For this reason therefore the hotel market is pure competitive.
One of the characteristics of pure competition is that there are many buyers and sellers in the market, this also includes the fact that the buyers are willing to buy products at a given price and that the producers are willing to supply products at a given produce. The hotel business has several suppliers or firms which include red roof inn, red carpet inn, Knight inn, Travelodge hotel, day inn and Econo lodge, it is also evident that their continued operation over the years means that buyers are willing to buy their at a given price.
On prices in a competitive market the prices are determined by the level of demand and supply, when demand increases then prices also increase and when the supply declines then prices are expected to increase, also that in the long run the market is at equilibrium, for this reason therefore the hotel market is characterised by the determination of prices by market forces and therefore we conclude that is fulfils one of the conditions of a competitive market.
In pure competition there are no barriers to entry, for our case the hotel market is characterised by free entry and exit by firms and this is evident from the large number of firms in the industry and the lack of regulations by government to restrict entry into the hotel