Apex should also choose between business and tourist traffic in order to build a competitive edge. The prime location will not yield adequate returns with only a 4-star rating, and the management should plan for an upgrade.
London is a major financial, tourist, and historical center. The 2012 Olympic Games and its aftermath will open additional market segments. The city also has a very large number of established and competitive lodging and boarding facilities. Hence, the long term prospects of a new hotel such as Apex cannot succeed without creative and systematic segmentation and accurate targeting as well (Payne, 2002).
Apex targets both affluent tourist traffic, as well as middle-level business executives. This is apparent from how the rooms have been appointed, the location chosen, and the conference facilities (Welcome, 2007). This kind of blend is a copy of tactics followed in the past by competing 4-star facilities, but it is not an optimal strategy for Apex to follow. The hotel should either focus on tourist traffic, or specialize as a convention center. It will weaken its branding by trying to do both things (Nijssen and Frambach, 2000). It is true that London has potential revenues from both segments, but since Apex is a late entrant in a mature market, it would do better to specialize in any one of the two segments which it has served during its first year.
Apex could have focused on becoming a luxury hotel for top executives and for celebrity visitors to the city. The prime location chosen makes it suitable for such use. This find of focus generic strategy would have offered the management superior returns on investment (Porter, 1991). However, the hotel has chosen to compete on price. The discounts promotions, deals, and special offers, which Apex offers makes it a place of choice in the prime locality where it is situated. This generic strategy may be difficult to sustain in the long run, and it is probably not required given the enormous traffic through London. The hotel has probably lost significant cash flows through its deep discounts. The forthcoming London Olympics will impact this low-price strategy, as the hotel has established a reputation for discounts in travel circles, which it may not be able to withdraw during peak tourist arrivals (Barger & Kirby, 1995). Overall, the company has not tried to maximize returns on its new investment, and has probably