It made me wonder, if I was a student or part of a military training camp. Eventually, my mentors guided me that both terms are miles apart from each other.

While working in the hospitality industry, I came across various opportunities and ways to do it. So today, let’s find more about SWOT analysis of hotels.

What is a SWOT analysis?

SWOT is an acronym for Strengths, Weakness, Opportunities and Threats. It’s an old-school way to assess an individual or a business at certain parameters.  

Many hotels adopt this technique before commencing their operations or when they face a critical situation. It gives an overview of all the angles that could affect their business negatively or positively.

But, being a traditional approach, hoteliers wonder if it’s necessary to perform their hotel’s SWOT analysis.

Why should you do your hotel’s SWOT analysis?

Let’s understand the importance of hotels SWOT analysis with a situation.

Say, you own a hotel amidst snowy mountains.  Initially, your property brims with guests. But soon enough, you notice a drop in the bookings. 

To recover from this loss, you deploy impromptu strategies. But none of them work.

The SWOT analysis comes into the picture here. It will give you an outlook of your hotel’s up-selling factors as well as the areas that have a scope of improvement.

How? 

First, let’s take a look and understand the hotel SWOT analysis report.

Here is a brief explanation of each point for better clarity.

Strengths of hotel: These are the key areas highlighted positively by guests. They give you an edge over your competitors. It could be location, food quality, polite staff, and such likes.

Weaknesses of hotel: Your property’s highly criticised aspects, falls under this segment. You tend to lose a majority of guests due to these points. Unclean rooms, rude staff, bad food, and slow services are some of the hotel weaknesses examples.

Opportunities of hotel: Any upcoming events, functions and holidays, which can bring you business are an opportunity. You can also consider any low-performing competitor in this vertical. 

Threats of hotel: What threatens your business? Reduced market share, well-performing competitors, hotel aggregators and so on. These are to name a few. Any factor that sweeps your guests away, is a part of this category.

Once you determine the core aspects of the SWOT, they will assist you in streamlining your focus points. You can then take corrective actions to improve your hotel’s performance.

What factors are to be considered while doing hotel SWOT analysis?

Now that you know what is SWOT analysis in hotels, it’s time to learn about the factors that will help you figure it out.

a. Revenue and forecasting report

I hope you read my previous blog on hotel reports. As stated in it, sales and forecasting reports play a vital role in the hospitality industry. 

An overview of your revenue based reports will give you a brief idea of your hotel’s performance. A gradual drop in the figures should trigger a red alert.

You can analyse the sales reports to see which department is contributing more towards the revenue.

Your priorities should be focusing on the areas where the cost incurred is more than the revenue generated.

b. Understanding market share index

Every hotel has a specific market share index. It provides them with a foresight to plan sales strategies.

In simple words, market share is all about determining your hotel’s performance with respect to your competitors. Calculating it is simple and doesn’t require working on heavy data.

All you need is the total room count of your hotel and other properties in your competitive set.

Let’s assume that your hotel has 20 rooms. You have three competitors, each with 20 rooms.

So, the total market potential would be 20*4=80 rooms per day.

Let’s say, each hotel achieved 50% occupancy every day for the entire week. So, the actual market potential would be, the sum of all the rooms sold in a week by each hotel.

In your case, it would be:

10*7 + 10*7 + 10*7 + 10*7 = 280 rooms.

Once you consolidate the data, it’s time to calculate your rightful and actual market share:

Let’s use this formula and understand your case study.

If we see, your actual and rightful market share are equal. This implies that your hotel is doing quite well in comparison to the competitors.

c. Competitor Analysis

In any business, competition is a MUST. Even in the hospitality industry, you will be the best until you have a compset (competitor set).

It’s quite simple to understand. If I were the only accommodation provider in my vicinity, it would make me rank at the top.

However, the real challenge would be when a new hotel opens in the same locality. The market share will split into two. 

It will be a tough competition. Guests will choose a hotel providing a better quality of services.

Similarly, during hotel SWOT analysis, it’s crucial to determine your compset. It will guide you in gauging your potential threats. 

Eventually, you can redefine your marketing strategies and work on your weaknesses to stay ahead of the game. 

