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Introduction
Some conditions offer different companies the advantages of manufacturing goods and services at relatively low prices for their customers. Strategic advantages allow companies to generate more revenue in a competitive environment (Lestari et al. 365). The rationale is that they are positioned to provide their clients with goods and services at relatively lower prices than their rivals. Several factors play into formulating a companys strategic advantage, including the cost structure, customer support, intelligence, branding, and distribution network. The significance of strategic advantage is that it provides an edge against rival companies at the end of high-value production. This report provides a UK-based companys evaluation of its strategic advantage concerning pricing. Travelodge, a UK-based hotel, will be evaluated against two choice models to determine its positioning for success against its competitors in terms of pricing.
Travelodge hotel is a private hotel-based company in the United Kingdom. It provides service for the hospitality industry with a bedroom capacity of 44984 spread throughout the country. The bed capacity places and budget hotel places the company second in the UK hotel chains. The company offers guests various services, including en-suite bathrooms, free connection to the internet, free drinks such as tea and coffee, LCD, and widely spaced rooms (Travelodge 1).
Customer reviews of the hostel are good, a parameter that will likely draw several other tourists to their premises. Different hotel facilities are spread all over the country to provide customers with various choices. Such facilities are near shopping centers and various restaurants for tourist accommodation purposes. In this regard, whatever the pricing value that the company places on its services, they stand advantaged against its competitors.
Since an eternal pricing factor has been identified, it is pertinent to understand how Travelodges pricing strategy works. Travelodge offers different packages of bookings, including flexible rates, saver rates, and group bookings. While booking across multiple hotels is almost impossible, booking up to 10 rooms is allowed even through online platforms such as group bookings (Travelodge 1). After the reception of the confirmation number, the booking is not transferable. Rates of bookings per room depend on various factors and range from between 46 pounds to 200 pounds. All of these payments are available in the public domain on their websites. They provide cancellation services where flexible rates are refundable. Saver rates, however, do have not refunded in full; instead, there is a discounted proportion that is allowed. Refund for cancellation of group bookings is subject to contracts signed by the organization (Travelodge 1).
VRIO Framework Assessment of Travelodge
VRIO is an acronym of four letters that stand for value, rarity, imitability, and organization as a framework for analyzing an organizations position (Lee et al. 1-8). This analysis provides the VRIO analysis of the Travelodge Company because of its pricing against its competitors.
Value
This aspect solicits whether an organization offers resources that add value for its customers. In the case of Travelodge, it has already been determined that they provide services that add value to their customers. Services including spacious rooms, WI-FI connection, LCD, and complimentary beverages add value for their customers (Travelodge 1). Despite a good customer rating, Travelodge Company does not provide room, porter, or concierge services. These are services that are common to any company that provides accommodation services. In this regard, customers are prone to shying away from Travelodge to other service providers who may have these value provisions. In assessing value provision, Travelodge falls short of the basic requirements. There is, therefore, a need for adjustments in pricing based on these revelations.
Rarity
This aspect of the VRIO framework solicits whether an organization controls scarce resources and capabilities. Because of rarity, Travelodge does not have the monopoly of controlling any scarce resources within the hotel industry in the United Kingdom. While they provide over 44984 tourist hotel rooms for accommodation, it is on record that this is second after Premierinn hotels in terms of the budget hotel industry. Notably, the two hotels provide a rarity compared to Vlodge, and as such, it suffers a price disadvantage against the two companies.
Imitability
Imitability requires organizations and companies to have resources and capabilities that are almost difficult to replicate. The argument is that when they have capabilities and resources that are not imitable, they can provide services that allow for specialized preferences that cannot be sought elsewhere. This strategy monopolizes their service-making and gives them an economic advantage against other service providers. The brand of Travelodge hotels is very costly to imitate. Their design for responsible luxury is also complicated to imitate. Whereas imitation occurs in the duplication of products and production of substitute products, the patent and copyright that the company has on its design and brand are almost impossible to imitate. However, the services they offer are offered by almost all the other substitute companies. Arguably, the organization enjoys a pricing advantage based on its brand and not the quality of service it provides.
Organization
This parameter of the VRIO solicits a company to have a management system and structures that place it ahead of the rest in capitalizing on resources and capabilities. The only viable asset of management that Travelodge has is its human resources. They also provide training to their staff. This information is resourceful in helping the company to deal with customer needs and skyrocket their experiences. It is notable that almost all other rival companies, like the Premierinn hotels, have similar arrangements. If this is the only management asset and layout of structures that the company has, it is prone to suffer a price disadvantage against its competitors.
