EXECUTIVE SUMMARY

Hotel industry is an essential part of tourism of Malaysia. The expansion of tourism is well inevitable bringing out development of the hotel industry. Hotel industry is so closely linked with the tourism industry that it is responsible for about 50% of the foreign exchange earnings from tourism trade and enterprises. The hotel industry in recent years government has taken several steps to boost travel & tourism which have benefited hotel industry in Malaysia. Swiss Garden, Island Resorts and Surin Phuket cover a wider market in the hotel industry than the other luxury hotels in the race. They have a better product profile than the rest: i.e. they have great management, hospitality and facilities provided by them to their customers. This project is based on secondary data. I have collected the all information from secondary data like internet, journals, book etc. The objective of taking up this research is to create a Global Market Positioning System for the hotels that can balance their maps and strategies for a financial well being. The researcher wished to relate to the hotel market segmentation, redefinition of the hotel services and brand competencies. At the backdrop of such a conducive business atmosphere 'Pre-feasibility Report on Fivestar Hotel Industry' attempts to examine such critical factors which will provide vital inputs in general to the potential investors and estimation of commercial viability of such an investment. It presents the Malaysian hotel industry PEST analysis, national competitiveness using Porters model, SWOT analysis in terms of structure& segmentation, market size, major hotels etc. It analyses the steps involved in setting up a hotel describing the technical aspects in terms of location details and land requirement.

CONTENTS OF THE REPORT

1. Introduction 2. PEST Analysis

3. Analysis of national competitiveness using Porters model

4. SWOT Analysis 5. Decision

6. Recommendation 7. Conclusion

1. Introduction
We have chosen Malaysia for hotel industry. Malaysia is a country in South East Asia located partly on a peninsula of the Asian mainland and partly on the northern 3rd of the island of Boreno. Malaysia has been regarded as one of the world famous holiday and investment destination. The country has attracted more than six million of overseas people - holidaymakers and businessmen to Malaysia each year. The Government of Malaysia has been promoting Malaysia tourism aggressively both locally and overseas. The country is blessed with numerous holiday sites and business centers.

The colorful multi-ethnic group practicing multi-cultureless in Malaysia has attracted million of foreign visitor to the country. The people, the food and the customs have impressed many foreign visitors. The country is continuously improving its basic infrastructure such as telecommunication, transportation, and public facilities in order to attract more foreign visitors.

As a result of the impressive economic growth, one cannot stop being amazed by the amount of land-related development projects which is going on in Malaysia presently. More hotels, resorts and business centers have sprouted everywhere. Light Rail Transit project has been constructed and near completion. All these development attempts are to set Malaysia as a centre for holidaymakers and foreign investors.

Hotel industry in Malaysia has contributed tremendously to the development in the Malaysia tourism industry. As a result of the continuing tourism development, the hotel industry in Malaysia is also continuingly developed to cater for more foreign visitors and provide better services.

The hotel industry in Malaysia is large. It offers accommodation ranging from lodging houses to five-star hotels, ranging from an inexpensive RM30 per day to an average of RM250 per day and can be as high as thousands. The visitors have a wider range of accommodation selection depending on their budgets. There are accommodation provider practically anywhere in all the major towns and cities.

2. Pest Analysis of Malaysia

In analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organizations supply and demand levels and its costs. Kotler (1998) claims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. PEST analysis is important for any businesses and it is more important for any businesses like us who wants to make FDI (Foreign Direct Investment). As the business environment and other aspects of Malaysia is less known to us so to do business with profitability is harder than in home country. The political, economic, social/culture and technological aspects will influence our hotel business both directly and indirectly. So, it is important for us to do an overall political, economic, social/culture and technological analysis of Malaysia. This analysis will help us to set our goals and objectives. It will also help us to interact with customers, competitors, suppliers, labor unions, government agencies, and the contextual or general environment.

PEST analysis consists of; Political Analysis; Economic Analysis; Social/Cultural Analysis; Technological Analysis;

Here we are going to relate those stated aspects with our business plan to decide whether it is worthy to inaugurate our business in Malaysia.

