The Gold Coast is located in the southeast corner of Queensland which is 70 kilometers from the capital city of Queensland- Brisbane. As one of the most popular tourism destinations in the world, the Gold Coast has unique natural resources such as 70 kilometers of beaches, hinterland and rain forest as well as world-class tourism facilities such as theme parks and accommodation. More than 11 million people visit the Gold Coast every year (Gold Coast Destination Tourism Strategy 2012 – 2016). Therefore, the accommodation sector plays an important role in the local economy. According to Gold Coast a Destination Management Plan (2005), approximately 5% Gross Regional Products ...view middle of the document...
1 per cent between 2012 and 2017. The economic contribution of these tourists has directly created 28,100 jobs and generated 1.9 billion dollars to the local economy (Gold Coast Destination Management Plan April 2005). Within the tourism industry, accommodation is an indispensable sector which highly depends on the performance of tourism. Also, approximately 70 percent revenue of accommodation and restaurant sector are related to tourism (Gold Coast Destination Management Plan April 2005). During the period of 2009, 3.16 million room nights were sold on the Cold Coast and it anticipated that 4.10 million room nights will be sold in 2017 (MidWood Queensland Investment Report 2009).
In terms of the price range of this sector, it varies from $100 to $2,300 a room per night, depending on the fluctuation of demand. According to the Gold Coast’s Destination Tourism Strategy 2012 – 2016 (2012), the major customer groups include domestic and international corporate and conference groups, social fun seekers from Melbourne and Sydney, as well as wealthy international tourists mainly from Asian countries, such as China and Japan. Also, the five-star accommodation on the Gold Coast provides a variety of products and services which incorporate accommodation, food and beverage, business and conference facilities and entertainment.
3.0 Task Environment Analysis
3.1 Power of potential entrants/ entry barriers
In order to determine the force of potential entrants in the Gold Coast 5-star hotel industry, it is important to identify a range of existing entry barriers. These barriers involve factors which discourage new competitors from entering the industry, such as product differentiation, exclusive contracts, high capital requirement, saturated distribution channels, restrictive government regulations (Harrison as cited in Yang & Fu, 2007). The capital investment is the most critical barrier as entrants have to spend large amounts of money to enter the industry. For example, Hilton Surfer Paradise spent 700 million dollars in total (Saurine, 2011). Additionally, it is difficult for firms with no experience in this industry to invest in hotels. Gold Coast 5-star hotels, such as Hilton, create entry barriers through patented or proprietary know-how, restricted distribution channels or difficulty in band switching (Kim & Oh, 2004). Also, some 5-star hotels have tried to make it harder for newcomers to enter by aggressively promoting their own brands, creating product differentiation and develop customer loyalty (Yang & Fu, 2007). It is obvious that some 5-star hotels at Gold Coast have established their competitive advantages by considering uniqueness and differentiation, which makes barriers higher for new entrants. For example, Domain Resort, as one of Australian's newest luxurious hotel brands, appointed a famous designer, Linda Gregoriou, to create a "unique style" for its property (Ryan, 2006). Due to the existence of a range of high entry barriers in the...