Explain the Product Life Cycle using examples of hotels at different stages of the life cycle. You should include details of each hotel and explain why you think it is at that stage of the life cycle.
Much like most of the things in our world the product is I considered having its Life Cycle. This cycle begins when a product is being developed (born), includes the products performance in the market based on demand as well as sales (life) and ends when there is no longer any demand for the product (death). I will try to explain in detail each of the five stages of a product's life while focusing on a hotel and what is the product a hotel offers? The answer is nothing else but quality accommodation of course.
Stage one, Product Development.
A hotel when is being built as for example the new Hilton Hotel built on Kos Island, it has not yet a product it can distribute into the market. That is why before it opens and is ready to host guests the management will have to decide what will be the quality of the services offered and the kind of rooms they will have (simple rooms, suites, apartments, bungalows etc). This is when the business begins to plan and develop the actual product they will soon present to the market. As it is natural since the product does not exist yet, or is not in a condition to be sold (since the hotel is still being built) the hotel has no sales at this point, but the costs required creating the product keep adding up. The hotel will be unable to generate revenue to cover the development costs (labor costs, utilities, building taxes etc.) until it is finished and ready to accept its first guests.
Stage two, Introduction
When a hotel opens for the first time or develops a new package or holiday program and begins to advertise this new product, this is the initiation stage. The renovated Grecotel in Athens, Omonia square; now known as the Two Fashion hotel is a good example to explain this stage. When the hotel opened after it's renovation it offered a new product to the market which was unknown before that, this new concept was not yet known nor established in the market what meant little sales and still lost of development costs needing to be covered as well as advertising. The initiation of a new product in the market is always followed by a period of time before the product becomes established and known in the market when the sales are low and hardly enough to cover the so far accumulated costs.
Stage three, Growth
This is the stage in the product's life when it becomes better known in the market and profits from sales rapidly increase. When the Euro Disney resort opened in Paris is swiftly became very popular among European families who did not possess the required resources for a cross Atlantic flight in order to visit Disney Land in America. This fact and increase in its original output gave a great boost to the company's revenue in combination with the opportunity for better (higher) prices. Since Europeans no longer hat to take an expensive flight to America, European prices could be slightly higher than those in America. In the stage of growth the hotel will find investing on its market share is less costly while it also enjoys a general growth of the market. Also during this stage major amount of recourses is committed in the promotion of the product.
Stage four, Maturity
The Grand Brittan Hotel in Athens is a well known hotel which's product is well established in the market as it is the most known hotel in Athens. It's hard to find someone in Greece who has been in Athens and does not know where the particular hotel is or that has not visited it at least once. Any business of which the product of which is currently in the period of maturity sees its sales slowly pausing to grow. That happens because the hotel's product (quality of accommodation) has managed to be accepted by most of its targeted market. Furthermore profit levels of the business slowly decrease because more resources are required for marketing and advertisement in order to protect the product from competition.
Stage five, Decline
In this final stage of a product's life cycle the market begins to shrink, the amount of sales begins to drop as the product becomes indefinite to buyers and profit drops. An example of such a product would be a hotel which has lost its attractiveness towards the guests and people see no reason why they should go there as there are new far better places and hotels to visit right now. For example the once known and attractive Daphnila Bay hotel on Corfu which as grew older the quality its original product offered has become outdated and over shadowed by other new luxuries and modern hotels. During this stage the hotel's product has to be managed with care and caution if the business wishes it's product to survive a bit longer for example:
-Trying to lessen some of the production costs, by cutting down on stuff or the quality of beverages.
-Offer the product at lesser prices, hoping to attract more guests.
-Approach other cheaper markets like the all inclusive.
Finally, based on the fact if the product maintains its profitability or not, the hotel may decide if it should end its distribution and try to develop something new or keep going for as long as the product manages to survive.