2.1. Political Analysis:

Political analysis will help us to get a broad idea about Malaysian political situation. Broadly defined is government system, policies and political stability. Malaysia is a federal parliamentary monarchy, the Prime Minister of Malaysia is the head of government, and there is multi-party system. The Malaysian political system refers to all those regulations and practices and the structure of laws that show how the government is run.

2.1.1. System of Government:

Malaysias Government is a unique one. This is because it consists of 2 systems; it consists of both constitutional monarchy and parliamentary democracy. For a recap of what parliamentary democracy is, few candidates will be vying for the presidential spot, and the people of the country will be able to vote for whom they wish to have as president. However, after a certain period of time, the elected president will have to step down and be succeeded by another person. For a recap of what constitutional monarchy is, it is the system of Constitutional Monarchy has a Head of State and a Government. The advantage of having a Constitutional Monarchy is that the Head of State does not change as the governments change. Due to the fact that only the elected Officials can pass laws, the Head of State acts as an advisor to the Officials. The Head of States job also includes choosing the Prime Minister and checking through legislations so to decide whether to accept or reject them. So, it can easily be said that Malaysian government system is democratic which is highly favorable for FDI. In fact Malaysia is the 6th most attractive country for FDI in the whole Asia. So, it will be easier for us to establish our hotel business and run it profitably.

2.1.2. Government Policies:

Malaysia has been one of the most successful Southeast Asian countries in attracting Foreign Direct Investment (FDI). It has always endeavored to maintain the competitiveness of FDI determinants like legal infrastructure. Many policy instruments have been set up. Malaysia has been one of the most successful Southeast Asian countries in attracting Foreign Direct Investment (FDI). It has always endeavored to maintain the competitiveness of FDI determinants like legal infrastructure. Many policy instruments have been set up. The Malaysian government has improved the value of the present determinants and is considering new strategies to attract FDI. Foreign Direct Investment (FDI) in Malaysia is set up following the holding of at least 10% of the total equity in a resident company by a non-resident investor. Consequent transactions in financial assets and liabilities between resident companies and non-resident direct investors linked by a foreign direct investment relationship (FDIR) can also be known as FDI. The transactions could be between Malaysian companies and with its immediate or ultimate parent or fellow companies. The government encourages foreign investors with a tax holiday of up to 10 years for investments in new industries and assurance of convertibility and repatriation of capital and profits. In order to export the raw materials for our hotel tariff continues to be the main border measure on imports; it also accounts for 5.8% of total tax revenues. As a consequence of temporary increases in rates in 1998, the average applied MFN tariff increased from 8.1% in 1997 to 9.2% in 2001. This rise in tariff protection was facilitated by the fact that one third of tariff lines are not bound and, even for those lines that are subject to bindings, bound rates often considerably exceed applied rates. This lack of bindings, together with the gap between bound and applied rates, can impart a degree of unpredictability to Malaysia's tariff. From above discussion it is clear that Malaysian government policies toward FDI are fair enough. There are little problem with tariff on import in Malaysia but it is not our major concern because we have nothing significant to import.

2.1.3. Political Stability:

The ruling Government of Malaysia is the longest serving, freely elected Government in the world, having remained in power in unbroken succession ever since independence. Political continuity confers policy continuity, bestowing the luxury of long range strategic planning which means for business a rare and comforting predictability. The countr ys institutional framework much of it bequeathed by the British Colonial System provides the protection business needs. It is important to note that Malaysian is a very safe place for investors. This is testified by the huge investments made by Conglomerates from all over the world, many who have made their regional headquarters in Malaysia. Malaysias security apparatus is one the best in the region. So, there is very little chance of political unrest that could affect our business.

2.2. Economic Analysis:

It gives us a clear picture of Malaysian economic situation. How large the economy is, peoples purchasing power and development to get rough idea about the economic feasibility of our investment. Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. As we fall under the service category, we have great potential to be successful.

2.2.1. Economic Indicators:

The Gross Domestic Product (GDP) in Malaysia contracted 3.20 percent in the first quarter of 2012 over the previous quarter. Historically, from 2000 until 2012, Malaysia GDP Growth Rate averaged 1.1800 Percent reaching an all time high of 5.9000 Percent in September of 2009 and a record low of -7.6000 Percent in March of 2009. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy.

