Question

Is the product or service of the hotel industry standardized or differentiated? Explain. Compared to other industries, is it difficult or easy to enter the hotel industry? Explain. Are there examples of nonprice competition in the hotel industry? Illustrate. Based on the above, would you say that the hotel industry is monopoly, oligopoly, monopolistic competition or perfect competition? Explain.

Answer 1

Is the service Differentiated?
Yes, because a number of hotels provide a range of additional services from Valet parking, health club access, pool & spa, breakfast and dinner cuisine etc, which may or may not be provided by other firms. Hence, they too try to make their service stand out from the other rival firms

Easy to Enter?
No, there are many barriers to entry: from acquiring and constructing a hotel at a prime location to providing a number of additional complimentary services, user's ratings and reviews on web portals etc, which make it easier for established players to attract new customers, while new entrants find it difficult.

Nonprice competition
Yes, a number of features such as Complimentary services, ambience, ratings and display on travel portals, type of cuisine being served etc are non price competition which hotels engage in, and price often becomes a lesser priority

Hotel industry is clearly an example of Monopolistic Competition (Oligopoly if located in a small town) engaging in non price competition, differentiating its service etc