How to conduct your hotel SWOT analysis in 6 steps

Have you planned business objectives for your property? Do you know what opportunities and challenges are ahead for your hotel and what initiatives you should implement to succeed? 

From luxury hotels to bed and breakfasts, boutique hotels, and hostels, every business in the hospitality industry should take time to evaluate its competitive position and find opportunities to enhance performance. A SWOT analysis is one of the best tools to help you make better decisions. 

Read on to learn more about what a SWOT analysis is and how to conduct your own.

Using this analysis, you can assess your business to re-examine your competitive advantage, set clear objectives, and define action plans and strategies to take your business to the next level.
 

What does SWOT stand for?

The acronym SWOT stands for strengths, weaknesses, opportunities, and threats. When defining a business strategy and a roadmap for your property’s growth, you should focus on these four variables.

Why it matters?

A SWOT analysis is an important component of any business and marketing plan. Conducting a SWOT analysis can help properties of any size with:

• Scaling: assessing current performance and determining growth potential.
• Prioritization: identifying the most important initiatives and building a roadmap.
• Benchmarking: getting a clear overview of a property’s position in the market.
• Decision-making: getting a better understanding of how new strategies or market shifts may affect the business.

4 elements of a hotel SWOT analysis

Every SWOT analysis includes four variables, each of which is grouped into two categories: internal and external factors.

Internal factors

Internal factors are under your property’s control. This category considers your strengths and weaknesses.

Internal factors include:

• Services: quality and pricing
• Marketing: brand awareness, advertising, visibility, and positioning
• Management: internal processes and organization
• Human resources: recruiting, hiring, and retaining staff
• Finance: resources, profitability, and cash flow
• Guest experience: pre-stay, during-stay, and post-stay
  
  

1. Strengths

Strengths are the characteristics that make your property stand out from your competitors and position you in the market.

Here are some questions to help you discover your hotel’s strengths:

What is your property’s unique selling proposition?
What attracts guests to your property?
What are you already doing well?
What services do you offer?
What makes your property better than your competitors?
What makes your property profitable?
What resources do you have?
What are your performance metrics?

Examples of strengths

• Location
• Loyal guests
• Customized guest experience
• Attractive offers
• Large social media following
• Use of technology and apps
• Modern/responsive website
• Efficient hotel operations
• Experienced and skilled staff
• Competitive ADR (average daily rate) 
• High RevPar (Revenue per available room)
• 5-star reviews

2. Weaknesses

Weaknesses are the areas your property needs to improve on to excel in the market and stay competitive. Customer feedback and reviews are a great way to help identify your property’s weaknesses.

Here are some questions to help you detect your weaknesses:

What factors are holding back your property?
Is there a gap in skills or resources?
What are your competitors doing better?
What have your guests been disappointed about?
Are there any budget limitations?
Are your services up-to-date? (facilities, website)
What are your performance metrics?
Are your strategies working?
Is your hotel competitive enough?

Examples of weaknesses

• Weak brand
• Poor marketing initiatives
• Low presence on social media
• Poor technological implementation
• Lack of pricing strategies
• Out-of-date website
• Poor facilities maintenance 
• Inexperienced staff
• High operating costs
• Negative reviews
• A low percentage of direct bookings
• Low occupancy rate
• Lower ADR than competitors

External factors

External factors are prevalent in the hotel industry and are out of your control. This category considers opportunities and threats.

External factors include:

• Market: demand evolution, guest behavior, market segments
• Sector: industry trends, external opportunities for success
• Competition: products and services, pricing, advertising
• Business environment: political, social, legal

3. Opportunities

Opportunities are circumstances that bring business and benefit your property. They come from analyzing and staying up-to-date with industry and market trends.

Here are some questions to help you identify your opportunities:

What are the market and industry trends you can take advantage of?
Which trends can you tackle with the skills and resources you have?
Are there any new markets you can explore?
Are there any other potential guests you can reach?
Are there any services on demand you can offer?
Are there any new technologies, better software, or new integrations to improve your business?
What initiatives can you implement to improve guest satisfaction?
Can your property execute strategies to increase revenue, direct bookings, and occupancy rate?

Examples of opportunities

• Growing volume of tourism activity 
• Increased attraction to local and unique experiences
• Demand for sustainability (90% of consumers are looking for sustainable travel options)
• Digitalization of the hospitality sector
• Access to local communities to create authentic and personalized experiences
• Improve guest experience 
• Improve visibility and invest in SEO initiatives
• Adopt products/services with high demand
• Adapt to changing consumer habits (digital nomads, pet-friendly)
• Implement technology (self-check-in, guest communication & engagement)
• Open new streams of hotel revenue
• OTA bookings share is expected to decline from 52% in 2021 to 48% in 2025, according to Phocuswire

4. Threats

Threats are external conditions that can affect your property’s performance and hinder your growth.

Here are some questions to help you find your threats:

What external conditions can harm your performance?
What is going on in the industry?
How are your guests changing?
Is the market share shrinking?
Are there any government regulations affecting you?
Do you have potential competitors? What are they doing/planning to do?
Are you prepared to face natural disasters/pandemics?
Are you protected against data breaches or cyber-attacks?

Examples of threats

• Competition
• Changing consumer habits
• Market share reduction
• Labor shortages
• Inflation
• OTAs expanding their business to include more types of accommodations
• Global economy
• Increasing energy costs. In Europe, for example, 80% of hoteliers rate the energy crisis as their biggest concern
• Tax laws
• Excessive regulation and bureaucracy 
• Political situation

How can a SWOT analysis help your property?

You can assess your property using a SWOT analysis to understand its current situation and future prospects. SWOT analysis helps you leverage your strengths, transform weaknesses into opportunities, and mitigate threats.

A SWOT analysis helps hoteliers:

• Understand the market and competitors
• Detect areas of improvement and potential risks
• Develop new strategies or reinforce existing ones
• Create roadmaps for projects and initiatives
• Identify problems in advance
• Re-evaluate products and services
• Re-define target audience and guest personas

6 steps to create your SWOT analysis 

1. Define your goals

Before creating your SWOT analysis, you need to know your objectives. The analysis may be too generic if you don’t have clear goals. Whether opening a new property, rebranding or launching a hotel marketing campaign, your focus should be specific to each goal. This way, you’ll get insights on how to proceed.

2. Gather data

Gather all the information you can about your property, market, industry, and competitors. Having all the data and metrics is vital to create a goal-oriented analysis. Some metrics to include are your ADR, RevPar, and occupancy rate. Your percentage of direct bookings, website performance, and guest reviews are also valuable. 

3. Bring your stakeholders together

Decide which of your team members and collaborators will participate in the analysis. It is ideal to have one member from each department. From hotel managers to sales representatives, every participant can provide insight to create a detailed outlook.

4. Schedule a brainstorming session 

Schedule a brainstorming session in which you and your stakeholders share ideas to fill in the SWOT template. During this session, you must write down your strengths, weaknesses, opportunities, and threats in each quadrant based on the information you previously gathered. 

5. Analyze the information

Once you have a list of each one of the variables, analyze them and rank them in order of importance. You can prioritize the ones that will help you achieve the goals you previously defined. Start with the ones that require immediate action, or focus on the ones that will have the most impact.

6. Define strategies to help achieve your goals

Once you have completed the analysis, define the strategies that will help you leverage your strengths and opportunities and mitigate your weaknesses and threats.

Final thoughts

Property owners can fall into a pattern of inaction or inefficiency without strategies and action plans. A SWOT analysis is an excellent tool to reach your business’ potential, maximize your resources, manage risk and stay competitive.