Environmental Analysis of Travelodge UK

Environmental Analysis of Travelodge UK

 

The Travelodge UK chain of budget hotels is the second largest in the United Kingdom,

with 380 branches in the UK, Ireland and Spain which are offering more or less 20,000

rooms. The chain employs innovative marketing strategies that have resulted in 6.5

million guests staying in their hotels in 2010 and 2.2 million people visiting their website

each month.[1]

 

 Travelodge is the lowest-priced hotel that offers more value for money spent and is

committed to a healthy environment with its 100% smoke-free policy. The hotel allows

 browsers to compare its rate with those of other establishments and to check what it

offers for the lowest price, which is basically towel, pillows and tea. It also provides

personalized directions to the location of the preferred hotel branch of customers, as

well as a mobile booking service for time-pressed customers. Travelodge prioritizes the

privacy and security of customers in their online and mobile transactions and has a

customer-friendly website. The chain’s focus on low price and the C and D market is its

competitive edge and what makes it attractive to budget-conscious travelers. This also

accounts for its 31% market share in budget hotels.[2]

 

The business strategy suitable for Travelodge UK can be analyzed using several

models or frameworks.

The Political, Economic, Social, Technological, Legal and Environmental (PESTLE)

analysis tool considers the bigger picture in which the business is operating. By

understanding the operating environment of a business independent of its

internal operations, the business can take advantage of the opportunities and minimize

 the threats both present therein. PESTLE is useful in understanding risks connected

with market growth and decline, and their relevance in the position, potential and

direction of the business.[3]

Porter’s 5 Forces modeling framework for business analysis considers the following

factors:[4]

Rivalry – refers to the striving of firms for a competitive edge over their rivals.

Threat of Substitutes – refers to the impact on product demand of price changes in

products of other industries.

Buyer Power – refers to the price determination by the buyer in a market where there

are many suppliers.

Supplier Power – refers to the impact of high-priced raw materials to the business.

Threats of New Entrants and Entry Barriers – refers to the entry of new firms in the

industry that will pose competition and the artificial lowering of prices by the business to

prevent potential market entrants.

The Boston Consulting Group (BCG) matrix tool considers the life cycle of a product in a

portfolio to determine the priorities of a business. The categories in a portfolio are the

following: [5]

Stars – refer to high growth, high market share products that use plenty of cash.

Cash Cows – refer to low growth, high market share products that need minimal

investments.

Dogs – refer to low growth, low market share products that should be minimized and

avoided by a business.

Question Marks – refer to high growth, low market share products that demand plenty

of cash and effort to increase market share.

The Ansoff growth vector matrix considers the business’s present and potential

products and markets via the following product-market combinations:[6]

Market Penetration – refers to achieving growth with existing products and markets.

Market Development – refers to achieving growth by introducing products to new

markets.

Product Development – refers to developing new products for existing markets.

Diversification –  refers to achieving growth by developing new products for new

markets.

 

After reviewing these business analysis frameworks, my choice for the most suitable

and recommendable for Travelodge UK is the PESTLE analysis tool. This well

established and patronized budget hotel business must continuously monitor economic,

social, technological and environmental developments both locally and globally in order

 to make adjustments as needed. Regular and potential customers are seeking more

 value for money spent, convenience, excellent customer service and environment

friendly settings in these times of economic uncertainty.

[1] “Strategic Analysis of Travelodge, UK”, 4 June 2011, <http://ivythesis.typepad.com/term_paper_topics/2011/06/strategic-analysis-of-travelodge-uk.html>

[accessed 8 June 2011]

[2] ibid

[3] “PEST/PESTLE Analysis Tool – History and Templates”, RapidBI, 29 January 2007,

<http://rapidbi.com/created/the-pestle-analysis-tool/>  [accessed 8 June 2011]

[4] “Porter’s Five Forces” QuickMBA, 2010, <http://www.quickmba.com/strategy/porter.shtml>

[accessed 8 June 2011]

[5] “BCG Matrix”, Value Based Management.net, 7 January 2011,

<http://www.valuebasedmanagement.net/methods_bcgmatrix.html>  [accessed 8 June 2011]

[6] “Ansoff Matrix”, VectorStudy.com, 2008, <http://vectorstudy.com/management_theories/ansoff_matrix.htm>  [accessed 8 June 2011]

Credit:ivythesis.typepad.com