Essays on Price and its Effect in Shaping the Competitive Ability of Hotels Essay

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The paper "Price and its Effect in Shaping the Competitive Ability of Hotels" is a good example of macro and microeconomic essay.   The hotel industry is a competitive one. Like any other economic venture, the factors of supply and demand apply in shaping the prices in the hotel industry. Besides the economic forces shaping the prices as will be discussed, there are other forces that come in and alter the prices in the hotel industry. Considering the fact that the guests in hotels will always consider what is affordable to them, the hotels are faced with an added burden of ensuring that they offer competitive prices in order to outdo their counterparts.

The increase in new entrants in the market has resulted in each hotel trying to scoop a share of the market. This is not always easy since some factors play a part in driving the prices higher than the hotel operators may expect as will be discussed below. Factors affecting prices in the hotel industry Supply and demand In economics, there are two major forces that are involved. The two forces are related to each other, in that, they affect the prices of commodities or even the services offered.

The rule is that when there is an increase in demand, there is an expected increase in prices if all the other factors remain constant. It follows also that when there is an increase in the supply, ceteris Paribas, the prices of the commodity in question will go down. It is, therefore, the norm that the buyers have the power to change the prices of commodities with the changes in their need for specific commodities.

It is not much different in the hotel industry on the dynamism of supply and demand, only that in this case, there is no commodity in question but rather, the services offered by the hotels including food, accommodation and any other related service that a hotel may offer. These two factors ensure that the prices in the hotel industry are at a certain range. It is upon the hotel operators to look for ways of offering much more at lower prices.

References

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Price water House Coopers 2009, The Australian Hotels Industry available from

< http://aha.org.au/wp-content/uploads/2011/04/PWC-Hotel-Industry-Report-20092.pdf>

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Tourism Accommodation Australia 2013, The Carbon Tax and Australia’s Accommodation Industry: Tourism Accommodation Australia. Available fromwww.tourismaccommodation.com.au

Allan,w & Jamie, L 2011, Hotel supply: Where are we in the cycle?

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