What is a hotel SWOT analysis?
A hotel SWOT analysis is a strategic planning tool used to identify the strengths, weaknesses, opportunities, and threats related to your hotel business. This comprehensive approach allows you to assess internal and external factors influencing your operations, enabling informed and effective decision-making for growth and improvement.
SWOT analyses are used in many different businesses, not just hotels, as it offers a broad overview of overall business performance. While a SWOT analysis is excellent for reviewing your focus areas, performing a hotel SWOT analysis also focuses your attention beyond immediate needs and enables you to take strategic action for your hotel business.
Hotels make the strategic task of performing a SWOT analysis particularly interesting: for one, the product is made up of brick and mortar, service, and a wide range of intangibles relative to the competition.
Thankfully, there is a growing amount of information at the fingertips of hoteliers thanks to hospitality technology. Hotel commerce platforms provide detailed forward-looking and historical information that has never been organised in a more absorbable way.
This blog explains what a SWOT analysis is and how you can perform an effective SWOT analysis of your hotel, including key examples and tips.
How to write a SWOT analysis
The traditional SWOT analysis focuses on its abbreviated components: strengths, weaknesses, opportunities, and threats. These can quickly be divided into internal (strengths and weaknesses) and external factors (opportunities and threats).
A common visual layout when summarising a SWOT analysis to others is on a 2×2 grid, although this has been criticised for causing condensed highlights, leading to shortcuts in thinking.
Ideally, a SWOT analysis of your hotel strikes a balance, neither appearing too condensed nor taking the form of a long list or essay. Action-focused statements are a key element in achieving this balance.
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Why is SWOT analysis important for hotels?
SWOT analysis is important because strategic decision-making is crucial for hotels to continue growing. A sound SWOT analysis is the starting point for your hotel’s strategic actions and as such can fulfil many uses. Depending on your priorities, you can perform a SWOT analysis of the hotel industry, a multi-hotel portfolio, or a specific hotel in its local market.
Performing a SWOT analysis can help you and your team:
- Uncover unexpected courses of action as a result of focusing on both external and internal factors
- Span attention across all parts of a hotel operation, including decisions on facilities as well as pricing and distribution
- Move from insights to strategic action in a guided manner
- Unite different functions around the bigger picture, highlighting interdependencies
Anyone who needs a clear path to action, from general managers to revenue generating or teams of subdivisions, will find their time spent on this analysis rewarded with valuable insights and a clear course of action.
How to conduct a hotel SWOT analysis with examples
That’s the theory – now let’s explore real applications. Below, we’ll guide you through identifying your hotel’s strengths, weaknesses, opportunities and threats, including examples and methods for ensuring that you consider every possible angle.
SWOT analysis: What are Strengths?
Strengths are the unique attributes and capabilities that give your hotel a competitive advantage in the hospitality market. They are internal factors that contribute to the success and appeal of your establishment. Recognising these strengths allow you to capitalise on them, enhancing their market position and guest satisfaction.
Some common areas to consider are:
- Unique selling propositions (USPs): These are the distinct features that set your hotel apart from competitors. It could be your prime location, exclusive amenities, or heritage status.
- Quality of service: Exceptional customer service, with staff going above and beyond, creates memorable experiences, encouraging repeat visits and positive reviews.
- Technological integration: Utilising advanced hotel management software like SiteMinder, which streamlines operations and improves guest experiences, is a significant strength.
- Operational efficiency: Effective management practices, including efficient resource allocation and reduced operational costs, signify a well-run hotel.
- Brand reputation: A strong, positive reputation in the industry and with guests contributes significantly to a hotel’s strength.
As you take account of your hotel’s strengths and weaknesses relative to the competition, ensure to include anything that comes up, but it’s vital to not judge what is brought forward. This is about taking stock and being specific. Avoid two-word descriptions and use your metrics and results such as ADR, RevPAR, percentage of direct bookings and performance relative to your comp-set as starting points.
Need to know more about competitive analysis? Read our full guide here.
SWOT analysis: What are Weaknesses?
In a hotel SWOT analysis, weaknesses are those internal factors that can detract from your hotel’s ability to achieve its full potential. These are areas where the hotel may be lacking compared to competitors or where improvements are necessary to meet industry standards.
Identifying these weaknesses is crucial as it allows for a clear understanding of the challenges that need to be addressed.
Some common areas to consider are:
- Outdated facilities: Ageing infrastructure or dated decor that doesn’t meet modern guest expectations.
- Limited online presence: A weak or non-existent online booking system and minimal digital marketing efforts.
- Inefficient operations: Lack of streamlined processes, often due to outdated hotel management systems.
- Customer service gaps: Inconsistent or below-par guest experiences can lead to negative reviews and diminished reputation.
- Staff training and retention issues: High staff turnover and insufficient training can affect service quality and operational efficiency.
Remember that weaknesses are not just ‘problems’. They represent opportunities for growth and development. By acknowledging these areas, you can implement targeted strategies to transform these weak points into strengths, thereby enhancing your overall competitiveness and appeal in the market.