Foreign direct investment, net outflows (% of GDP) in Malaysia was 5.68 as of 2010. Its highest value over the past 11 years was 6.83 in 2008, while its lowest value was 0.29 in 2001. On the other hand the latest value for foreign direct investment, net inflows in Malaysia was $9,167,202,000 as of 2010. Over the past 40 years, the value for this indicator has fluctuated between $9,167,202,000 in 2010 and $94,000,000 in 1970.

 Malaysia has moved up two spots to 14th position in the latest ranking in the World Competitiveness Yearbook 2012 Report released by the Switzerland-based Institute for Management Development (IMD), which surveyed a total of 59 economies.

2.2.2. Purchasing Parity in Malaysia:

Purchasing Parity determines how much people spend and their income. It will help us to determine our customers comfort price zone and also help us to shape our business according to the need and ability of our customers. The purchasing power parity in Malaysia is $447 billion (2011 est.) $424.8 billion (2010 est.) $396.4 billion (2009 EST.). The per capita income of the country is 15,600 (2011 est.) $15,000 (2010 est.) $14,200 (2009 EST.) Malaysia is ranked 96th out of 143 cities in the world in terms of expense and cost of living. Average cost of living in Malaysia for one person is 2345 RM. People spend in different sector. The proportion of their spending can be illustrated in a pie chart.

2.2.3. Human Development:

MALAYSIA UNEMPLOYMENT RATE: The unemployment rate in Malaysia was last reported at 3 percent in April of 2012. Historically, from 1998 until 2012, Malaysia Unemployment Rate averaged 3.3600 Percent reaching an all time high of 4.5000 Percent in March of 1999 and a record low of 2.8000 Percent in March of 2012. The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labor force.

 Life expectancy rate at birth: The population of Malaysia has a healthy life expectancy at birth of 71.7 years (74.5 for males, and 69.01 for females). The infant mortality rate of Malaysia is 19 deaths per 1,000 live births.

2.3. Social/culture analysis:

2.3.1. Language: They are the largest, as well as the most homogeneous ethnic group, in
the country in terms of culture, language and religion. They share a common culture and speak a common language - Malay - the official language of Malaysia.

2.3.2. Religion: Almost all Malays are Muslims, and adherence to the religion is seen as
an important factor distinguishing Malay from non Malay. Indeed, by constitutional definition, all Malays are Muslim

2.3.3 Education: In terms of literacy rate in Malaysia, 88.9 percent (85.4 percent for
females and 92.4 percent for males), age 15 and over, can read and write.

2.3.4 Social Strata: Class position in Malaysia depends on a combination of political

connections, specialized skills, ability in English, and family money. The Malaysian elite, trained in overseas universities, is highly cosmopolitan and continues to grow in dominance as Malaysia's middle class expands. Even with the substantial stratification of society by ethnicity, similar class experiences in business and lifestyle are bridging old barriers. In Malaysia's market economy, consumption provides the primary symbols of stratification. Newly wealthy Malaysians learn how to consume by following the lead of the Malay royalty and the prosperous business families of Chinese descent. A mobile phone, gold jewelry, and fashionable clothing all indicate one's high rank in the Malaysian social order. Given the strict mobility to Malaysian society, one's vehicle marks class position even more than home ownership. Most Malaysians can distinguish the difference between makes of cars, and access to at least a motor scooter is a requirement for participation in contemporary Malaysian social life. Kuala Lumpur has more motor vehicles than people. Skin color, often indicative of less or more time working in the hot tropical sun, further marks class position. Distinct class differences also appear in speech. Knowledge of English is vital to elevated class status, and a person's fluency in that language indexes their social background.

2.4 Technological analysis:

2.4.1 Infrastructure:
The greatest advantage to hotel industry in Malaysia has been the nation's persistent drive to develop and upgrade its infrastructure. Over the years, these investments have paid off and serious bottlenecks have been avoided. Today, Malaysia can boast of having one of the well-developed infrastructures among the newly industrializing countries of Asia. Latest, the development of Kuala Lumpur Central, is a futuristic self-contained city, providing the perfect live, work and play environment. A modern transportation hub integrating all major rail transport networks, including the Express Rail Link to the KLIA and Putrajaya, the government's new administrative centre. The transport facilities offered are on par with the best the world over.