So you can see, competitor analysis is quite an important step here.

d. Hotel reviews

Reviews are a pivotal factor during SWOT analysis of hotels. They provide a 360-degree view of any property’s best and worst features. 

Most of the OTAs and reviewing websites have keyword-based searches. If guests click on a specific word in the reviews tab, it shows them all the feedbacks related to it. 

It’s the best tool for hotels to analyse their most praised and criticised points by the guests. It helps them in understanding the property from the guests’ perspective.

How to prepare a hotel SWOT analysis report?

So, with all the mise-en-scène and mise-en-place ready, it’s time to create the hotel SWOT analysis report.

Although there are various ways to do it, I would suggest going with the quadrant method. Why?

1. It’s easy to understand
2. All the aspects are available on a single platform

It’s similar to using a graph in mathematics. Once you have created quadrants, start listing strengths and weaknesses of the hotel.

As I said earlier, use reviews to accomplish this task. You can opt for a reputation management tool. It will share a comprehensive report of positive and negative points from all the booking websites you are listed. 

After listing these points, check for upcoming social events in your city. Don’t forget to consider any carnivals, feasts, holidays or corporate conferences.

I would recommend exploring new market segments such as solo travellers, corporate guests and staycation as well.

This leads us to the last part of the SWOT analysis for hotel – Threats. As I said, disregarding your competitors is a grave mistake. 

I would suggest considering their reviews, market share, ADR, ARR and other verticals while mentioning threats. It will give you an accurate position of where your hotel stands in comparison to your competitors.

With all the relevant updates done, it’s time for you to use this report and make the necessary changes to be your guests’ best choice.

The post Here’s How You Can Do Hotel SWOT Analysis Effectively appeared first on eZee Absolute.

Both were presented with live hotel data and asked to draw a pricing report for the next 15 days.

While Jacob quickly added the inflation rate, adjusted demand, and drew a pricing report; Jonathan asked about the closest competitor hotels before submitting his.

Can you guess, who got selected? It was Jonathan.

Because he analyzed competitors’ pricing along with traditional methods.

While the story may be a work of fiction, the idea behind it is NOT.

With over 700,000 hotels and resorts and 16.4 million hotel rooms worldwide; the hotel business is one of the most competitive businesses in 2020.

Condor Ferries

These days, you MUST consider factors like competition analysis and hotel benchmarking to sell your rooms to the right guest, at the right time and right price.

Through this blog, we will give you thorough information on hotel competition analysis, how to create the right compset, and strategies to win among your competitors.

First, let us understand,

What is hotel competition analysis?

If we talk in general – competition analysis is the evaluation of your competitors’ services and products in order to strategize your business growth.

It works on similar grounds for the hotel industry as well (more or less).

Usually, most of the hotels think every accommodation provider next door is their competitor.

Well, that’s not the case!

Although, you need to have the RIGHT set of competitors for an effective competition analysis (commonly known as comp set).

But, before you go ahead to form your comp set, you should know,

Why to perform hotel competition analysis?

Its main purpose is to give you a clear picture of what you are up against. In other words, competition analysis is all about determining the strengths and weaknesses of the competitor hotels. Obviously, you MUST KNOW your competitors thoroughly to win against them. As a famous saying goes,

A horse never runs so fast as when he has other horses to catch up and outpace.  

Ovid

Basically, it lets you: 

• Create barriers to prevent competition from entering 
• Gives you understanding of how your existing and potential guests rate the competition.
• Tells you about your property’s unique factors  that gives you advantage over your competitors.
• Plan strategies for how to expand into a new market.

Now, let us tell you,

How to define the RIGHT comp set for your hotel?

As we said, not every hotel in your area is your competition. 

Your competition is a definite set of properties similar to you in one way or the other; with whom you compete for business. It is often called a hotel compset.

An ideal hotel compset consists of a minimum of 5 and a maximum of 10 properties that you are going to monitor closely. Adding too many hotels to the selection mix often leads to confusion to a data-driven decision-making process.Choosing the right compset is a tricky process. Therefore, presenting you some elements  you need to consider for an ideal hotel competitor analysis:

If you are a 45 rooms property; selecting a 100 rooms property as your competitor defeats the purpose. Look at the hotels with similar room numbers as yours. 

