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Air Hotel’s Market Analysis and Business Plan Essay

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Updated: Jul 12th, 2021

Distinctive Competence

Air Hotel is an innovate concept that provides customers with a unique tourism option to live in an airplane that travels around the globe and stops to visit cities of clients’ choice. It should be stated that Air Hotel is not a brand name and a new label is to be elaborated that will be a part of intellectual property. The hotel is a Boing 777-300ER that has up to four separate rooms for guests with bathroom units and two areas for staff. The airplane is chosen, as it is comfortable, relatively spacious, reliable, smooth in flight, and cost-efficient (“777-200LR / -300ER / -Freighter” 1-2). Customers are offered to pick a tourist route that is designed to visit different cities according to the theme of interest. The common themes for sets of destinations are partying, theatres, museums, beaches, exotic countries. Customers can alter or create their own set of destinations to visit the cities they want. In short, the central idea is similar to cruise liners with a faster way to travel and increased cost for the clients.

Air Hotel is a luxurious vacation option, as even on board guests will be offered the best service and entertainment. The rooms for customers will be equipped with everything needed to have a pleasing hotel experience, and the airplane crew will provide all the necessary room services. The hotel will have a restaurant and a socialization area with additional amusements, such as billiards, video games, gambling, and massage. The hotel will have two double rooms and two single ones. Even though onboard entertainment options will be limited due to space restrictions, the fact will be compensated by amusements offered during staying in every city.

The possible extensions of the business idea vary depending upon the demand. First, there may appear separate Air Hotel parking in major airports around the world where people can socialize during their stay. Second, additional services may be offered, such as city transportation (taxi services) and spa. Third, other airplanes may be utilized: smaller for individual use and more spacious that has more rooms, various amusement options, and even a small garage for guests’ vehicles. In brief, the idea can be developed in several areas that may attract more customers in the future.

Market Analysis

As the concept of Air Hotel is an innovation, it does not have an apparent market it will enter. It can be assumed that the business will compete in one of the three possible markets: hotel industry, luxury traveling, and the cruise industry. Upon thorough consideration, it has been decided that the luxury cruise market is the closest to the idea of the Air Hotel, as it also includes onboard services and visiting different locations. Therefore, for the present business plan, it would be beneficial to analyze the market and state its size, trends, needs, and barriers for entering.

Currently, the spending pattern shifts towards acquiring experience rather than buying material things. Micallef states that “millennials are choosing travel over spending on other material things because they want authentic experiences and something cool to share with their friends on social media” (para. 21). While traveling on a cruise ship can be relaxing, it may appear slow for some people. Prosperous individuals do not have time to waste and may prefer traveling by air. However, it may be associated with different problems, such as catching flights, scheduling excursions, and discomfort while waiting for a plain to arrive. The proposed idea will lure away a relatively small portion of the cruise market by offering exclusive services.

The market size of the cruise industry is large and grows fast. According to FCCA, there were 24.7 million passengers in 2016 creating $126 billion in total economic impact (4). At the same time, luxury market passenger capacity was 0.55 million in 2018, and the number is expected to grow by 139% until 2027 (Mathisen). Indeed, the central issue with the market, as stated by Micallef, is the inability to build enough ships to support the growing demand. However, the cruise industry is only a small part of the vacation industry that is also snowballing (Micallef). Therefore, even though the proposed business plan describes an idea that is accompanied by a certain risk, it has the potential to find its niche due to the growing market it is entering.

Even though Air Hotel concept has promising potential, there are difficulties associated with entering the market that need to be stated. First, the offered product is an innovation, and it will be challenging to find and address the niche. Air Hotels will require a well-thought marketing campaign to explain the core concept to the public. Second, it is a luxurious vacation option that targets a relatively thin layer of possible customers. Offering the right price that will not scare off potential customers and at the same time will support the business’s sustainability will be one of the central issues. Lastly, the idea requires considerable investments into research and implementation of the project. The concept needs to be carefully evaluated by specialists in different areas, including aircraft engineering, marketing, air travel managers, cruise liners managers, and lawyers. Investing in research will prevent from further unnecessary spending. In summary, while the uniqueness of the idea has its advantages, it is also associated with issues that can interfere with entering the market.

Competitive Analysis

The primary competitors in the market are luxury cruise companies that operate worldwide. According to Mathisen, the two giants in the sphere are Viking Cruises and Silversea. Silversea specializes in luxury sea cruises on small ships for people who enjoy the spirit of discovery (“Silversea”). It offers a variety of onboard and ashore services that address every need of all the passengers (“Silversea”). The company is evaluated to have 13% of the luxury cruises market (Mathisen). Viking Cruises is a larger company that occupies around 35.7% of the market and provides diverse services (Mathisen). It offers river and ocean cruises around the globe and is proud of providing a holistic experience that makes the customers return (“Viking”). There is more competition in the market that is depicted in Figure 1.

Luxury Cruise Market
Figure 1. Luxury Cruise Market (Mathisen).

While the competition is intense, the Air Hotel concept has distinctive features that make it more attractive for certain customers. First, it is more dynamic and allows people to visit more places in a short timeframe. Second, customers will not have to communicate with many other guests, which is crucial for people who enjoy their privacy. Third, it is a unique experience, and no other company can offer similar services, which makes it more attractive for people who enjoy innovation. In short, Air Hotels can be more attractive than the products offered by competitors due to a combination of objective and subjective reasons.

Works Cited

FCCA. Cruise Industry Overview. , 2018. Web.

Mathisen, Monty. Cruise Industry News. 2018, Web.

Micallef, Joseph. Forbes. 2018. Web.

Boing, 2015, Web.

. Silversea Cruises LTD., 2021.

Viking: Ocean Cruises. Viking Cruises, Web.

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IvyPanda. (2021) 'Air Hotel's Market Analysis and Business Plan'. 12 July.

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