You know the saying, “When you fail to plan, you plan to fail?” That’s true in many aspects of life, but it’s especially true for hoteliers interested in optimizing their operations. The hospitality industry is expected to soar to $5.8B by 2027 — meaning that travelers will have more options than ever before, and staying competitive will be a must for success.
Fortunately, understanding what your hotel is doing well and where there is room for improvement can help you get a plan in place to do just that; and that’s where the hotel SWOT analysis comes in. Shorthand for identifying the Strengths, Weaknesses, Opportunities and Threats that impact your hotel, a SWOT analysis is an exercise that every hotelier should be familiar with.
To start, let’s take a look at exactly how a SWOT analysis works for a hotel and how hoteliers are able to conduct the process for their own business.
What is SWOT Analysis for Hotels?
A SWOT analysis is a strategic planning matrix used to clearly identify where a hotel operation’s Strengths, Weaknesses, Opportunities and Threats lie. It can be as broad or granular as your hotel needs, from a simple sketch to a full report, as long as the four categories are satisfied. From General Managers to management group CEOs, a SWOT analysis is a good thought exercise for anyone interested in improving operations.
SWOT analyses are used across a variety of industries, but they’re particularly valuable for hotels. They make it possible for hoteliers to make more strategic, long-term decisions to stay competitive and maximize operational revenue as you go. Whether it’s deciding to provide more amenities for high-end travelers or investing in your tech solutions, a hotel SWOT analysis gives you the insight required to make an informed choice.
The Core Elements of An Effective Hotel SWOT Analysis
A SWOT analysis is particularly unique in the hospitality industry, as it encompasses your hotel’s physical attributes, online presence, staff retention, industry standing and more. Some key elements to identify include:
Physical attributes such as your hotel’s location, seasonal attractions, design elements and unique historical traits
Customer service operations including amenities, extra touches and the overall guest experience
Technology stack which can include check-in and checkout operations, guest messaging, AI-powered services and more
Future initiatives such as planned facility upgrades, technological investments or expansions
Hoteliers doing a SWOT analysis lay the groundwork for future initiatives, positioning them to be more proactive and strategic in every element of their operations.
How a Hotel SWOT Analysis Can Improve Business Operations
By organizing your strengths, weaknesses, opportunities and threats into one concise place, you can both identify your wins and put together a hotel action plan to make any necessary improvements. Here’s what a SWOT analysis enables hoteliers to do:
Think ahead: Gain insights that can translate into a clear action plan
Synchronize functionality: Unite hotel department strategies under a single focus
Benchmark your market position: Assess your current market position and determine where growth can occur
Inform decisions: Learn which decisions will have the most impact on growth
How to Conduct a SWOT Analysis for Your Hotel in 4 Steps
1. Identify Your Hotel’s Strengths
Strengths are the internal attributes unique to your hotel that allow you to be competitive. Recognizing the assets that your property brings to the table lets you capitalize on them and create a business strategy focused on improvement.
Strengths that hoteliers can examine include:
Unique Selling Propositions (USPs), such as your property’s location, historical significance or other elements that can’t be readily replicated
A modern guest experience that takes advantage of integrated guest management technology and streamlined options for completing tasks
Exceptional customer service by highly trained hotel staff
Efficient operations, low overhead costs and other signifiers of a well-run hotel
High-caliber food and beverage options
Extensive offerings for your target market (i.e. a well-equipped business center or luxury spa)
Significant repeat business
Competitive rates for your market
Key questions to ask yourself when assessing strengths:
What do guests consistently say is the highlight of your hotel?
What USPs does your property offer?
What services do you provide?
What makes your property stand out from competitors?
What are your performance metrics?
2. Recognize Weaknesses in Your Hotel Operations
Conversely, weaknesses are any internal elements that can impact your hotel’s ability to reach its full potential of success. Weaknesses prevent hotels from staying competitive, keep them from delighting guests and create operational inefficiencies that hinder staff performance.
Key questions to ask yourself when assessing weaknesses:
When you lose business to the competition, what factors motivate that loss?
What weaknesses exist because of staffing issues?
What are your customer’s pain points?
Which weaknesses are due to budget constraints?
Is there a gap in staff skills or resources?
What are negative reviews focused on?
3. Spot Opportunities for Hotel Growth
Opportunities are external factors that hotels can identify as chances for growth. They can be leveraged to create more strategic operations, boost brand reputation and further a hotel’s success.
Key questions to ask yourself when assessing opportunities:
What are the current trends in my sector of the hospitality industry?
How can I increase bookings?
Which trends can you capitalize on with current resources?
Are there any new market sectors you can explore?
What initiatives can you implement to enhance the guest experience?
4. Assess External Threats to Your Hotel Business
In addition to the internal weaknesses, a SWOT analysis also evaluates external hotel market threats that owners should be aware of. The idea is to identify these threats early to mitigate them proactively, before they have a significant impact on the business.