The key benefits for our hotel industry Malaysia are: Network of Highways Efficient Seaports International Airports Developed Industrial Parks Specialized Parks Hi-Tech Telecommunications

Technological advancement has become an integral part of Malaysia's growth as an industrialized nation. With the help of technology, Malaysia is steadfast in providing for the modern day requirements of investor companies based in the country. Malaysia is one of the most technologically developed countries amongst industrializing nations in the ASEAN region. The nation's persistent drive to engage modern technologies proves to be a great advantage to manufacturers in Malaysia. One of Malaysia's greatest assets is her human resources. The workforce here is young, educated and productive, proving to be one of the best in the region. The Government's emphasis on human resource development ensures the continuous supply of manpower to meet the needs of the expanding manufacturing and services sectors.

3. Analysis of national competitiveness using Porters model

3.1. FACTORS ENDOWMENT: The factor endowments with respective to the Malaysian hotel industry can be discussed under the Porters diamond model. Malaysia continues to be a top choice because of the work ethic of its people, the relatively low labor and other costs and because of highly attractive government incentives and an improving legal and business environment. The important cost of production factor is briefly given below.

LAND Cost: The purchase of a land in Malaysia offers very positive returns on investment. The government is encouraging foreign investment through relaxed tax and property ownership rules. We purchase our land for hotel at Kuala Lumpur the image of the city has been reshaped by the building boom of the latest years. Architectural and cultural mixture that has started the development of the city has been preserved. The amount of the land we purchased for our hotel is perfect and the price of the land is not high. We will get a fair amount of land for establishing the hotel in a very moderate price.

Malaysia, Perak Lumut Tetoksengin it cost 2835, 583.00USD which is 60702.85m Malaysia Johor Pontain it cost 24,081,616,67USD which is 2023428.29 m

Labor cost
One of Malaysias key assets is her youthful labor force which is diligent, disciplined, educated and trainable. A large proportion of Malaysias labor force also possesses the basic skills required by industry. Labor costs in Malaysia are low in comparison to the industrialized countries while labor productivity remains high. There is no national minimum wage law applicable to the manufacturing sector in Malaysia. Basic wage rates vary according to location hotel industrial sector. Supplementary benefits which could include bonus, free uniforms, free or subsidized transport, performance incentives and other benefits vary from company to company. Salary rates and fringe benefits offered for management and executive level personnel also vary according to the industry and employment policy. In addition to salaries, most companies also provide fringe benefits such as free medical treatment, personal accident and life insurance coverage, free or subsidized transport, annual bonus, retirement benefits and enhanced contributions to the Employees Provident Fund.

Transportation cost
Malaysia is served by an excellent transport system. Once you are in the country there is always transport available to you to even remote areas.

By AIR:
Getting to Malaysia is easy with over 40 airlines, including Malaysias own carrier, Malaysia Airlines. All flights arrive and depart at the new state-of-the-art Kuala Lumpur International Airport (KLIA) located at Sepang, about 50 km or an hour's drive south of Kuala Lumpur, is the countrys capital. From KLIA, visitors can take connecting flights to most major cities and towns in Malaysia as well as to Sabah and Sarawak. The airport is well equipped with the latest facilities and services to cater passengers either arriving into the country or on a transit to other destinations.

By ROAD:
Buses are an inexpensive way to travel in Malaysia. Most, if not all buses in Kuala Lumpur (KL) are air-conditioned but there are still non-air-conditioned buses in smaller towns around the country. Buses plying routes within towns and cities typically charge fares according to the distance covered while interstate buses have fixed rates. Taxis in major cities are usually fitted with meters. In KL, the rate is currently RM2 for the first two kilometers and 10 seen for every subsequent 200 meter.

By RAIL:
It is possible to travel by rail within and to Peninsular Malaysia via Thailand and from Singapore. Malayan Railways or Keretapi Tanah Melayu Berhad (KTM) connects all major towns in the Peninsular. First, Second or Economy Class air-conditioned coaches are available.

