Some of the major vendors in the hotel industry are food wholesalers, advertising agencies, and organizations that offer services that hotels can provide like dry cleaning or catering. A lot of these supplies can probably be obtained online from various vendors, so the Bargaining powers of suppliers are relatively low. Because of how close the Ritz-Carlton is to Temple, the supply of employees is relatively large because college graduates of the hospitality program at Temple or other local schools will be looking for work. The suppliers bargaining power would be low because if a provider raises the prices on Marriott, it would not be good for the vendor. There is a total of 16,000 hotel rooms in Philadelphia County (DiscoverPHL, 2016). Marriott owns 3,968 of those rooms, and now that Starwood has been acquired, the new total is 6,572 rooms. Marriott will then account for 41 % of the hotel rooms in Philadelphia (Supplier Network 2016).
Threat of substitute products
As Airbnb and other shared economy vendors becoming increasingly valid in the world of corporate travel, people might seek out those accommodations instead of hotels to save money. Many of the Airbnb options in Philadelphia are a fraction of hotel prices. However, consumers are also willing to pay hotel prices for an Airbnb option. The average ADR for Airbnb was $148.42 while hotel’s average was $119.11. That is a $29.31 difference in ADR. The ADR tells us that the average price of an Airbnb room is more than an average price of a hotel room. People are willing to pay more for an Airbnb then a hotel. We see that in Appendix 7 that the central cities are taking part of Airbnb, and it is slowly growing. In Appendix 8 we can see how successful Airbnb has become over a couple of years. In Appendix 9 you know Philadelphia has an active unit growth percentage of 184.9%, which means that Philadelphia Airbnb inventory is going to increase rapidly in the future. (Clampet, 2016)
Bargaining power of buyer
Business travelers are recurrent travelers, therefore, more experienced travelers. This knowledge gives them a tremendous amount of buying power. Those who travel more often are going to look for accommodations that can substitute their home (O’Donnell, 2015). Business travelers mean they will have higher expectations because they know what they want- and less patience with poor service. These travelers will also take more factors into consideration when choosing a hotel.
The customer bargaining power is very high because they have the choice from many hotels in the area. With the over saturation of the market customers have choice to picking which hotel they want to go with. There are 85 hotels in Philadelphia area (TripAdvisor LLC, 2016). There are 20 hotels in the near vicinity of the Ritz Carlton. Appendix 10 shows all of the different hotels customers can choose from the local area