Using the example of a SWOT analysis of a 5-star hotel, a strength may be its city centre location close to sights and with an in-house spa, while a weakness may be low brand recognition and lower ADR relative to the local competitor that is part of a global chain.
SWOT analysis: What are Opportunities?
Opportunities in a hotel SWOT analysis refer to external factors that the hotel can capitalise on to improve performance, gain a competitive edge, or expand its market share. These are elements outside the hotel’s immediate control but can be leveraged for significant advantage and growth. Your hotel may already be doing some of these, but you feel like there’s more juice to be squeezed out. Alternatively, it may be a brand new area that you can expand into better, faster or in a unique way, compared to your competitors.
Some common areas of consideration are:
- Market trends: Staying attuned to emerging trends in the travel and hospitality industry can reveal lucrative niches or new customer segments.
- Technological advancements: Leveraging new technologies, such as SiteMinder’s cutting-edge hotel management software, to enhance guest experiences and streamline operations.
- Strategic partnerships: Collaborating with local businesses or travel agencies to create unique offerings or packages.
- Sustainability initiatives: Implementing eco-friendly practices can attract environmentally conscious guests and improve operational efficiency.
- Expanding services: Diversifying the range of services or amenities offered to cater to broader customer needs.
When taking inventory of opportunities to a hotel, you can use a model such as PESTEL to ensure all aspects of the business environment are considered and organised. Using PESTEL, you will list opportunities across the political, economic, social, technological, legal and environmental surroundings. Again, at this point do not judge any points raised and just take note. These are factors that affect everyone in your market.
SWOT analysis: What are Threats?
Threats are external factors that could potentially harm your hotel’s performance or market position. These are challenges or obstacles arising from the environment outside the hotel, requiring strategic planning and proactive measures to mitigate their impact.
Some common threats include:
- Economic fluctuations: Changes in the economic landscape, like recessions, can impact guest spending and travel habits.
- Competitive market: The emergence of new competitors or the growth of existing ones can threaten market share.
- Technological disruptions: Rapid advancements in technology can render current systems obsolete, requiring continuous updates and adaptations.
- Regulatory changes: New laws or regulations in the hospitality sector can impose additional compliance costs or operational changes.
- Changing guest preferences: Shifts in consumer behaviour, such as a growing preference for alternative accommodation options like Airbnb.
Just like with opportunities, you can use PESTEL analysis to analyse threats across the board. Continuing with the example of a 5-star hotel, an opportunity may be a doubling in leisure market demand since the city featured in a movie, while a threat may be an increase in third-party distribution costs.
SWOT analysis: How to build action-focused statements
Once the above lists are complete and reviewed as a whole, a broader picture emerges. This is when you can move beyond the 2×2 grid that was mentioned earlier. Instead of making your SWOT analysis a one-slide highlight, let it guide you through strategic discussions and decisions. Harvard Business Review recommends doing this by completing their template sentence that relates external and internal factors:
“Given the condition of [external factor], our ability to [internal factor] leads to our recommendation that we [recommendation].”
In the previous example of a 5-star hotel, this may translate into: “Given the condition of an increase in leisure market demand, our ability to compete well due to location leads to our recommendation that we raise prices in line with the competition.” Another recommendation may be “Given the condition of an increase in third-party distribution cost, our ability to include our in-house spa service at a rate leads to our recommendation that we create a spa package offer only available directly on our website.”
Hotel SWOT analysis template
Once analysed, your strengths, weaknesses, opportunities and threats should be put into a simple table, condensing your findings into an easy-to-read, easy-to-understand, easily distributable format:
| Strength | Weakness |
| Opportunity | Threat |
Hotel SWOT analysis example
SWOT analysis can contain many different areas and topics. See below a SWOT analysis example for a hotel:
Strength
|
Weakness
|
Opportunity
|
Threat
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Tips to complete a hotel SWOT analysis
SWOT analyses can be as in-depth or as straightforward as you like, but there are some shortcuts you can take to maximise the usefulness of your final results. Here’s what you can do:
1. Consider external factors first
Since environmental factors are the same for your competition, it has most recently been argued that external factors should be considered and listed first.
By moving on to the internal factors afterwards, there is familiarity across the working team with the context every competitor is operating in and an opportunity to highlight internal areas you may otherwise have overlooked. This is a way of moving away from a pure diagnosis, and towards generating ideas.
2. Be specific
In order to improve your hotel SWOT analysis you have to be specific in labelling your findings: “price” does not mean much as an opportunity, as it could be the opportunity to lower costs or increase the price. Specifically, in hotels, price or rate is relative to days of the week, market segments and compared to specific comp sets. Ensure you bring this level of clarity with every point listed.
3. Identify what success look like day to day
Hotel operations are monitored daily, so as you define recommendations and strategic actions, take time to include what these will translate into in your daily and weekly stand-up meetings. Will there be new regular updates? Should actions lead to the achievement of a new goal for occupancy or ADR? As you consider the hotel business intelligence that you review, know how the team is monitoring progress.
There is an element of change to any new strategy or action that can be managed smoothly, especially with the involvement of team members from the start, when building the SWOT analysis.