By SEA:
There are several ports of entry in Malaysia, namely Penang, Port Klang, Kuantan, Kuching and Kota Kinabalu. Coastal ferries sail frequently between Penang and Butterworth, carrying both passengers as well as vehicles from the mainland to the island. Apart from That, there are many ferry/ boat services available for mainland-to-island and island-toisland travel around the country. Fast boats and small river crafts are a popular way of getting about in Sabah and Sarawak especially to the more isolated settlements. There are also sea cruises and river-cruises run by local tour agents. For sea travel within the country there are services available from Port Klang (Selangor) to Kuantan (Pahang) and to Sabah or Sarawak. Besides that, there are also holiday cruises that take passengers to neighboring countries.

Natural Resources, Factor Endowment and Ownership

Malaysia has been blessed with natural resources. It is endowed with fertile land and minerals and therefore, Malaysia was one of the chief producers of natural rubber and tin in the world. Malaysia started to diversify its agricultural sector by planting more oil palm in large scale and by now Malaysia is the largest producer and exporter of palm oil in the world. Malaysia diversified further its agricultural sector by growing cocoa in large scale in Sabah but the venture has not been as successful as oil palm. Malaysia also produces and exports oil and natural gas and these have helped ease Malaysia during economic adversities caused by oil price increase.

RENEWABLE NATURAL RESOURES

Palm oil: Palm oil may not sound like a very

important natural resource, but it is the primary cooking oil used in Asia. And Malaysia is the largest exporter of palm oil in the world. Plus, clever Malaysian scientists are developing efficient ways of converting palm oil into ethanol. Boustead Holdings (2711.KL) operates 286,000 acres of palm oil trees.

Rubber: I have written many times about the booming automobile sales in China. So you
need to ask who provides all those tires for all those new cars? Instead of investing in tire companies, like Goodyear or Cooper Tire, you could invest in companies that produce rubber. Malaysia is the third largest rubber producer in the world (Thailand is number one and Indonesia is number two) and Kossan Rubber Industries (7153.KL) has the wind at its back.

Timber: Thanks to its tropical climate and abundant rainfall, Malaysia is COVERED with
trees. A lot of those trees teak, sandalwood, ebony, and ironwood can be turned into valuable lumber products. Jaya Tiasa Holdings (4383.KL) is one of Malaysias top timber producers.

Oil: Malaysia is blessed with massive deposits of oil and is one of the largest non-OPEC
oil exporters in the world. Malaysias state-owned energy giant, Petronas Gas Berhad (6033.KL), is so profitable that its royalties provided 44% of the governments total revenues last year.

Tin: Of the six basic principal base metals tin,

copper, iron, lead, zinc, and lead tin increased the most last year rising by 59% to as much as $27,500 per metric ton. It is expected to hit $40,000 on growing demand within the next five years. And Malaysian Smelting Group (5916.KL), the largest tin producer in Malaysia, could be a big winner.

3.2. Demand Condition: According to Porters Model of national competitiveness, firms are most sensitive to the needs of their closest customers. So, the characteristic of home demand play a significant role to shape the demand of an industry.

Market size of an industry is a major player of demand condition. Market size of Malaysian Hotel Industry is huge and also very competitive. From last few decades the government of Malaysia is giving much emphasize on tourism. So, quite a few numbers of international hotels has started business in Malaysia. People from all over the world are coming to Malaysia for recreation and travelling. To give them world class facilities there are many famous hotels. But still there are places to improve. The market is huge, so to fulfill the demand there are much scope of growing new hotels. We are about to take this chance. Hotel customers/guests in Malaysia are mainly tourists from different parts of the world and the local people. Here consumers are international and sophisticated. This continuous pressure from service consumers made existing hotels to focus on providing international standard hotel services.

