Moscow Hotel Market: Determination of Attractiveness and Development Frends

<p>The present graduate qualification work deals with the analysis of Moscow hotel industry attractiveness and outlines potential tendencies and driving forces typical of the industry. Such characteristics as industry attractiveness is extremely important in the process of making strategic decisions by investors, current companies and those which are planning to enter the industry. Potential driving forces, as well as tendencies in the industry could provide vital information for shaping an effective strategy or making amendments to existing one. This whole process is impossible without the understanding of companies&rsquo; external environment and general industry analysis which also will be conducted as part of the qualification work.</p><p>The subject being analyzed is the luxury segment of the Moscow hotel industry. Even though Moscow hotel industry is the most profitable and growing, the level of its development is significantly lower the index of other European cities. Due to this fact the analysis of existing and potential attractiveness of luxury segment, which is the most promising one in the region, seems to be especially interesting.</p><p>The goal of the present works it to define the attractiveness of the luxury hotel segment for existing hotels, investors and companies considering the segment entrance. The determination of tendencies and driving forces is conducted for better understanding of segment development prospects and profitability in the future.</p><p>Work objectives include the following:</p><p>1) Consider the theoretical basis of strategic industry analysis;</p><p>2) Analyze the industry in terms of economic performance;</p><p>3) Select the existing factors affecting the industry;</p><p>4) Determine the competitive situation in the industry and outline the existing segments;</p><p>5) Select the key success factors for the segment of 5-star hotels;</p><p>6) Identify the major driving forces, trends and prospects in luxury hotel segment and the industry as a whole.</p><p>The luxury segment analysis conducted using the model of Porter&rsquo;s five forces has shown that the segment is considered to be attractive for industry actors except for the high entry barriers. These barriers include fierce competition from the existing popular and branded hotels and high initial investment and capital expenditures. This factor may be restrictive for investors or new-comers without well-known brand name or popular global hotel chain, while it is not so crucial for international operators with sufficient tangible and intangible assets.</p><p>The results demonstrate that driving forces in the segment include development of sales channels in the form of cooperation with online booking services; active industry globalization; hotels promotion through mobile applications and social networks , the growth of business tourism, etc. The analysis showed that luxury hotel success is now less dependent on tangible assets and more - on intangible ones, which are one of the major key success factors in the segment (well-known and trusted brand , qualified personnel, advanced CRM system, etc.)</p><p>Despite high entry barriers, the luxury segment seems to be quite attractive for both existing firms and potential investors (as segments of office, warehouse , retail real estate are almost saturated, which is not the same for hospitality industry). Nevertheless , despite the shortage of mid-scale hotels, the luxury segment will remain attractive for a long time due to its high profitability, growth potential and&nbsp; absence of substitute services.</p>