The second funnel to choosing the right compset is the hotel star category. Just because the number of keys is the same; a 45 keys budget hotel running next door can not be a competitor to a three-star resort.

You might come across a hotel with similar room numbers and star categorisation, and yet being priced at with a five star resort. It could be due to reasons like the experience they offer or the cultural or heritage value of the place. Do not add them to your list. Similarly, if you are a luxury hotel; the next door hostel is not your competitor.  Know your niche and add similar hotels to your competition list.

Always compare your hotel’s offerings with your competitors’. A hotel with conference and wedding facilities is not an ideal competitor to consider throughout the year ( if you do not have those facilities). Check your competitors’ website as well as their listing on OTAs to know their facilities and offerings.

A hotel can either be a business hotel, a leisure, or a mix of both.Study your guests’ profiles. And if you most of them are coming for a business stay, add more business hotels as your competitors.Similarly, if you cater to pure leisure guests, add leisure hotels to your compset. In case you cater to both business and leisure travellers; add both the types of hotels to your compset. A good mix will help you benchmark the prices as per the segments.

This is one funnel which you MUST NOT ignore. Read what the guests are saying about you v/s the hotel you want to compete against. If your review score is 4.2 over 5, don’t select hotels with 3.1 over 5 as your competitor. 

Proximity is an important factor. A hotel situated 20 miles cannot be your competitor, even if it matches all the above criteria. You can take a walk around your area to get a fair idea. Also, you can talk to your OTA account manager to get information on your ideal competitors. 

A Marriott, A Radisson, A Lemon Tree have become brands after providing a similar level of comfort and facilities to their guests globally. When a four-star hotel next to your three-star hotel lowers the price; you must match the price or reduce it to prevent the guests from moving to the other hotel. Keep a close watch on the next-door neighbours like these.

Metasearch engines like Google, TripAdvisor, and Trivago come in handy in finding the best competitors for your hotel in the online segment.  Search for hotel type  + area (eg. 3-star hotels on 7th Ave) to get the closest match on metasearch.As you see, these are the parameters for finding the right compset for your hotel. Other salient factors to consider are proximity to the airport, metro station, business centers, or a place of tourist attraction. Turns out, you can’t benchmark your prices against the same compset throughout the year. For the right hotel compset analysis, non-identical sales platforms and different seasons require multiple compsets.

In the next segment, let us understand the types of compset.

Which are different types of compsets?

Just like your pricing depends on a wide range of factors, your hotel competition analysis depends on multiple compsets. It is obvious that the demand is not going to be the same all throughout the year. So based on different factors, you have to consider MULTIPLE compsets. 

Segmental:

Today, hotel sale is broadly divided into two segments; viz. Offline and online sales. The offline segment consists of walk-in customers, corporates, and offline agents whilst the online segment is divided into OTAs, hotel booking engines, and GDS.

All these segments are governed by different pricing and policies. Every hotel has one segment which gives it maximum bookings; and one segment where it lacks the presence completely. 

When deciding the prices, you must consider different competitors for segments. Always have a compset that comprises a mix of the strongest, moderate, and weak hotels in that segment.

Seasonal: 

People travel at different times of the year. While holidaymakers travel during long weekends and holidays; business travelers flock throughout the year. It is often seen that business hotels drop their rates during the weekend while leisure hotels hike their prices up.

 If you cater to a mix of holidaymakers and business travelers, a seasonal compset is the most favorable one for you. If there are hotels around you that operate for only several months every year; but still have a high footfall you must add them to your compset. 

Aspirational:

Consider you start remodeling your 45 rooms hotel on 7th Ave. After the renovation, you will attain a five-star categorization. When you upgrade the facilities and amenities, prices will go up as well. 

The aspirational compset is created or asked for by the owners and general managers to get an idea of what your room prices should be like; once you upgrade. This compset helps you analyze future pricing strategies. 

Some hotels always keep their base category room available online by upgrading the guests to the higher category rooms available at the hotel. This keeps the average selling price low and attracts more guests.

For such hotels, always consider the second room category to benchmark. This is how you need to consider different compsets for near-to-accurate hotel competition analysis. Now, your compsets are ready, let us understand how to utilize them.

How does competition analysis benefit the hotels?

Once you have selected your compset, the following are the important analysis you can do in order to bring a positive impact to your revenue.

