We conduct a hotel SWOT analysis to investigate the internal and external factors that impact the hotel industry and why using SWOT analysis is essential.
What's that one thing that every tourist wants? Of course, a good hotel. Travelers are always looking for hotels where they can check in and chill.
Besides travelers, locals also love to visit grand hotels just to get an experience. You might wonder why we are talking about hotels. Since today's article concerns hotels, how can we not discuss hotels?
The hotel industry is one of the biggest industries. It generates revenue of billions of dollars each year and employs people across the globe. Today, we will discuss how we can conduct a SWOT analysis of hotel businesses and why using SWOT analysis in the hotel industry is essential.
Before discussing the benefits of SWOT analysis in the hotel industry, let's discuss what SWOT analysis is. SWOT analysis is a tool that highlights the strengths, weaknesses, opportunities, and threats present for a business or an industry.
Businesses use SWOT analysis to get a snapshot of the external and internal factors that impact their operations. Businesses in different industries use SWOT analysis since it is a strategic tool that is easy to use.
Understanding SWOT Analysis
The name "SWOT" is an acronym that represents strengths, weaknesses, opportunities, and threats. This analysis aims to highlight the internal and external factors that affect the operations of a business or an industry.
Businesses all across the globe use SWOT analysis so that they can form strategies based on the results of their SWOT analysis.
The SWOT analysis has great significance and usage in the hotel industry. It helps businesses to form strategies to overcome their weaknesses, which makes it easy for them to gain a competitive advantage.
Furthermore, the SWOT analysis identifies the threats that are present for hotels. Hence, using SWOT analysis helps hotels to mitigate the threats highlighted by the SWOT analysis.
The SWOT analysis findings also help hotels allocate their resources efficiently.
For example, after the SWOT analysis highlights the weaknesses of the hotel, it gets easier for the hotel management to allocate resources to overcome those weaknesses.
Other than that, SWOT analysis provides a chance for hotels to avail the opportunities that are present for them. Since the SWOT analysis highlights the opportunities for the hotels in advance, the hotel owners can avail those opportunities.
Furthermore, using SWOT analysis is essential in the hotel business since the dynamics of the hotel industry keep changing, and it is important to evaluate the factors that impact the business.
Now that you know the benefits of conducting a SWOT analysis in the hotel industry, let's conduct a SWOT analysis of hotel businesses and look at their strengths.
Strengths of Hotel Businesses
Strengths are the strong points of a business. They are the factors that provide a competitive advantage to businesses. Let's look at some of the strengths of hotel businesses.
Prime Location
Have you ever noticed that all the top hotels are always constructed in a prime location? The reason for choosing a prime location is to attract the maximum number of clients. Usually, hotels are made in cities.
The reason for constructing a hotel in a city is that tourists usually visit cities. Hence, more tourists will visit a hotel in a city than the one established in the suburbs. Moreover, another reason for opening a hotel in a prime location is that basic necessities such as water and electricity are present in such locations.
If a hotel is in a prime location, there will always be people checking in to the hotel. Hence, having a hotel in a prime location is considered a strength.
Brand Reputation
A strong and positive brand reputation also acts as a hotel's strength. People tend to trust hotels that are reputed. As a result, hotels with good reputations pull more customers than hotels with bad reputations.
High-Quality Food And Service
Providing high-quality food and service is a major strength of a hotel. Every hotel wants to improve its quality since people like to visit hotels that provide high-quality food and service.
In the hotel business, word of mouth matters. People believe the experiences of other people. Hence, it is very important for hotels not to compromise on the quality of their food and service.
Diverse Accommodation And Amenity Options
Having diverse accommodation options such as rooms and suits is considered a strength in the hotel industry since a diverse hotel can cater to people with diverse needs.
Five-star hotels often have swimming pools, suites, meeting rooms, bars, restaurants, etc. Having so many different things in one place is to attract people with different needs. Any hotel with diverse options can attract the masses and generate huge revenue.
Online Presence
In today's era, hotels need to have an online presence. Hotels with online booking options and websites tend to attract more customers than hotels that do not have an online presence.
Online presence provides a competitive edge to the hotels and helps them increase their customer base. Hence, it is considered a major strength.
Safety And Security
Providing a safe environment to the guests is considered a major strength. People prefer to check in safe hotels and provide security protocols. Hotels with surveillance systems and security personnel attract more customers than hotels with less security.
Weaknesses of Hotel Businesses
After discussing the strengths of the hotel business, let's look at some factors that are considered weaknesses among hotel businesses.
Aging Infrastructure
People find hotels attractive only when they are glamorous and modern. Hotels that have aging infrastructure repel customers for a few reasons. Firstly, they are not reliable.
Many customers might not feel safe in a hotel with an aging infrastructure since there have been incidents where hotels have collapsed due to aging infrastructure. Moreover, aging infrastructure causes dissatisfaction among customers since they get to stay in outdated rooms and amenities.
Seasonal Demand
Another weakness of the hotel business is that it has a seasonal demand. Hotels in places with a high number of tourists in the winter season generate the majority of their revenue in winter and remain almost empty in other seasons.
Due to this nature of the business, cashflow problems are created since revenue is not generated throughout the year.
High Competition
The hotel industry is highly saturated, which is why it has high competition. Hotels give tough time to each other and look for ways to snatch the market share of the other hotels. As a result of this high competition, market share is divided, making it difficult for businesses to make high profits.
