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Hotel SWOT analysis: discovering improvement opportunities

Back in the mid 1960s three members of the influential Stanford Research Institute in the USA published a study into Long Range Planning, which identified four major factors that could affect the fortunes of businesses and organisations. This was the seed which would over time grow into a tool known as SWOT Analysis, after the four categories of Strengths, Weaknesses, Opportunities and Threats. In its various forms, SWOT Analysis is still used in almost all businesses and sectors, but perhaps surprisingly, not so much in the hospitality industry. Let’s look at how to take some significant steps in the strategic planning process of hotel SWOT analysis.

Setting an objective for your hotel SWOT analysis

The underlying purpose of any SWOT analysis is to capitalise on existing advantages, and to identify areas for improvement. In doing this it’s necessary to have an objective. OK, you could say ‘We want everything to be better’ but that can be too unfocussed. So for a hotel SWOT analysis, target a specific area - be it guest satisfaction, occupancy rates, or the overall competitive position of your hotel in the market. Of course these things overlap, but having a specific objective to start with makes for a more effective analysis. The better you get at doing SWOTs, the more you will be able to broaden their scope. 

An important point from the get-go is to make this a team effort. Gather stakeholders from across your business to brainstorm and suggest different angles as they see them. The more viewpoints you collate, the more effective the SWOT analysis of a hotel can be.

Internal and external factors of SWOT

The idea of a SWOT analysis is elegantly simple, which is another reason why stakeholders in your hotel can quickly appreciate and contribute to the process. Strengths and Weaknesses are essentially internal attributes. That is, they are within your direct control to change:

Strengths

It will involve identifying the hotel's resources that give it a competitive advantage. These can include location, amenities, reputation, service levels, awards, and positive online reviews.

Weaknesses

The hotel SWOT analysis will recognise internal factors that may hinder the hotel's performance. These might include outdated facilities, limited marketing budget, understaffing, high employee turnover, or negative reviews on online media.

The external attributes are those things which are outside your immediate control or influence and represent both Opportunities or Threats to your business:

Opportunities

Opportunities are factors that could be leveraged such as events happening in the area, tourist attractions, a particular niche market, or new partnerships with other businesses and the OTA ecosystem.

Threats

Threats are identified as factors that could impact the hotel negatively. These include increased competition, changing customer preferences, economic downturns, or negative publicity. In the light of global warming and the effects it has had on tourism (in southern Europe especially), we might be wise to also add ‘Natural disasters and climate change’ to the list of possible threats.

Circle Infographic Diagram SWOT Analysis

With each point that you assess, don’t just think of it as ‘either / or’. That is, if you are analysing the food and beverage offering, there are many gradations between ‘Amazingly good’ and ‘Embarrassingly awful’! Be as honest as possible, and get granular. In other words, your food may be ‘Excellent’, but perhaps the wine cellar is merely ‘OK-ish’. The easiest way to represent all the factors you choose to examine for a particular goal is to create a simple four-box matrix, and then individual items can be plotted by their position to show whether they are ‘high scoring’, or not.

With a matrix drawn up, you will be able to clearly visualise the relationships between internal and external factors. From that it will be possible to develop strategies: Prioritising the most significant elements from each category based on their potential impact. SWOT analysis strategies build on strengths, acknowledge and address weaknesses, capitalise on opportunities, and work to mitigate threats.

Let’s look at each SWOT category in turn to see how the principles can be applied.

Strengths (of your hotel)

So what gives your hotel the edge? Sometimes it may seem so obvious to the hotelier that they almost forget that it’s not so obvious to the market. By brainstorming with your team you can assess and define what makes your hotel special and a cut above the rest.

Location, location, location

Let’s face it, where a hotel is located has to be one of the most important factors guests will be looking for, whether it’s the convenience of being close to an airport, or in breathtaking scenery. Whatever your strengths are when it comes to location, make sure these are included in your SWOT analysis. What’s more, give it a score as to how well it satisfies the needs of the market.

Map out your hotel’s reputation

A hotel’s reputation is both an internal and external factor, and the hotelier must be able to assess how well it measures up. Is the reputation good, and in what areas? Perhaps the food and beverage reputation is great, but facilities and services come lower on the matrix. Map your reputational strengths to see where improvements have to occur.

Improve your Staff

Hand in hand with reputation comes the quality of a hotel’s staff. Your staff quality lies in a number of things, such as their level of motivation, their problem solving abilities, or their willingness to adapt to new technology in the hospitality industry. Recognising these as strengths means they can be built on and enhanced to produce increased bookings, and enhanced profitability.

Implement Hotel technologies

Guests increasingly expect to make searches and bookings online, and the hotel which has a great website (with effective Search Engine Optimisation), and connects seamlessly with OTA sites has significant strengths. Deployment of modern hotel softwares also provides strengths, with features such as ‘touchless’ check in and check out, and apps such as SabeeApp’s GuestAdvisor, which provides a communication channel to guests during their stay.

Weaknesses that you can turn into strengths

Sometimes it’s hard to see the weaknesses of the offering. After all, if the hotelier was really aware of problem areas, they would surely address them. Paying particular attention to weaknesses is therefore vital, because this is the area where guests can be most impacted.

Introducing a clear value proposition 

Coupled with knowing your guest comes the proposition of the hotel: What are you offering? An unclear proposition is a huge weakness - so get very clear about whether you are a luxury hotel, get-away destination, family-oriented… and so on. 

