The hotel and motel industry consist of organization such as Hyatt Hotel Corporation to mom and pop “beachside inn’s,” so its industry is fragmented According to the American hotel and lodging association, as of 2010 there were 210 brands of hotels and motels in the United States.8 Therefore, there is more competition equating to lower prices and costs staying constant which limit profits, making this a strong force. The demands for hotel and motel services are low. The macroeconomic environment has caused staggering statistics in the last 15 years. For example, in 2006 the average occupancy rate was 63.3% compared to the 2010 rate of 57.6 %.( American hotel & lodging association)8 Low demand translates into intense rivalry amongst competing brands resulting in lower prices. Fixed costs for the hotel and motel industry are high. Some examples of fixed costs hotels and motels would incur are rent, property taxes, insurance and property operations. The average occupancy rate is 57% resulting in a lot of waste for the average firm coupled with their fixed costs equals low profits.8 The exit barriers for the hotel and motel industry are high. Hotels and motels demand large properties in locations that are highly sought after. Hotels and motels are constructed with a large quantity of small rooms with sewage in every room. This type of structure results in limited reuse besides for another hotel which equates to a high exit barrier.

8) American hotel & lodging association information center. (2012). Retrieved from