Concept Statement
Event Host is designed to provide a platform on which property owners can rent out spaces for events for small and large groups of individuals. Catering services are getting increasingly expensive and out of reach for the regular consumer interested in hosting a group of friends in an exotic location. The idea for this business venture was triggered by the exorbitantly high cost of hiring catering services for an event at a non-traditional location. There is a gap in the market for affordable catering services at unique locations. The target market is organizations that offer team-building exercises to their employees and individuals interested in hosting birthday parties or celebrations that include a minimum of two people.
The services are structured such that the company will provide packages in which consumers can either have catering services provided at a fee or have their arrangements on a location listed on the website. A registry of hosts in various locations will be easily accessible. It is also worth noting that hosts that can provide catering services will be allowed to do so under a structured payment plan available on the website. The route to market will be through online marketing initiatives. The value to the consumer is easy access to affordable venues to host events in prime local locations at an affordable price. The lean canvas highlighting key aspects of the proposed business is highlighted in Table 1 below.
Concept Validity
Competitive Environment
The hospitality industry has been heavily influenced by various factors, each of which has facilitated a paradigm shift in the manner in which organizations conduct business. Events such as the 2008 financial crisis and evolutions in the Internet and other technologies have facilitated numerous changes in the last decade (Nannelli et al., 2019). One of the most significant transformations is the advent of short-term rental businesses run through online platforms in a novel paradigm of peer-to-peer consumption (Nannelli et al., 2019).
Porter’s Five Forces Model is best for contextualizing shifts within the hospitality industry. Peer-to-peer rental systems go against established boundaries in the industry.
The observed trajectories in the industry reflect political, economic, and social global trends. The rules in the hospitality industry have changed due to the evolution of ICT and regional laws adopted by different governments. Five key forces determine the degree of competition seen in any market. These are “competition in the industry, the potential of new entrants, the power of supplies, the power of consumers, and the threat of substitute products” (Nannelli et al., 2019, p. 464). It is worth it because technology has played a vital role in the evolution of the hospitality industry. For instance, digital platforms have facilitated the growth of new businesses that benefit from the availability of numerous connections that are flexible and non-binding.
Porter’s Five Forces Model
Competitive rivalry significantly influences the degree to which business will be conducted in any given environment. The number of well-established competitors has increased significantly due to the development of the Internet and ICT. The International hospitality industry is growing fast and is estimated to bring in 7.6 trillion dollars and create 292 million jobs annually (Ruel & Njoku, 2021). In addition, the heightened level of visibility and transparency has intensified competition among existing brands. The competitors in this segment include Airbnb, Hotels.com, and Booking.com. The market’s attractiveness is marginally reduced because most of the products in the market are undifferentiated, thus significantly raising the degree of competition.
Supplies have increased their bargaining power significantly as a result of increased efficiency. They have access to a wide range of interested businesses, which drives demand for their products and services. The high costs of switching from one supplier to another and the uniqueness of the services and goods provided impact supplier market position immensely. In addition, the limited number of suppliers means that businesses in the hospitality industry must contend with a relatively high cost of supplies.
Buyers have a particularly high power in the hospitality industry, as they have access to various products and information. In addition, various organizations have implemented loyalty programs designed to increase referrals and overall market share (Myo et al., 2019). The elimination of traditional offline models and the introduction of easily accessible and cheap options over the Internet give consumers significant power (Stafford, 2020). Therefore, the cost of switching from one business to the next is exceptionally low for buyers, thus increasing their capacity to drive prices down.
The threat of new entrants is a significant factor to consider when assessing the tourism industry’s competitive environment. The threat of new entrants is very high, given the Internet’s extensive reach. New players can identify new niches and expand their sales channels owing to the exponential increase in creative distribution (Nannelli et al., 2019). They have also significantly increased their efficiency. Studies conducted at Ford Motor Corporation demonstrated that employees lose between 15-25% of their time on non-productive information-seeking activities (Kalra et al., 2020). This is no longer the case due to advancements in digital technologies. Digital platforms allow numerous individuals and organizations to supply products and services in the hospitality industry. The introduction of efficient communication channels reduced marketing costs, thus facilitating the entry of new players.
Prior to the developments experienced in ICT, the threat of substitutes was controlled by a strong brand identity or exponential switching costs. The scenario in the contemporary market is quite different because the Internet has forced businesses to offer a wide range of options, significantly lowering the barrier for substitutes. For instance, the travel and tourism sector experienced 3.5% growth in 2019, significantly higher than the global economic growth, which was recorded at 2.5% for the ninth consecutive year (Stafford, 2020). New players can easily access the market and offer various products and services.
