A SWOT analysis is a classic tool used for strategic planning and decision making. SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT diagram analyses a project or business venture by focusing on each of these factors.
As a result, SWOT diagrams can be especially useful when trying to decide whether or not to embark on a certain venture or strategy by visualising the pros and cons. In the hospitality industry, this tool is used for everything from software purchasing to refurbishment and adoption of new in-room technologies.
The key benefit of this type of analysis is the opportunity it gives you to plan ahead and approach problems proactively. Rather than buying software as a result of negative reviews, declining sales, or turnover of key staff, you can consider your options carefully and decide on actions before problems arise.
A SWOT analysis can be as simple or as complex as your hotel requires, from a back-of-the-napkin sketch with bullet points all the way up to a formal report. The key is that you take a look at the four main areas - strengths, weaknesses, opportunities, and threats - and see how they stack up for the proposed project. Here we’ll take a look at the seven simple steps you need to take to create your own powerful SWOT analysis.
Discover the 7 simple steps for a hotel SWOT analysis:
1. Determine your hotel’s objectives.
SWOT analysis works well when you’re considering a change and need to know if it’s worth the time and money required. In the hotel industry, SWOT analysis can be used for large strategic initiatives like opening a new property, considering refurbishment, or rebranding. It can also be used for smaller decisions that still have an important strategic impact, such as switching your CRM software, adopting new in-room technologies, or purchasing modular furniture for your event space.
Think about key initiatives, projects, or purchases that your property is considering in the next year. A SWOT analysis can help you brainstorm the pros and cons of these actions, and give your team a good idea of whether to move forward with the proposed initiative.
To clarify which section an idea belongs to, it may be useful to think of strengths and weaknesses as internal factors – that is, to do with the organisation, its assets, processes, and people. Think of opportunities and threats as external factors, arising from your market, your competition, and the wider economy.
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2. Critically examine your metrics and results.
Before you begin mapping out your strengths, weaknesses, opportunities, and threats, you need to gather all of the information about your hotel and the proposed initiatives that you can. What is the status quo? Metrics and Key Performance Indicators (KPI’s) are an important part of this process, as they give you hard data you can use and compare to other properties, brands, or similar initiatives. You can find reports containing many of these metrics in your CRM and PMS systems.
Here are a few metrics you may want to include in your analysis:
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Revenue per Available Room (RevPAR)
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Average Daily Rate
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% Occupancy
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EBITDA margin
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% Direct bookings
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Average group size
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Event activity
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Sales cycle length (by segment)
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Website traffic
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Online reviews and feedback
3. Map your hotel's strengths.
This refers to the positive traits, both tangible and intangible, that are present in your hotel. These are internal factors that are within your control. Consider these factors as advantages that your hotel has at its disposal. Which metrics have you identified that are better than average, or better than your competitors’? What are the things that your hotel does well? What do customers say about their interactions with you?
Strengths can include tangible benefits such as intellectual property, proprietary software, and capital. But don’t forget to include intangible strengths in your analysis. Maybe your front desk employees have a higher level of training and professionalism, or your business center provides more modern value, or your food and beverage is significantly better than the competition’s. Use your own knowledge of the property, as well as staff and guest feedback, to map and include your intangible strengths alongside the tangible ones.
Remember, any aspect of your organisation is only a strength if it brings you a clear advantage. For example, if all of your competitors provide fast check-in and free wi-fi, then this is not a strength in your market: it's probably a necessity.
4. Consider your property’s weaknesses.
Weaknesses refer to elements that inhibit growth or optimal performance, or things that your hotel lacks. These are internal factors that are within your property’s control. Understanding your weaknesses involves some critical self-evaluation. A SWOT analysis will only be valuable if you gather all the information you need. So, it's best to be realistic now and face any unpleasant truths as soon as possible.
Common weaknesses for hotels include budget limitations, lack of in-room technology, poor online reviews, lacking certain facilities, or an outdated website. Take a hard look at what your competitors do better than you, and areas that guests have flagged in negative feedback. When you lose business to the competition, what factors motivate that loss?
Weaknesses can also include areas where you have a lack of resources, time, or personnel. What parts of your sales process are getting short shrift? What operational weaknesses exist because of staffing issues? In what areas are your customer segments or unique selling proposition unclear or vague? What are your customers' pain points? All of these places are helpful to look at as you consider your weaknesses.
5. Look for external opportunities for your SWOT.
Opportunities are openings or chances for something positive to happen, as long as you can identify and take advantage of them. These are usually external factors that arise from situations or trends outside your organisation, and require an eye towards what might happen in the future. They might show up as developments in the market you serve, or in the technology you use. Being able to spot and exploit opportunities can make a huge difference to your hotel's ability to compete and take the lead in your market.
See what you can spot immediately. These don't need to be game-changers: even small advantages can increase your property's competitiveness. What interesting market trends are you aware of, large or small, which could have an impact? How are MICE business trends such as personalisation, changing customer segments, bleisure travel, the desire for more sustainable hotels, and smart devices impacting your market? What do you think the next big thing will be?
You should also watch out for changes in government policy related to the industry and your location. Changes in social patterns, population profiles, and lifestyles can all throw up interesting opportunities for you to take a look at.
A few helpful tools for identifying opportunities include:
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Subscribing to hotel industry blogs
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Setting up Google Alerts for hotel-related keywords such as “hotel technology” and “MICE business”
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Searching Google News for the latest relevant “hotel” stories
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Subscribing to trends newsletters such as Cassandra Daily
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View your competitor’s websites and reviews on sites such as Yelp and Facebook
Some common opportunities in the hotel industry would be things you could do to increase bookings, improve guest satisfaction scores, or boost your profits. Research current market trends and look to guest reviews for ideas of where you can open up new streams of revenue or reach new markets.
6. Be aware of external threats.
Threats include anything that can negatively affect your hotel externally, such as OTA changes, shifts in market requirements, or a shortage of recruits. It's vital to anticipate threats and to take action against them before you become victim to stagnation, poor feedback, or lost business.
Think about the obstacles you face in marketing and selling to groups and individuals. You may notice that quality standards or amenities in your category are changing and that you'll need to change your offering to stay in the lead or catch up to competitors. Evolving technology is an ever-present threat, as well as an opportunity!
Always consider what your competitors are doing and whether you should be changing your organisation's emphasis to meet the challenge. But remember that what they're doing might not be the right thing for you to do, and avoid copying them without knowing how it will improve your position. Consider your value proposition, brand, and customer segments to make sure that threats really apply to you and your market.
Be sure to explore whether your hotel is especially exposed to external challenges. Do you have bad debt or cash-flow problems, for example, that could make you vulnerable to even small changes in your market? This is the kind of threat that can seriously damage your business, so be alert.
7. Take the next steps!
A SWOT analysis won’t be worth the paper it’s printed on if it doesn’t lead to discussion, evaluation, and eventually action. Transfer your elements into a grid-like matrix with four quadrants, one for each category. This format offers a clear snapshot of where you can adjust, invest, and play to your strengths.
Now that you’ve mapped out the strengths, weaknesses, opportunities, and threats associated with a given initiative, you need to determine how things stack up. Are there more positives than negatives for undertaking the project? Will it be worth the investment of time, money, and human resources? Can you mitigate any of the risks you have identified in the process? In what ways will you capitalize on the opportunities available to you?
Only you can determine whether your SWOT analysis is pointing you towards the proposed initiative. But hopefully, the discussions and research that helped you create the framework will point you in the right direction.
Act on your hotel SWOT analysis:
With the tips above, you can create a SWOT analysis for your hotel and identify the initiatives that best align with your strategic goals.