Examples of threats can include:
New or growing competitors that can become a threat to your market share
Shortages of qualified labor to provide a high level of service
Evolving consumer habits that may attract guests to other types of properties
Changes in the national economic market that impact travel trends
Technological advancements that leave your current software solutions obsolete
Inflation that impacts your property overhead
Key questions to ask yourself when assessing weaknesses:
What external factors can impact your business?
How are market trends evolving?
In what ways have travel trends been changing?
Will any governmental regulations impact the hospitality sector in the next 12 months?
Where do your competitors rank within the market?
Are you protected against cyberattacks and data breaches?
Putting it All Together: 3 Examples of Hotel SWOT Analysis
Every hotel will have its unique value propositions and concerns, but different hotel types often have significant overlap in the outcome of a SWOT analysis exercise. Let’s take a look at examples of how a hotel SWOT analysis looks for three different (fictional) property types.
Example 1: Camembert Castle (Luxury Boutique Hotel)
Strengths:
A unique property: Located on a former business tycoon’s countryside estate from the 19th century, Camembert Castle benefits from a unique, historical design and atmosphere
Exceptional customer service: As a 5-star property, each staff member on the property is highly trained in providing an high level of personalized service
Modernized facilities: Despite its historic nature, the hotel has invested in modernized facilities to provide guests with the best of both worlds
Weaknesses:
Limited room inventory: Because of the historic nature of the building, there are a limited number of rooms available
Higher operating costs: The high caliber of hotel staff, food and beverage offerings, and luxury touches leads to higher overhead costs as well
Niche market appeal: Catering to high-end, luxury travelers results in a narrow market sector that the property can appeal to
Opportunities:
Ancillary revenue: Offering exclusive experiences (e.g., private chef dinners, spa treatments) can increase ancillary revenue without significantly impacting overhead
Expanding market share: Targeting locals who want to use the grounds and facilities for the day can increase market share beyond high-end travelers
Increasing online preference: Leverage social media and influencers in the luxury travel space to enhance brand visibility
Threats:
Economic downturns: Auxiliary spending, such as luxury travel, is one of the first things to decline during periods of economic uncertainty
Negative reputation: Because of the high volume of influential gusts, one high-profile negative experience can significantly ding the castle’s reputation
Changes in travel trends: If market demands shift away from luxury or boutique properties, they might see a reduction in bookings
Example 2: The Midway Motel (Budget Motel Chain)
Strengths:
Extensive network: Midway has multiple locations throughout the United States
Standardized operations: As a chain, franchises are standardized and costs are lower
Brand recognition: With a large market share and a loyalty program, many travelers will recognize the brand
Weaknesses:
Limited service: With basic amenities and only the standard offerings, they are positioned as a true budget option
Low brand perception: Because of their market positioning, many travelers may think of them as a low quality option
Inconsistencies in experience: While franchises are meant to be standardized, a large number of properties creates a higher room for error
Opportunities:
Increase amenity offerings: Upgrade properties to offer more features and attract more travelers
Expand into emerging markets: Increase market share through opening more locations
Invest in technology: Implement digital solutions to reduce overhead and enhance the guest experience
Threats:
Increased competition: Budget hotel chains are easier to expand meaning competition could come at any time
Economic downturns: Leisure travel may be reduced overall if there is a widespread economic downturn
Rising overhead costs: An increase in labor and utility expenses may have a widespread impact on the brand
Example 3: Bear Cub Lodge (Family-Friendly Resort)
Strengths:
Broad appeal: A diverse range of activities and amenities appeals to both parents and children
Spacious accommodations: Multiple room configurations can accommodate families of all sizes
Strong focus on family fun: All marketing collateral reinforces their established reputation as a family destination
Weaknesses:
Seasonal fluctuations: There is a stark difference in occupancy rates when schools are and are not in session
High maintenance costs: Extensive facilities require a lot of upkeep and staffing
Weather dependence: With many outdoor activities, weather plays a significant factor in the guest experience
Opportunities:
Appeal to new age groups: Expand offerings to increase market share (e.g., teen programs, senior discounts)
Local partnerships: Work with local attractions and tour operators, especially those that offer indoor recreation opportunities
Offer a digital compendium: With many facilities and details to communicate, a digital solution can help reduce staff burden and give guests the info they need
Threats:
Natural disasters: Because of their weather-dependence, a natural disaster with a large impact can have a major impact
Increased competition: Other family-friendly resorts with additional services or amenities could impact market share
Changing travel patterns: Resorts are often not considered the greenest option, so an eco-friendly travel trend may reduce bookings
Taking Action: Implementing Your Hotel SWOT Analysis
While doing the work to compile a hotel SWOT analysis is a great first step, putting it into action is what will actually make a difference. A SWOT analysis makes it easier to evaluate which opportunities can be most advantageous to implement, which weaknesses need to be addressed immediately and where strengths can be continually enhanced to stay competitive within the market.
Once you determine exactly what improvements you plan to make, such as implementing a Guest Management Experience Platform, modernizing facilities or up-leveling offered amenities, making these changes are a key way that hoteliers can remain competitive and continue to grow within their market.
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