During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry. Since the early 2000s, there has been a rise in the availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as tourists have gravitated to these more cost-effective options. 1.State what market structure exists in Jamaica since the early 2000s. Explain if excess profit will exist in the long run. 2.Illustrate and describe how equilibrium demand and supply is determined for the hotel industry in the long run since the early 2000s
During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry.
Since the early 2000s, there has been a rise in the availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as tourists have gravitated to these more cost-effective options.
1.State what market structure exists in Jamaica since the early 2000s. Explain if excess profit will exist in the long run.
2.Illustrate and describe how equilibrium demand and supply is determined for the hotel industry in the long run since the early 2000s.
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