Inadequate Marketing
Having an inadequate marketing strategy is considered a weakness in the hotel business. Hotels that don't have a strong marketing strategy tend to struggle. Hence, hotels need to market themselves effectively.
Inflexible Pricing
Hotels need to have flexible pricing to attract customers. Hotels that have inflexible pricing often bear losses. Hotels should be able to assess market conditions and then set the price accordingly.
For example, suppose a hotel doesn't bring its prices down in a recession. In that case, it will not generate any revenue since no one would visit it.
Limited Accessibility
Hotels should have easy access. If they are difficult to access, people avoid visiting such hotels. People prefer to visit hotels that have an open main entrance and a proper parking area. Limited access is a weakness for hotels since people don't like such hotels.
Opportunities In The Hotel Industry
Now that we have analyzed the strengths and weaknesses of hotel businesses let's discuss the opportunities in the hotel industry.
Emerging Travel Trends
As globalization has increased, people have started traveling a lot. The increase in tourism provides an opportunity for the hotel industry to flourish. Hotels can create special traveling packages for tourists to attract them. As a result, the customer base of hotels will increase.
Collaboration With Local Businesses
Hotels can collaborate with local businesses to increase their customer base. They can launch coupons that provide a special package for the people who are regular customers of a local restaurant. This way, more people will be attracted to hotels, and the industry will grow.
Sustainable Practices And Eco-Tourism
The hotel industry can adopt sustainable and environment-friendly practices. Tourists prefer to stay in eco-friendly hotels. In this way, the hotel's market share and customer base will increase.
Enhanced Digital Marketing
Hotels have an opportunity to adopt digital marketing. They can use digital marketing to increase their customer base and virtual presence. Hotels advertise themselves on social media. By doing so, their reach and the hotel industry will grow.
Renovation And Rebranding
Hotels can attract more customers and generate revenue by renovating and rebranding their hotels. People prefer to stay in fully renovated hotels with a positive image. Renovation and rebranding can also increase the competition in the industry, which will help the industry to grow further.
Increased Demand For Wellness Tourism
As the demand for wellness tourism is increasing, hotels have an opportunity to increase their customer base and earn more revenue. Hotels can open gyms and start yoga classes to attract people looking for healthy hotel options.
Hosting Events And Conferences
As the frequency of events and conferences increases, hotels can increase their customer base by providing venues for conferences, meetings, and corporate events.
Threats To Hotel Businesses
The last section of the SWOT analysis discusses the threats hotel businesses face. Let's take a look at some threats that hotel businesses face.
Economic Downturns
Economic downturns can impact the hotel businesses negatively. In case of an economic downturn, people's purchasing power falls. This would cause people to limit tourism. As a result, hotel businesses will suffer.
Increasing Competition
As the hotel industry grows, the competition among hotel businesses is increasing. The number of hotels has increased over time due to low barriers to entry. This has created competition among hotels, leading to price wars.
Natural Disasters
Natural calamities such as floods and hurricanes can damage the hotel's infrastructure. Moreover, it may cause hotels to collapse. This would cause a loss of human lives and damage the reputation of hotels.
Negative Online Reviews
Negative online reviews of hotels on different platforms damage the hotel's image. As a result, many hotels suffer a loss in revenue since people avoid visiting hotels with negative online reviews.
Changing Consumer Preferences
Changing consumer preferences can threaten hotel businesses if they don't change with the consumer preferences. For example, the Internet has become a necessity. If any hotel doesn't provide internet service, people won't visit that hotel.
Regulatory Changes
Changes in the national or international level regulations can threaten hotel businesses. For example, if new regulations ask hotels to increase security. This would increase the operational cost of hotels and minimize their profits.
Real-Life Examples
Here are two examples of SWOT analysis conducted on real hotels. Read and enjoy!
SWOT Analysis of Hilton Hotel
Hilton is a renowned hotel chain. According to its SWOT analysis, the strengths of Hilton are its worldwide recognition, huge customer base, and satisfied workforce.
On the other hand, one of the weaknesses that Hilton possesses is that it has a high number of bad reviews. Moreover, its data was leaked, which impacted its image, and it has a large workforce.
Furthermore, one of the opportunities that lie ahead of Hilton is that it can increase its online presence. Similarly, mergers and acquisitions can increase its geographical presence and market share.
Hilton also faces threats from increased competition and the war between Russia and Ukraine since it impacts Hilton's operations.
SWOT Analysis of Mariott
Mariott is one of the biggest hotel chains. However, it does possess some strengths and weaknesses. Some of Mariott's strengths include its loyal customer base and worldwide presence.
On the contrary, Mariott's weaknesses include weak data protection systems and a strict code of conduct. Besides that, Marriott can grow by diversifying its operations and expanding into developing economies. Furthermore, the hotel chain feels threatened by pandemics and intense competition.
Hotel SWOT Analysis: Conclusion
The hotel industry is one of the biggest and most valuable industries. SWOT analysis is important in this industry so hotels can identify the internal and external factors that can impact their operations.
Applying SWOT analysis will provide hotel businesses with insight, and they will have time to form strategies to deal with the weaknesses and threats present for their businesses. Moreover, SWOT analysis also ensures efficient allocation of resources.
In this article, we carried out a SWOT analysis of hotel businesses. We highlighted the strengths and weaknesses of hotel businesses. After that, we also looked at the opportunities and threats present for them. Make sure to check out other examples of SWOT analysis here.
