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Hotel SWOT Analysis - What It Is And How To Do It


Hotel SWOT Analysis is an important evaluation technique
Hotel SWOT Analysis - What It Is And How To Do It

Every organization or a project needs to analyze their strengths, weaknesses, opportunities and threats. This is where the SWOT Analyze comes into the picture. The Acronym SWOT stands for Strength, Weaknesses, Opportunities and Threats.


Understanding these four components is essential for the functioning and progress of all businesses, and hotels are no exception to this. Hotel SWOT Analyze will help properties understand the condition of their business and what they can capitalize on and what they should be careful of. It gives an in-depth picture of the hotel.


Hotel SWOT Analysis - From The Hotel’s Perspective


Every hotel has its strengths and weaknesses. Your property may have a great pool, but it has weak room service. The glamping business is an opportunity, but not offering spa service while the upcoming hotels do is a threat to your standing.


As you can see, a business is never black and white, instead filled with grey areas which need to be worked on. This is where the SWOT Analysis comes into the picture for hotels. Here is the explanation of each of the components of a Hotel SWOT Analysis.


Strengths


These are the plus points of the hotels, something which the guest have positive views about. These are the factors that can fetch you a 3, 4, or even 5-star review. It can be rooms, amenities, food, room service, housekeeping and food quality.


Weaknesses


These factors can negatively impact your perception of the hotel and guest experience. It includes an unclean room, a dysfunctional amenity, slow service, rude staff, and many other complaints of the guests.


Opportunities


These are the upcoming opportunities and advantages a hotel can have. It can be a new spa amenity, a new hospitality segment gaining prominence, a new guest segment emerging and so on.


Threats


Threats can hamper your hotel business shortly or even many years ahead. Better competitors, a potentially malfunctioning amenity, a trend that the hotel has no resources to capitalize on.


Once you determine these factors, you will be easily able to conduct SWOT Analysis.


Hotel SWOT Analysis Factors

Hotel revenue management.
SWOT Analysis can help you determine the performance and position of your hotel.

While conducting SWOT Analysis, some factors need to be considered. Some of them are as follows:


Revenue And Forecasting Reports


The revenue and forecasting reports play an important part in the hotel SWOT Analysis. To understand where your business is heading, you need to know the amount of revenue the hotel business is generating.


Forecasting reports will help you in understanding where your business will reach based on present performance. If there is any drop in figures, the management needs to be alerted so that the issue can be deliberated.


Market Share Index


The Market Share Index helps in determining the performance of your hotel concerning its competitors. Your hotel operates in an environment with other hotels, against which you can compete to gain more bookings and room nights.


For example, there are 3 hotels and each hotel has 10 rooms. All the hotels achieve 60% occupancy throughout the week. Therefore the total market potential will be:


6 x 7 x 3 = 126 rooms.


Therefore, Rightful Market Share = Total no of rooms/actual market potential


= 10/30 or 33%


Actual Market Share = 42/126 or 33%


Therefore the Rightful Market Share matches your actual market share. It means that your hotel is doing quite well against its competitors.


Competitor Analysis


The Competitor Analysis is another crucial factor in determining the position of your hotel vis - vis the competitors. A Competitor Set, or a Compset, will help you determine the factors by which one should evaluate their competitors and then compare the performance of the Key Performance Indicators of their hotel.


A compset will aid you in determining the threats your hotel faces from emerging competitors. At the same time, if you are an emerging property, you can refer to the compset to find out how you can make your place, or even dominate, amongst the various competitors.


Hotel Reviews


The people who will give honest feedback on your hotel’s performance are your guests. The reviews of reviewing sites and OTAs give a holistic picture of your hotel. Most of them have keyword-based search results, if you click on that keyword, you will be able to fetch feedback related to that keyword. Hotel reviews can give you all the information you need regarding the performance of your hotel.


Preparation of Hotel SWOT Analysis Report

SWOT Analysis report.
Preparing a SWOT Report consists of many steps.

Now that we have discussed the importance of SWOT analysis and which factors you should consider while doing so, we should now get into the practical part - how to prepare a hotel SWOT Analysis report.


The best way to create a SWOT analysis report is by creating a quadrant sheet. It is easy to understand and since four factors are considered, looks aesthetically pleasing too. You need to make a separate quadrant for strengths, weaknesses, opportunities and threats.


First, fill in all the strengths and weaknesses of your hotels. The best source for this is the hotel reviews on the various OTAs, Reviewing and Listing sites. For these, you can use a reputation management tool. It will share a comprehensive report of all the positives and negatives of your hotels.


For opportunities, you should check all the social events happening in your locality, such as carnivals, fests and corporate events. You need to also keep track of all the emerging trends and seasonal opportunities that the hotel will present to you. Exploring new emerging market segments such as bleisure travellers, adventurer travellers and staycations can help identify new opportunities.


Next comes threats. For that, the competitors are key in understanding your position in the market. Your and your competitor's reviews, ADR, ARR, and other factors are to be mentioned in the report.


To Conclude


After all these factors are taken care of, you can now formulate a SWOT analysis report of your hotel. SWOT analysis may be a traditional method of self-evaluation, but as they, “Old Is Gold”. It is a simple yet effective way of evaluating and analyzing your hotel’s performance vis-a-vis your competitors.


It has been used in the hospitality industry for several years and will be continued to be used in the future. With it, your business will be able to improve in efficiency and performance.


Read our blogs to understand more about the hospitality industry, its issues and its trends. Bigfoot Hospitality is here to make your hotel revenue and profit-generating machine.