In the three years to 2017, hotel room rates are expected to rise in response to continued growth in input costs and a rise in demand
Los Angeles, CA (PRWEB) April 01, 2015
The buyer power score for hotel rooms is 2.9 out of 5, indicating that buyers and suppliers have an equal amount of leverage during negotiations. “Market share concentration, product specialization, price trends and demand driver volatility are the primary factors that influence buyer power for hotel rooms,” according to IBISWorld business research analyst Kayley Freshman-Caffrey.
Market share concentration is medium in this market. Brands play a significant role, and the top brands collectively garner a significant portion of market revenue. Consequently, these top brands have more pricing power than other companies, and buyers hoping to book a room with one of their hotels will have to contend with higher room rates, hurting buyer power. On the other hand, product specialization is low, so buyers that are unconcerned with brand names can still leverage the availability of other suppliers to negotiate lower room rates. Low product specialization benefits buyer power by providing buyers with a wider range of suppliers from which to choose. “Even if a buyer seeks a hotel with a more specialized service or feature, such as an on-site conference center, there are typically enough suppliers that can offer the amenity to prevent specialization from impacting the price or availability of hotel rooms,” says Freshman-Caffrey.
Unfortunately, price trends for hotel rooms hurt buyer power. Hotel room prices increase in response to spikes in demand and input costs. Both of these factors are expected to rise rapidly in the coming years to the detriment of buyers, leading to higher room rates. At the same time, changes in demand are predictable and subject to low volatility. Low demand driver volatility benefits buyer power by reducing the volatility of hotel room rates, which allows buyers to more accurately budget for hotel expenses without worrying that the price will jump or plummet after their purchase. Overall, the positive effects of low product specialization and low demand driver volatility reduce the negative impact of moderate market share concentration and unfavorable pricing trends to give buyers a moderate amount of negotiation power. Major vendors include Marriott, Hilton and Best Western. For more information, visit IBISWorld’s Hotel Rooms procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of hotel rooms. Hotels primarily provide short-term lodging and offer a variety of room types, including single rooms, double rooms and suites. Business, leisure and government travelers use these rooms, which are available throughout the country. This report does not cover the rental of conference centers or rooms in bed and breakfasts or hostels.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.