Barriers to exit

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Exit barriers are economic, strategic and/or
emotional reasons that keep hospitality firms
competing even thought they might be earning
low or even negative returns on investments
(Porter, 1980). Such costs are viewed to outweigh
poor performance. Examples of such barriers
include specialized assets with high costs to transform
or with limited other use (such as a hotel or
aircraft), fixed costs (labor agreements), or strategic
relationships that attach high importance to
being in the business and would significantly
impact image, marketing ability, access to capital,
etc. For example, a hotel building has limited
reuse other than that of a hotel. The rooms are
generally too small for residential living and the
building infrastructure too complex for convenient
redesign. Office space or light manufacturing
operations generally prefer larger, more open
areas and do not require as many bathroom or
electrical facilities. While the front-of-the-house
in restaurants can be converted to new purposes,
other types of businesses rarely need the specialized
industrial production facilities in the back.
The cost to convert such space often outweighs
retaining the space as it was initially created.With
such high costs to transform the facilities for other
purposes, hospitality firms frequently find it more
acceptable to continue current operations.

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