Competition
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Step 4/10: Competition in the market
A way to check the competition is by looking at three types of competition:
- Generic competition (on time and money)
How many people travel, what is the average income? How, on average, do they spend their income? What are the consumers' sentiments? Consumers can only spend their money - and their time - once. Try to use some realistic figures from you real local situation in your country.
- Specific competition (or alternatives).
If consumers decide to spend their money on leisure, they can choose to stay in a hotel, a campsite, use Airbnb, stay with friends and relatives etc. Try to use some realistic figures from your real local situation.
- Selective competition (with your direct competitors)
If consumers choose for a hotel, other competitors offering practically the same product are the most likely competitor. The competition is now mostly based on brand and product specifications. We call these the direct competitors. The the city Emerald Forest Hotel is located in, there is ten other hotel who the Bergman's consider to be (direct) competitors.
Together
As the normal economic competition rules apply to your city, you are not allowed to work too close together on prices with competitors: making price-covenants with competitors is forbidden and illegal. It is considered important that customers have a free choice and that there is serious competition. Creating an organization which covers the interests of several hotels or of all of the hotels (for instance, in a promotion) is a normal thing, and not done yet in the city. This could be a DMO. Any serious cooperation could bring advantages to the partners if there was a serious ground (an agreement) and described obligations and advantages for all parties: it will also bring soem costs.
Secret
A lot of information on your competitors is freely available. Some information should be kept secret not only for the sake of your hotel, but also by law. If problems arise you could accuse another hotel of an illegal action, or for that matter, get accused. You could get a a fine related to (for instance) legal issues or, for that matter, also bonuses.
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