Value Chain Framework for Travelodge
The value chain framework summarizes the steps that are pertinent to the creation of a finished product. It involves the processes that go into the sourcing, manufacturing, and marketing stages of the entire production process. The value chain model is essential because it helps foster the efficiency of a business for the product of the value at the least possible cost. The value chain framework has five components: inbound logistics, operations, outbound logistics, marketing and sales, and service.
Travelodge hotel of the UK provides complimentary beverages for its clients. It also provides laundry services when it is necessary. They provide all these through a systemized arrangement that follows all agreements of the governments institutions. In addition, they have an HR team that deploys employees for inventory control management. Analytically, these are inbound logistics provided by all other hospitality service providers. For strategic advantage, Travelodge Company cannot benefit based on their inbound logistics.
Operations
The operational procedures of Travelodge follow that of any other industry that provides service for the accommodation industry. The HR of Travelodge ensures that all staff has been trained to function in their respective capacities. Customer reviews rate the hotel as one of the best in the UK to mean excellence in operations. The customer ratings place the Travelodge hotel at a point of advantage compared to other hotel service providers.
Outbound Logistics
Travelodge offers a variety of services to its clients. They provide complimentary beverages, internet connection, and wisely spaced rooms. Any organization that offers hospitality will have the same services. On the flip side, they fail to provide essential services which are logistically necessary. They fail to provide courier services, room services, and concierge services. Travelodge is bound to suffer a strategic price disadvantage compared to other service providers.
Marketing and Sales
Travelodge primarily utilizes its brand as a marketing parameter. This step is not enough. In the wake of technology, this company ought to deploy techno-friendly marketing strategies to reach a vast marke. In addition, other marketing strategies such as giving discounts to group bookings, giving special offers, and digital marketing are a few marketing strategies that Travelodge needs to deploy. At present, they are doing some of these things; it is only advisable that they increase their capacity to provide them with a pricing advantage against other competing service providers.
Service
It is not arguable that Travelodge offers some of the best services in the industry. The company provides fully furnished rooms, family rooms, group bookings, affordable pricing, special deals, and other services. The argument is that all other top hotels provide the same services. This reality makes the industry competitive, making the commodity and service prices relatively cheaper. If Travelodge does not incorporate additional services to spruce its bargain, it will likely suffer a strategic disadvantage.
Challenges and Tensions of The Effect of Pricing
Having analyzed the position of Travelodge as a service provider in the hotel industry, it is evident that the company stands neither disadvantaged nor advantaged. However, if the company does not deploy a few measures and strategies, several effects will face the company and its stakeholders. When the business begins to lose customers, revenue declines and presents a situation where shareholders shy away from investing in the company (Aman 79-105). Travelodge stands where its rivals will quickly take some of its clients if it does not implement measures to achieve a price advantage.
The capability and the resources of the company are then strained in order to meet up with quota allocations. As a result, the depletion of such resources and capabilities generally leaves the company bankrupt and phased out. The organizational culture is also affected because its employees can no longer interact with their clients as before. Hopefully, this is a situation that Travelodge can avoid by implementing strategies that would provide it with a price advantage.
SWOT Analysis Table of Travelodge
This table summarizes the strengths, weaknesses, opportunities, and threats facing Travelodge Company. It summarizes the analysis of the VRIO and the Value Chain framework of the organization, as discussed. Therefore, it provides a rough positioning of Travelodge with pricing against its competitors.
TOWS Analysis of Travelodge
Conclusion
Travelodge sits where it can either tilt towards achieving a competitive advantage or not. It provides accommodation services in the United Kingdom, which several other service providers also provide for that it must have a price advantage over. Most of Travelodges strengths are characteristics shared well among its competitors. There is a need for the company to rise and do things differently and achieve different outcomes.
As such, some of the few interventions the company must address include; upgrading its services, strengthening its imitability status, deploying technology for marketing, expanding its service space to the international domain, and revising its policies on overbooking. Travelodge hotel must also build its production capacity to control scarce resources and capabilities. These provisions have been arrived at through VRIO analysis, the value chain framework, and the SWOT analysis. Further implementation of the TOWS analysis provides a clearer path that Travelodge can deploy for greater success.
Works Cited
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Lee, Jun-Ho, Taejoong KIM, and Hyunjun PARK. Smart Studys Strategy in the Kids Content Industry: VRIO Framework. The Journal of Economics, Marketing, and Management 8.3 (2020): 1-8. Web.
LESTARI, Setyani Dwi, et al. Antecedents and Consequences of Innovation and Business Strategy on Performance and Competitive Advantage of SMEs. The Journal of Asian Finance, Economics and Business, vol. 7, no. 6, Korea Distribution Science Association, 2020, pp. 365378. Web.
Travelodge., Booking Terms and Conditions. . 2022. Web.
Travelodge Where Would You like to Go? . Web.
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