3.3 Related & supporting industry

Number of Suppliers Our hotel consists of land category of fields within the service industry that includes lodging, restaurants, event planning, and additional fields within the tourism industry. In our hotel there are multiple groups such as facility maintenance, direct operations (servers, housekeepers, porters, kitchen workers, bartenders, etc.)It covers a wide range of organizations offering food service, accommodation, meeting and events, gaming, entertainment and recreation, tourism services, and visitor information. Bargaining Power of supplier Suppliers provide resources to the business. For our hotel business we will look at suppliers of goods and services noting their reliability, quality, pricing and whether they can offer credit terms whenever asked. We will also find out if there are many suppliers or a single supplier. Multiple suppliers will compete for business and therefore will offer better service on a reasonable price, whereas a single supplier can have an advantage and hold business on hostage. We will also look at real estate resources. In hotel industry there is only one supplier than bargaining power of suppliers is high. For example in vegetable there are lots of farmer in the market so hotel can purchase from any one, in grain also there are many suppliers of grain so again there are bargaining power of suppliers is low. In milk there is only one supplier which is selling milk to that hotel so the hotel has to purchase milk from that specific supplier. 3.4. Firm Strategy, Structure and Rivalry: Existing hotels in Malaysia is currently following a common strategy of attracting tourists. Most of the hotels are following TQM(Total Quality Management); which means they are maintaining quality service at every stage. But, most of the hotel management dont know which components should be emphasized more in TQM. Rivalry among different hotels in Malaysia is intense. Malaysia is a major tourist attraction. So, lot of high-end hotels builds up in Malaysia. There are approximately 105 hotels with different ratings and sizes in Kuala Lumpur alone, which means there is 1 hotel in every 2.3 kilometers. This is because the land area of Kuala Lumpur has only 244km. From these data it is clear that how hot the competition is among the competitors of different hotels in Malaysia. So, to be successful in this competitive market hoteliers have to find other ways to increase their productivities.

4. SWOT Analysis
Hotel industry is considered as the service industry. Hotel is the second home when away from home. Hotel industry is a major source of revenue for a tourism country. Malaysias hotel industry is a popular channel of investment. An economic change will also have an immediate impact on the hotel industry. a large number of tourist ever year in Malaysia is increasing the competitor in hotel industry. SWOT is one of the important analysis tools to control and survive the hotel industry.

Strengths A wide variety of hotels are present in Malaysia because of this their hotel industry is so enriched in todays world. Malaysia is a well established country and they are the leader in the hotel, hospitality and gaming industry Some hotels play the as an international player in the market which help them to represent their countrys hospitality in a proper way like Hilton Hotel, Surin Phuket ,Island Resort etc. Malaysian hotel industry is well diversified across the country with hotels in the high end, business and mid-priced classes in their product mix Manpower cost in Malaysian hotel industry is comparatively lower. Government plays a significant role in promoting their hotel industry and take adequate action to improve their market image. Malaysia is the great center location which helps to attract most of the tourist comes to their country. The country has many tourist destinations that offer potential growth for hotel owners. Their hotels are also possessed into solid integration features such as owning the companies that manufacture its furniture and have invested in online reservation travel enterprises.

Weakness The cost of land in Malaysia is high at 50%of total project cost as against 15% abroad. High tax sometimes makes the industry worse off than its international competitor. Global Economic Breakdown can affect hotel business very easily. It is also very vulnerable to workers strikes. Weak management team may lose customer satisfactions. Poor supply chain management might affect in proper customer service. Customer from different country have different culture and demand, understanding them properly is very important.

Opportunity Malaysian hotels have branches, like Swiss Garden has branches in Kuantan, Lumut and other few places. Hotel in Kuala Lumpur provides Indonesian Balinese massage and spa treatment at Samsara Spa while the hotel in Kuantan offers golf resort. Customers can buy packages and visit Kuala Lumpur and Kuantan also by not changing hotel. Malaysia is one of the best tourism countries in the world. Adventure tourism, nature-based tourism are growing significantly worldwide. Swiss Garden is in well placed to gain market advantage. It should offer an array of distinctive and specialized services to the high end guests and high rollers such as wedding planning and hosting, Spas that specialize in personal services etc They should look to expand into or acquire a cruise line: A cruise ship is little more than a hotel that floats this would essentially matched what it currently does with its leased properties. They should take advantage of emerging markets, especially with business class and mid-priced markets. Demand between national and inbound tourists can be easily managed due to difference in the period of holidays.

