Today, the development of the hospitality industry faces a number of challenges, which affect consistently business development of companies operating in this industry. In this respect, it is possible to refer to the experience of Red Lions Hotels, the company operating in the hospitality industry and having extensive experience of operations. Nevertheless, in spite of the extensive experience, Red Lions Hotels still face a growing pressure from the part of its major rivals, such as Intercontinental Hotels Group (IHG) and Marriot International Corp. The situation is aggravated by the ongoing economic recession and the global financial crisis. As a result, Red Lions Hotels and other companies operating in the industry face a steep decline in their business development. On the other hand, Red Lions Hotels still have a considerable marketing potential and, if the company stumbles through the current crisis successfully, Red Lions Hotels can regain its positive marketing and financial performance and improve its marketing position consistently.
In actuality, Red Lions Hotels hold a strong position in the market but the company needs to keep growing and expanding its market share to confront its rivals successfully. However, this is exactly where the problem arises because the company suffers from the lack of financial resources, whereas customers prefer saving instead of spending that leads to the drop of the number of customers using services of Red Lions Hotels. Therefore, the company needs to enhance its performance consistently and to look for options to optimize its performance. At this point, it is important to compare the position of Red Lions Hotels to that of its rivals, such as IHG and Marriot International Corp. In this regard, the competitive profile matrix can help to understand the current competitive position of Red Lions Hotels:
Competitive Profile Matrix
Red Lions Hotels Intercontinental Hotels Group Marriot international Corp.
Competitive Factor Weight Rating Extended Rating Extended Rating Extended
Completeness of product line 0.16 3 0.40 4 0.54 2 0.27
Quality of installation 0.14 4 0.45 3 0.32 3 0.37
Reputation / referral by friends 0.09 4 0.30 1 0.09 2 0.18
Reliability of product and installation 0.14 4 0.45 3 0.32 3 0.27
After sales service 0.11 3 0.33 3 0.30 3 0.33
Price (lower is better) 0.09 2 0.26 3 0.32 4 0.35
Availability of service contracts 0.03 4 0.12 4 0.12 1 0.03
Time in business (for future service) 0.05 3 0.15 4 0.18 2 0.10
Warranty length and coverage 0.08 4 0.23 4 0.28 3 0.24
Convenience of show room 0.07 2 0.14 4 0.25 2 0.14
Customer loyalty 0.02 3 0.20 2 0.30 4 0.15
Service quality 0.02 3 0.25 4 0.20 3 0.25
Total 1.00 3.73 3.71 3.10
The competitive profile matrix reveals the fact that Red Lions Hotels hold a strong competitive position in the market. To put t more precisely, the company has the well-developed completeness of product line for the company offers its customers multiple services comparable to those of its major rivals, although IHG still outpaces Red Lions Hotels in this regard. Second, the quality of installation is important in the hospitality industry and Red Lions Hotels hold better position in the market compared to IHG and Marriot International Corp. Therefore, the company can attract customers to its products and services due to the higher quality of installation. Third, reputation and referral by friends/customers is extremely important in the hospitality industry because they contribute to the formation of the customer loyalty to the brand and, therefore, the company can count on the steady growth in a long-run perspective. Fourth, reliability of product and installation is also extremely important for the business development in the hospitality industry.
In this regard, Red Lions Hotels are in an advantageous position compared to IHG and Marriot International Corp. Customers can enjoy reliable services provided by the company and they can always count on the flexible approach of the company to each customer. Fifth, after sales service contributes to the customer satisfaction and Red Lions Hotels is one of the leaders in this field. Sixth, the price offered by the company is lower compared to IHG and Marriot International Corp. Red Lions Hotels offer the lower price compared to its rivals and customers naturally prefer Red Lions Hotels, although the brand of the company is less renowned than that of Marriot International Corp., for instance. Seventh, availability of service contracts is also important for the successful business development in the hospitality industry and Red Lions Hotels hold a strong position in this field. At any rate, the company is open for cooperation with reliable suppliers of products and services that meet the company’s quality standards. Eighth, the company has average time in business (for future service) compared to its major rivals. Nevertheless, the company still can compete successfully (Peters, 351). Ninth, the company offers its customers warranty length and coverage to make them confident in the reliability of the company, although, in this regard, the company is similar to that of its rivals. Tenth, the convenience of show room attracts customers because they want to enjoy rooms, where they stay. In this regard, Red Lions Hotels is one of the leaders in the industry. Eleventh, the customer loyalty is high for Red Lions Hotels, although IHG is in an advantageous position in this regard. Finally, the service quality is one of the priorities of Red Lions Hotels and the company competes successfully in this field. In such a way, the competitive profile matrix reveals the strong competitive position of Red Lions Hotels in the market.
At the same time, today, the hospitality industry and companies operating in this industry are vulnerable to the impact of different trends, which affect consistently the position of Red Lions Hotels in the market. First of all, it is worth mentioning the fact that the deterioration of business environment caused by the economic recession and global financial crisis is one of the major trends in the contemporary business environment (Mohrman, 194). The company faces a number of problems caused by the financial crisis and economic recession. The company needs financial resources but the financial crisis has limited consistently financial opportunities of the company. For instance, the company has limited access to bank loans because many banks grow extremely concerned with their loans but, as they have limited financial resources, they cannot provide companies like Red Lions Hotels with excessive loans.
Furthermore, the drop of consumption and spending among customers is a serious threat to the further business development of Red Lions Hotels and other companies operating in the hospitality industry because companies face the consistent decline in the number of customers using their services. In such a situation, customers attempt to save their costs and they look for cheaper hotels and other options to save costs in the time of economic recession. Therefore, Red Lions Hotels focus on the development of positive company-customer relationships to maintain the customer loyalty. As a result, the company attempts to enhance its position in the market.
Finally, the growing competition in the hospitality industry is a serious threat for Red Lions Hotels because the company needs to accelerate its business development to take a competitive advantage (Viardot, 261). In this regard, it is possible to recommend developing customer loyalty and attract customers due to the high quality of services offered by the company to its customers and affordable price they have to pay for the company’s services.
Thus, Red Lions Hotels hold a strong competitive position in the market but the company is still vulnerable to the impact of negative trends in the market. Nevertheless, the company has the potential and resources to cope with current challenges, such as the economic recession, the drop of the number of customers and the growing competition. In this regard, the company should focus on the improvement of the quality of its services to increase the customer satisfaction and customer loyalty.
Mohrman, S. A. Tomorrow’s organization: Crafting winning capabilities in a dynamic world. San Francisco: Jossey-Bass, 1998.
Peters, T. J. In search of excellence: Lessons from America’s best-run companies. New York: Harper & Row, 2002.
Viardot, E. Successful Marketing Strategy for High-Tech Firms. New York: New Publishers, 2001.