Lean Startup
The modern business environment is characterized by the desire to reduce waste, maintain product quality, and enhance production. The lean management system assumes that any loss encountered is spread to the entire hospitality industry chain (Foris et al., 2020). Therefore, measures designed to eliminate losses are prioritized in order to create value for the customer. The lean startup model prioritizes the development of products in which consumers have demonstrated significant interest (Bocken & Snihur, 2020). Therefore, a market for such products already exists, meaning the new business will likely thrive and succeed.
Customers
The target consumers are business organizations and individuals seeking venues for team-building exercises or events. There is a gap in the market for affordable rental spaces for events. It is, however, vital to consider the impact of Covid-19 on the market. The global market is slowly recovering from the devastating effects of the crisis, demonstrating innovation’s value in the hospitality industry (Khan et al., 2021). Various new ideas have been implemented in the industry to help combat the social and economic effects of the pandemic. For instance, service delivery systems have evolved to prioritize consumer health and safety (Seyitoğlu & Ivanov, 2020).
Physical distancing and robotic services have become the norm in the hospitality industry. Internet-based services have become immensely popular because they limit physical contact, thus protecting consumers from potentially deleterious health effects. Health-conscious services are, therefore, highly desirable in the context of the global health crisis.
Cost and Revenue Structure
Event Host will employ a specific cost and revenue structure to provide consumer services. A proactive crisis response strategy demands the implementation of a dynamic pricing and booking strategy (Piga et al., 2022). Therefore, the applied strategy should remain adaptable and be determined by the intensity of the crisis. In addition, it should be designed to accomplish particular organizational goals. Effective pricing strategies can withstand turbulence and have the capacity to allow businesses to survive severe economic disruptions (Piga et al., 2022). The peer-to-peer platform will charge consumers a service fee that ranges between 7 and 14% of the cost of bookings, while the hosts will be charged a standard rate of 4%. A catering fee will be available in stances where guests require the services, which will be provided by catering agencies that partner with the company. The charges to hosts who provide catering services will be included in the 4% service fee.
Evaluation
SWOT Analysis
The Event Host business idea is a unique approach to providing event-hosting services in the hospitality industry. The idea’s strengths include leveraging the network effect, providing a unique event-hosting experience, and filling the demand for tailored services. The weaknesses include constant changes in the regulatory environment, easily imitable business models, and variations in host prices. The opportunities include expanding into new markets, forming strategic partnerships with other industry players, and the increased desire for unique event experiences. The business’s threats include high competition, economic challenges, reduced interest in hosting due to the COVID-19 pandemic, and data breaches. The SWOT analysis is highlighted in Figure 1 below.
The evaluation of the business idea reveals that the business is viable and can be pursued owing to its strong opportunities and strengths. The highlighted weaknesses and strengths can be overcome by implementing strategic measures designed to mitigate each identified issue. Event Host presents an opportunity to offer consumers unique event-hosting experiences while allowing property owners, who have largely been excluded by existing platforms, to earn income.
Reflection and Conclusion
Innovation plays a critical role in the success of any business in the hospitality industry. Technical and material innovations, such as novel ways of offering unique services, are necessary for differentiation and acquiring a competitive edge. Easy access to new markets through digital platforms and the Internet increases the potential for growth and profitability. Finally, adopting innovative ways of addressing organizational challenges enhances a company’s ability to navigate the highly competitive business environment.
Addressing the aforementioned issues depends on an individual’s understanding of various tools, such as a SWOT analysis and Porter’s Five Forces model. The highlighted tools facilitate the dissection of the business environment and the elements that impact an individual’s success. For instance, it is possible to contextualize the degree to which the number of established competitors has risen, providing a complete picture of the development of the Internet and ICT sectors. In addition, it is possible to devise flexible strategies governed by the severity of the crisis and geared towards achieving specific organizational objectives.
The fact that the lean approach is immensely beneficial for businesses is well-established. Another element that must be considered is the Six Sigma model, which prioritizes the reduction of variations in process improvement (Francisco et al., 2020). The second approach is the total quality management process that prioritizes detecting and eliminating errors for improved customer experiences (Moghadam et al., 2021). Customer satisfaction is among the most important elements to consider in any industry. Successful entrepreneurs must constantly evaluate their environment, understand all the forces that influence the chosen sector, and implement measures to address potential threats.
Reference List
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