasing andstricter regulatory requirements that have required the firms toadhere to the increasing rules and regulations in carrying out theiroperations. Such regulations include quality assurance regulationsthat require the hotels to meet the set quality standards for theirfood products. In addition, firms have been faced with challengesrelated to inadequate space, especially in peak seasons when theyreceive more visitors than other periods during the year. Puttinginto consideration this analysis, the firm should develop adequatestrategies that will result in the ability to achieve sustainablegrowth and survival in the increasingly competitive marketplace.
Likeall other players in the industry, it has not all been smooth playfor Travelodge. The key to the rise of Travelodge to become thelargest, fastest growing and well known budget hotel brands in the UKis finding suitable new people, who can deliver the services requiredin a hotel. It is never easy finding the right people to take up thiscritical role as the success rate of a brand like this heavily relieson the effectiveness and competence of the staff in deliveringservices. In an attempt to deal with this challenge Travelodge brandhas set up employment academies and partnered with BabcockInternational as the training provider.
Yetanother challenge that Travelodge faces is technology related. In thehotel and hospitality industry proper communication is paramount asmany departments are involved. There is an ardent need to set upsystems that allows good communication both interpersonal as well asinterdepartmental. This has proved to be quite a challenge as anysimple design that is concise enough for all companies involved tounderstand is virtually impossible to develop. This is owed to thefact that any new Travelodge hotel could originate from an existinginner city premises or a fresh new purpose built premises. Creating aone size fits all design is therefore not easy prompting the companyto outsource.
Travelodgemarketing is very much business driven and relies heavily on the useof digital era strategies and also serves as a model for otheraccommodation properties. This is because their business model makesuse of the low cost marketing that the digital era offers. One oftheir marketing strategies is advance-purchase incentive pricing.This is an effective strategy where advance purchase is oftendiscounted.
Travelodgeis a budget hotel that operates over 500 hotels in Ireland, Spain andthe United Kingdom. It was first launched in the UK in 1985 and hasgained its prominence by identifying consumer needs that are poorlyprovided for and then presented business solutions to satisfy theseconsumer requirements. The great value hotels mainly target businesstravelers as well as pleasure seekers. In order to achieve theirgoals the hotels are strategically positioned in major cities andpopular holiday hotspots so that they can best serve their clientele.The Travelodge brand has a range of hotel designs including: purposebuilt hotels, grade II listed buildings, office conversions,acquisitions of existing hotels and Co-partnerships with leading pubcompanies, supermarkets and retailers, further widening its networkfor consumer comfort a fact that has greatly contributed to itsgrowth. The use of online marketing is of immense importance to thecompany’s growth.
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Henry,A. (2011). UnderstandingStrategic Management.New York: Oxford University Press.
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Premier.(2015). Premierfor Business.Retrieved April 22, 2015, fromhttp://www.premierinn.com/en/business.html
Travelodge.(2015). Oneof the UK`s Leading Hotel Brands.Retrieved April 22, 2015, fromhttps://www.travelodge.co.uk/company_information/