Micro environment and Macro environment analysis of Trans Asia Hotels PLC and Taj Samudra Colombo Sri Lanka.

              In this blog, the author focuses on two hotels which caters luxury hospitality  service in Sri Lanka. Cinnamon Lakeside Colombo which operates under Trans Asia Hotels PLC and Taj Samudra Colombo which operates under Tal Lanka Hotels PLC are the companies of concern under this discussion. Both these hotels are considered to be five star hotels and both have been operational in the country for the last decade.   

  

Micro environment analysis

  “Industry rivalry” is one of the major challenges that the Cinnamon Lakeside Colombo hotel is currently faced with due to both approximately 10 numbers of hotels currently running in the country offering the same standard of service to the customers and with the proposed new chain of hotels such as Shangri-La hotel about to start their operations in the country.  “Bargaining power of buyers” or the pressure that the customers put upon the company to lower the prices of its offerings is high, again due to high availability of companies providing the similar type of offerings. For instance the hotel would not be able to increase its room charges or prices of food and beverages as and when the hotel requires it to be increased, it will always have to consider the same of its competitors and set suitable prices accordingly. When considering the “Bargaining power of suppliers” with regard to the company of concern, it is apparent that most of the products such as liquor and other beverages, dairy items and sanitary products etc that the hotel resells to its customers are branded ones. Therefore the hotel maintains annual agreements with these suppliers to get their supplies at a mutually agreeable price. This process helps to get the required supplies at a constant price, on a pre defined delivery schedule throughout a given financial year.  When considering the “threat of substitutes” with regard to the company of concern, it is evident that the recent rapid spread of four star hotels in the island has brought a direct impact on hotel Cinnamon Lakeside Colombo affecting many areas of its operations. Especially after ending the war in 2009 which lasted for nearly 30 years, and with the governments’ support enabling rules and regulations for foreign investments, together with rapid infrastructure development activities across the country, now the foreign investors consider Sri Lanka as one of their potential places for business initiatives. Hotel Shangri-La is one of the world renowned chains of hotels which have chosen to run their operations in Sri Lanka starting from 2017. Entering of such internally reputed brands into the Sri Lankan tourism industry could bring about huge competition within the sector.   

 Macro environment analysis 

  With the change of government in 2015, the country is currently experiencing a stable political environment and especially the new government’s flexible foreign policies and the way in which it maintains relationships with the international community is really beneficial to the country in terms of the expansion in the tourism industry and getting more foreign investments to the country. Economic wise, the county is currently making a moderate progress and most of the infrastructure development projects are put into a temporary pause due to various issues in the budgetary allocations, issues with the contractors etc. General public is also affected by high taxation imposed by the government, affecting their day to day lives and forcing them to allocate less for their leisure activities. This in general has affected the hotel and tourism industry and has some impact on the income of the hotel Cinnamon Lakeside Colombo.  When considering the ‘Social’ factors influencing this industry, it is noticeable that within the last decade or so the people in Sri Lanka adopted a more westernized life style and allocated more time for travelling and leisure activities. This trend opened up many opportunities for the organizations in the hotel and tourism industry and helped to find more income avenues. Technological development, especially the developments in Information Technology (IT) sector have opened up unexploited markets within the hotel and tourism industry. Information through web sites, online room reservation systems, and in house inventory management systems are some of the IT features used by the hotel and use of these technological features has made direct impact on increasing revenue of the company.