Are Corporate Hotels Breaking the Chains of Vertical Integration?

In recent years, the corporate hotel industry has witnessed a momentous shift towards vertical disintegration, signaling a departure from the traditional practices of total control and ownership. This significant transformation has given rise to a multitude of opportunities and challenges for both hotel chains and independent hoteliers alike.

Understanding Vertical Integration

Vertical integration refers to a business model where a company possesses or controls multiple stages of the supply chain, from production to distribution. In the hotel industry, this typically involves the same company owning and operating all aspects of the business, including real estate, management, and distribution.

While vertical integration has been a popular strategy in the corporate hotel industry for decades, various factors have led to its decline in recent times.

Vertical Disintegration in the Corporate Hotel Industry: The End of Business as Usual (Routledge Research in Hospitality Book 1)

by Angela Roper(1st Edition, Kindle Edition)

5 out of 5

Language	:	English
File size	:	2358 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
Word Wise	:	Enabled
Print length	:	196 pages

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The Emergence of Disintermediation

Disintermediation, characterized by the removal of intermediaries from a supply chain, has become increasingly prevalent in the digital age. The rise of online travel agencies (OTAs) and third-party booking platforms has significantly disrupted the traditional hotel distribution landscape.

Instead of relying solely on chain-affiliated channels for bookings, travelers now enjoy the convenience of comparison-shopping through various websites and platforms. This shift in consumer behavior has propelled hotel chains to reconsider their approach and explore alternative distribution models.

The Benefits of Vertical Disintegration

Vertical disintegration offers several advantages for the corporate hotel industry. By divesting physical assets, such as real estate, chains can achieve improved operational efficiency and cost reduction. This allows them to allocate resources more strategically towards enhancing guest experiences and expanding their brand presence.

Furthermore, a diversified ownership structure through franchising or management contracts can enable hotel chains to penetrate new markets and cater to different consumer segments. This flexibility proves invaluable in adapting to evolving industry dynamics and consumer preferences.

Opportunities for Independent Hoteliers

While vertical disintegration presents challenges for established hotel chains, it also opens doors for independent hoteliers. With the emergence of numerous online platforms, independent hotels can now access a global audience and compete on a level playing field with their larger counterparts.

By actively leveraging new technologies and digital marketing strategies, independent hoteliers can differentiate their properties and target niche markets effectively. Additionally, they have the freedom to integrate with a multitude of distribution channels, expanding their reach and driving occupancy rates.

Challenges for the Corporate Hotel Industry

Despite the opportunities provided by vertical disintegration, it is not without its challenges for the corporate hotel industry. Chains must carefully navigate the complexities of maintaining brand consistency and quality across a wide range of independently owned and managed properties.

Furthermore, maintaining strong relationships with franchisees and leveraging their local expertise becomes crucial in ensuring overall customer satisfaction. Efficient collaboration between franchisors and franchisees is essential for achieving consistent service standards and guest experiences.

The Future of the Corporate Hotel Industry

As the hotel industry continues to evolve, the trend of vertical disintegration is likely to persist. Hotel chains must adapt and strike a delicate balance between maintaining brand control and allowing flexibility in the pursuit of growth.

Furthermore, technology will play an increasingly vital role in streamlining operations, enhancing guest experiences, and facilitating efficient communication between hotel chains and their partners.

Ultimately, the future of the corporate hotel industry lies in successfully embracing vertical disintegration, harnessing technological advancements, and capitalizing on the myriad of opportunities it presents.

The vertical disintegration of the corporate hotel industry represents a paradigm shift that impacts all stakeholders involved. Hotel chains and independent hoteliers must seize the opportunities it presents while addressing the challenges, to remain competitive in a rapidly changing market.

By embracing change, leveraging technology, and fostering strong partnerships, the hotel industry can continue to flourish, creating memorable experiences for travelers worldwide.

Vertical Disintegration in the Corporate Hotel Industry: The End of Business as Usual (Routledge Research in Hospitality Book 1)

by Angela Roper(1st Edition, Kindle Edition)

5 out of 5

Language	:	English
File size	:	2358 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
Word Wise	:	Enabled
Print length	:	196 pages

FREE

This book evaluates how and why vertical disintegration has occurred in the global corporate hotel industry, as it undergoes a structural transformation. It provides a unique insight into the new competitive landscape. Underpinned by academic literature, it includes first-hand accounts from the most eminent senior executives of firms in and around the industry. It provides an in-depth perspective of a modern industrial phenomenon and makes observations as to the profitable way forward for the industry.

This text is an important read for those working, advising and investing in the sector as well as for students, graduates and researchers.