Manage your online presence and reviews

Social media comments and reviews on OTA sites are hugely influential in persuading guests to book a hotel. Don’t regard this as merely an external issue however: You can actively engage in social media and be proactively involved in dialogue with reviewers. Internally, a hotel can create the environment to monitor social media, create its own channels, and respond to the ‘world out there’. The hotel which is weak in online engagement is flying in the face of every contemporary trend in the hospitality market.

Improve your Facilities and offers

For your target market and chosen proposition, does your hotel have the facilities and offerings that can be expected by guests? If the answer is ‘No’, then that is a significant weakness. Benchmark by checking out the competition in the area - what do other hotels do that you don’t? It could be as simple as offering a welcome gift, or having some gym facilities, but if your hotel is behind the curve, benchmarked against the competition, then it can be a major weakness.

Opportunities for future growth

There are always opportunities in the hospitality sector, and this is also where checking out what the competition is doing can be very revealing. Sometimes it’s simply a case of adjusting your offering and ‘working smarter, not harder.’ Some opportunistic examples include.

Finding local partners

What’s going on in the local area: Are there any events, sports activities, festivals or seasonal celebrations coming up? Partner with organisations and other businesses which are aligned with your demographic. This can be achieved as easily as providing mutual links to websites and publicity, or by entering more formal ‘approved supplier’ partnerships. Often this costs nothing except a few phone calls, and maintaining good partnership.

Meeting the needs of guests

If you really know who your ideal guests are, you can meet and enhance the guest experience in line with their needs. If your hotel is in an area of natural beauty (for example), and some guests are day hikers, then think about what they may need at the end of each day, such as sauna or wellness facilities. 

Getting technological

This is without doubt one of the most important opportunities to pursue in meeting the needs of guests. It’s also something which appeals to almost everyone: What’s not to like about seamless booking, check in and check out, and enhanced in-room facilities? It is now an expectation of guests that there will be technological solutions at all the touchpoints of the guest experience. Another opportunity coming out of this is that hotel staff can therefore be freed from the more mundane tasks to be much more customer-facing.

Communicate with your guests

The ability to communicate with guests before, during and after their hotel stay has never been easier, through social media and by utilising the power of Property Management Systems. These can - for example - manage templates of personalised emails to confirm bookings and say ‘thanks for staying with us’. Communication continues after the stay through special offers and discounts, as well as the continued monitoring of what guests say about your hotel online. Responding promptly to both positive and negative reviews represents a huge opportunity to protect and enhance your brand reputation.

Threats - better safe than sorry

What’s the worst that can happen? Hotel staff are well-versed in the obvious threats of what to do in physical emergencies, but hoteliers need to be just as aware of external threats in the market.

New offerings from competitors

Don’t operate in a vacuum, but constantly scan the online presence of other hotels in the area that have a similar guest demographic to yours. What new facilities do they have, what special offers are they making, and are they promoting seasonal or other special events? 

Train your Staff

A hotel’s staff are arguably its greatest asset - if they are friendly, responsive and customer-facing. However the threat posed by just one unpleasant interaction  can completely sour the guest journey. By training every member of staff in being customer-facing, a very large potential threat can be avoided.

Consider pricing issues

This of course is an almost constant threat in the hospitality market, and the best response is to research and be aware of the current trends in pricing. Do this by scanning competitor’s rates, and through the OTAs. Do not be priced out of attracting guests, but of course ensure that profitability is maintained. Easy to say, sometimes hard to do!

Expecting the unexpected

No-one predicted the massive worldwide downturn of business due to the covid pandemic. Some threats are just too big to adequately plan for. However the savvy hotelier should always be on the lookout for external trends in the market which could impact business. These can include transportation strikes, power price hikes, or of course public health issues. You can’t stop macro events happening but you can have a proactive stance ready to deal with such threats.

Step by step SWOT Analysis for hotels

So how to go about a hotel SWOT analysis? Well, at SabeeApp we have been working closely with hotels across the whole hospitality sector for over ten years, so we have a good understanding of the Strengths, Weaknesses, Opportunities and Threats facing every hotel of whatever size and type. 

That’s why we are confident in offering these guidelines for improving your business by implementing SWOT analysis of your hotel. We created a template that you can use together with your team to do your hotel's SWOT analysis. Make a copy of this document and start working! Here are some more tips for you, to make the process flawless.

SWOT Analysis template for your hotel

  • Do include all stakeholders in the process - they can contribute valuable experience and insights.
  • Don’t attempt a ‘one size fits all’ SWOT analysis of everything. Rather, work on analyses of specific areas, such as reception and check in, or food and beverage.
  • Do think creatively and brainstorm. Agree that initially anything and everything is ‘on the table’, especially from members of staff.
  • Don’t dismiss any suggestions or observations, however unusual they may seem.
  • Do act on what you have learned from the SWOT matrixes that you collate - they provide a hugely valuable action plan for future success.
  • Don’t forget to include guest feedback that you have received, either positive or negative. After all, the SWOT analysis is designed to improve your hotel business and make it more profitable and effective - which means meeting the needs of customers.
  • Do everything step by step.
  • Don’t expect that one session with a flipchart will identify every single strength, weakness, opportunity and threat facing your hotel. The process requires time and granularity. Some issues can be addressed easily, others may require longer twerk planning and investment to fix. Every step taken that addresses the SWOT matrix is a further step towards long term success.

Ready to take the first step towards hotel automation?

SabeeApp knows the hospitality market in detail, and the technology modern hoteliers need to ensure success. We’ll be happy to give you a free, no obligation demo of our all-in-one Hotel Management System, which for sure helps avoid Weaknesses and Threats, and provides further Strengths and Opportunities for hotels of all sizes.

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