To begin, we have conducted a hotel industry analysis (See Exhibits 8 & 9). Although the exhibits
concentrate on Porter’s five forces on each of the Ian Schrager and W brands, they are mostly similar
and can be used to look at boutique hotels versus previously existing hotel types. The main message
to glean from the industry analysis is to notice how buyers and suppliers do not have bargaining
power. This means that the hotel industry itself can capture most of the economic benefits of the
hospitality category. Yet, within the hotel industry, it is worth noting that the internal rivalry is
intense. In addition, new entry is relatively easy and the many different types of hotels guarantee that
there is a large substitution effect.