Threats Malaysian hotel industry must be careful not overextend its efforts to mix entertainment and gaming. Also the extension of credit and other side effects of gaming can slowly but surely nibble away profit. September 11th was a major blow to the hotel industry. A similar event could result in another down turn. Guest houses replace hotels. The hotels which are located between Bukit Bintang and Chinatown that have so many guest houses providing cheaper prices. The competition is tough in hotel industry of Malaysia as in other countries. Such as Swiss Garden is located in the heart of Kuala Lumpur, Furama Hotel, D Oriental Inn Chinatown, Ancasa Hotel and so on. In order to compete with these hotels each hotel has to provide reasonable price, good quality and service. Increasing competition from other developing country like India, Sri lanka. Economic condition of this country has a direct impact on the earnings in hotel industry.

In the long term hotel industry in Malaysia has latent potential for growth.

5. Decision
Appropriate entry mode: Now a days MNC emerging in FDI have different modes in host country. It may enter into the country through different entry modes selecting a mode from entering or exporting in a foreign market is one of the most crucial strategies for the firms.excuitive and one of the vital decisions in internationalization. Choosing a suitable entry mode in foreign market can affect a firms international business performance and survival. A firm should select those strategies that their resources can support. As we are investing in hotel industry of Malaysia the appropriate mode of entry for us would be in acquisition form of FDI.acquisition refers to acquiring or buying or merging with an existing local firm in the form of mergers. the volume of cross border acquisition has been growing at a rapid rate for two decades. There are some major factors depending on those we are selecting acquisition mode for entry at hotel industry in Malaysia. First of all it is very easy to execute. By acquiring an existing local firm it would be very easy for us to build the presence in the targeted Malaysian market. We can acquire some well established hotel rather starting from the scratch. As this is the quickest way to establish the sizeable presence in Malaysian hotel business. Through acquisition we would be able to preempt our rivals as the need for preemption is certainly great in highly globalized market. Because of acquisition a combination of deregulation within nations and liberalization of regulations governing cross border foreign direct investment has become much easier so now we can easily enter into the market. Through acquisition we can reach to a global scale of hotel industry. It is assumed that acquisition is less risky than green field and joint ventures. Through acquisition process we would be able to produce a known profit and revenue; in green field and joint venture this cannot be happened. In acquisition we can not only acquire tangible assets but also intangible assets; such as-brand name, managers knowledge about the hotel industry of Malaysia and this would reduce the risk of mistakes caused by ignorance.

6. Recommendation:
All of the hotels listed above can benefit from internet applications that produce greater value in the value chain. The firms infrastructure can benefit from financial and ERP systems. Communicating with investors can also be done by internet. Human resources can be managed by the internet as part of the overall strategy as well providing internet based self service personnel and benefits, web based training, internet based sharing of information and knowledge and electronic time and expense reporting. Value can be increased by standardizing technology across multiple locations, forming knowledge directories, and allowing real time access to online booking information. Finally, every hotel could benefit by online inventory control and forecasting systems with suppliers. These improvements can all lead to greater profitability. Distinguishing oneself from the competition becomes vital. This can be enhanced by superior technology, through superior inputs, through better training of staff or through better management. Differentiation adds value but the internet makes it hard to maintain those distinctive strategic positions because it eases change to best practices and it improves operational effectiveness. Never the less such distinctions make the business more profitable.

By its basic nature the hotel industry is fragmented. The internet makes it easier for travelers from far and wide to learn about the hotel or to order a room but the customer must still come to the hotel for the service. This makes it more likely that the profitability will be there for when sale is easy to transact and complete the profit margin usually decreases. Porter points out similar examples with Real Estate and with furniture sales.

Dealing directly is great for hotels. Other than travel agencies who arranged hotel stays the hotel business has always been a face to face business and this normally sustains the economic value of the transaction. For all of these chains the internet complements rather than cannibalizes established ways of doing business. It becomes one more link in the value chain.

CONCLUSION:
Malaysia is well-known country for hotel industry. So it will be benefit to invest in that country. As a result tourism has become Malaysias 3rd largest source of income from foreign exchange and accounted for 7% of Malaysias economy as of 2005. As of 2011, Malaysia ranks 9th among the top most visited countries in the world, after Germany. This has resulted an exciting opportunity for the hotel industry.