Pricing Analysis

The segments like offline agents, and corporates, enjoy a fixed rate throughout the year. Hoteliers have a large field to play in the online segment. Here is how you can use the data of the competitor’s pricing to your benefit.

How to get your competitor’s prices?

Now you know who your competitors are, the task is to find their selling price. One way to do so is to get their prices from the OTAs or from the Metasearch engines like Google, TripAdvisor, and so; which works fine on a day-to-day basis. When you want to analyze rates of multiple hotels for several date ranges, it is always advisable to invest in a rate shopper tool. Here’s a video that shows how to rate shopper works: Compare rate plan to rate plan and room type to room type. For example; if your property has a Standard Room with room-only pricing for one pax as your lowest price; do not compare it with your competitor’s Deluxe Room with Breakfast for two pax just because it is their base price. 

Price Benchmarking

There are various approaches you can use to formulate the best pricing strategies against the compset. The pricing analysis report will help you determine the average room rates in the market. It is not necessary to adapt to the same price as everyone. Depending upon the occupancy at your hotel you can either; lower the prices, increase the prices or keep them at par with the average selling price. The purpose is not to become a price follower who copies what everyone around them is doing. Instead, the aim is to monitor the competition so you can identify your rates in relation to the competitors.

SWOT Analysis

Hotel SWOT Analysis is a technique used to help any business to identify Strengths, Weaknesses, Opportunities, and Threats (SWOT). Strengths and weaknesses are internal aspects of your hotel. Whereas, opportunities and threats are mostly external aspects. Basically, once you have the right compset for your hotel defined, then find out their total offerings, room types, number of rooms, and various other details. When you analyze your competitors, you MUST consider all these factors. You can create opportunities against your competitors’ threats and strategize accordingly. All you have to do is compare your services and amenities with theirs. Try to strengthen your weakness against your competitors.

Social Media Analysis

As facts stand,Today around 61% of travelers observe the activities of a hotel on social media before booking their stay. 

Web Courses

On this note, you see how important social media is. Generally, the business accounts are public (You can even follow them).

From the list of the compset, find the social media handles of each competitor hotel. Observe the quality of their content and their frequency of posting the content.

Also, see whether they are engaging with their audience or not. If they are less active on social media platforms, then you can start being more active.

If they are active but are not engaging with the audience, then you should start engaging via your social media handles by running contests, polls, giveaways, and so on.

You may like to read: 9 simple steps to do social media marketing for hotels.

 Review Analysis

Reviews are one of the most important factors in the hotel’s competitive analysis. If you look carefully, then reviews are actually the mirror of any hotel and its services.

When you analyze the reviews, you can figure out which features of your competitors are being appreciated by guests and which aren’t. 

You can find your competitors’ reviews on its website, Google, OTA, and Travel websites like TripAdvisor, Trivago and so on.

Examine their reviews on any of these platforms,  you will get a clear picture of the qualities and flaws of your competitors. With this detailed analysis, you can understand what the GUESTS like and dislike about your competitors; and then later use it to your advantage. 

For instance, let’s say you want to analyze reviews of your competitor property, Hotel A. Go through its TripAdvisor listing and examine its reviews. Now, you found that Hotel A has frequent complaints of housekeeping and on the flip side, they have positive feedback for their extra services like pick-up, drop-off, and so on.  

Now how would you use this to your benefit? All you need to do is, highlight your better housekeeping on social media platforms. Also, you can get connected with cab services and start offering pick-up or drop-off services.

In addition to this, you can offer guided tours of your locality.

You may like to read: Hotel Reviews and Reputation Management: What, Why and How of It

Another important thing to contemplate is how your competitors are responding to their reviews.

So this was all about the what, the how, and why of hotel competition analysis.

FAQs

Conclusion

In a nutshell, hotel competitive set analysis plays a vital role in shaping your business expansion strategies. It helps you understand how the market reacts to the demand, and how your competitor’s pricing can hamper your own budget goals.In addition, the precise competition analysis draws a roadmap to help your business stand among the crowd. It gives you a different yet important perspective to grow your hotel business.

The post How to Perform Hotel Competition Analysis? [Step-by-step Guide] appeared first on eZee Absolute.