Hotel Competition Analysis - Assessing Competitors Strategically

As a hotel owner, you already know that the hospitality industry is no walk in the park. It's a battleground out there, with every hotel vying for guests' attention. You're constantly looking for ways to stand out and attract more visitors to your property. So what to do?

The answer: perform hotel competition analysis right now!

Understanding your competitors' strategies is like having a guide straight to success. It gives you a clear picture of who you're up against and what they're doing right. Analyzing the competition, from the luxurious boutique hotel across the street to the trendy chain down the road, can reveal valuable insights. Moreover, their strategy will change over time - so you must do your analysis regularly to stay on top!

In this blog post, we'll show you how to perform a strategic hotel competition analysis that goes beyond simply knowing your rivals. We'll dive deep into their strengths, weaknesses, pricing tactics, marketing ploys, and even their approach to customer service. With this knowledge, you can develop a winning strategy that maximizes your strengths, addresses your weaknesses, and positions your hotel for success in this cutthroat industry.

Let's get started on your competitor analysis.

PSTTT: Not quite at this stage yet? Get the 411 on how to start a hotel business in our beginner’s guide. 

Identifying key competitors in the local market

To kick off your hotel competition analysis, it's essential to identify your key competitors within the local market. These players directly impact your business and vie for the same pool of potential guests. You’ll want to focus on your direct and indirect competitors for a thorough starting point.

Direct competitors: 

These hotels share the same star rating and are situated nearby. Guests often consider these hotels as alternatives to yours, making them your primary rivals.

Indirect competitors: 

Indirect competitors might not be right next door, but they have a similar star rating or target a comparable audience. They could include vacation rentals, boutique inns, or other lodging options that provide alternative choices to potential guests.

How to perform a strategic analysis framework - SWOT analysis

Alright, now it's time to roll up our sleeves and get down to the nitty-gritty of your hotel competition analysis. This section will dive into the strategic analysis framework, which will be your trusty compass in navigating the competitive landscape.

Let's kick things off with an in-depth SWOT analysis of your hotel business. Here's what components are involved in a SWOT analysis.

SWOT analysis - Strengths: 

Time to channel your inner superhero and showcase your hotel's strengths! What makes your hotel shine like a star? Is it the breathtaking rooftop pool with city views, or perhaps your exceptional concierge service that treats guests like royalty? Maybe it's the effective pricing strategy put in place. Take note of the standout features that make your hotel exceptional and set it apart in this bustling industry.

SWOT analysis - Weaknesses: 

Every hero has their weak spots, and hotels are no different. Let's have an honest heart-to-heart about areas where your hotel might need a little boost. Identify those hidden areas for improvement. Is your Wi-Fi service not up to par, or is there room for improvement in your check-in process? Maybe it's time to revamp your hotel rooms to meet modern expectations. Be honest with areas you know could do with refinement - this will help you in the following steps!

Analyzing your strengths and weaknesses will help maximize your hotel’s internal resources. You can focus your marketing on your hotel’s best features and turn your weaknesses into strengths. Remember to look at all areas of your hotel for strengths and weaknesses, including your price, staff (how knowledgeable and experienced they are), branding, and dependencies (such as if you’re dependent on international or seasonal tourism).

SWOT analysis - Opportunities (and market trends): 

Ah, here come the exciting prospects! Opportunities are like doors to new adventures that can take your hotel to greater heights.They are the favorable external factors that could give your hotel an advantage over your competitors. 

With the rise of sustainable tourism, maybe it's the perfect time to implement eco-friendly practices and attract environmentally-conscious guests. Maybe you’ve got opportunities for cross-selling or partnering with local suppliers to benefit from the local sourcing trend. Maybe there’s potential in your area for emerging segments, like co-working spaces or workplaces.

This is where it is important to monitor and analyze the latest trends in the hospitality sector. This could include preferences for sustainable practices, tech-savvy services, or unique experiences that guests seek. Understanding these trends can help you effectively align your offerings to meet customer demands.

SWOT analysis - Threats (or market challenges): 

Prepare to play detective and uncover potential threats lurking in the shadows. Every hero faces challenges, and your hotel is no exception. By understanding these threats, you can be prepared to shield your business from harm's way and minimize their impact. 

Various challenges can impact the hotel industry, such as economic fluctuations, natural disasters, or shifts in travel patterns. By identifying potential challenges, you can prepare contingency plans and mitigate their effects on your business.

Keep an eye on trends in the hospitality industry, and be aware of any new boutique hotels or competitors that could threaten your occupancy rates. Other threats could include the apartment rental industry, local or political unrest, changes in consumer behaviors, high turnover and unfavorable economic conditions.

By gaining a deep understanding of the hotel competition landscape, including key rivals and prevailing market trends and challenges, you'll be well-equipped to devise a winning strategy. 

SWOT analysis of key competitors

Great job on getting a handle on your hotel's SWOT! Now, it's time to turn our attention to the competition and unveil their secrets. Here's how you can analyze your key competitors like a seasoned strategist:

• Analyzing their strengths and how they differentiate: Uncover the magic that sets them apart from the rest of the pack. After all, knowing your adversaries inside-out is essential in this epic battle. For example, you might find that a competitor excels in creating personalized guest experiences and ongoing email marketing campaigns that keep visitors returning for more. Or you may find that your competitor's rates are amazing. This competitive analysis will help you determine if you can out-compete your competitors in their strengths or what their customers are looking for (to improve your offerings). .
• Identifying weaknesses and potential areas for improvement: Remember, no competitor is unbeatable, and everyone has their Achilles' heel. Let's pinpoint these weak spots, which could be the key to unlocking your victory. By identifying potential areas for improvement in their services or operations, we'll uncover opportunities to outshine them. For instance, you may discover that a competitor struggles with slow response times to guest inquiries, giving you a chance to emphasize your prompt customer service.
• Spotting opportunities they are leveraging: Here's where the age-old art of spying on your foes comes into play – all in good spirits, of course! Let's peek into the opportunities your competitors are taking advantage of. It's like learning from their moves will help you fine-tune your strategies for maximum impact. For example, you might find that a competitor has hotel concepts that successfully target the millennial traveler segment, prompting you to explore ways to cater to this demographic.
• Understanding the threats they face: A true strategist knows that the best way to triumph is to understand the enemy's vulnerabilities. Let's dig deeper into the threats your competitors face, so we can anticipate their moves and stay one step ahead in this intense competition. For instance, in your hotel competition analysis, you may discover that a competitor struggles with retaining their trained staff due to high turnover rates. Understanding their vulnerabilities can help you plan your strategies more astutely.

Porter's five forces analysis of the hotel industry

Now you’ve completed your SWOT analysis, it’s time to brace yourself, hotelier! Because it's time to dive into the competitive dynamics of the entire hotel industry using Porter's Five Forces Analysis. This powerful tool will help you understand the broader market influences impacting your hotel's performance. Let's analyze each force like a seasoned strategist:

1. Bargaining power of customers: Now that we've explored your hotel and competitors, it's time to shift our focus to the guests – the ultimate decision-makers. Analyzing their bargaining power is crucial, as understanding their desires and demands is essential for your hotel's success. For instance, guests may have higher bargaining power during off-peak seasons due to increased availability across other hotels, making competitive pricing and enticing offers crucial to attract and retain them.
2. Bargaining power of suppliers: Behind every successful hotel is a network of suppliers that make it all possible. Maintaining strong alliances with suppliers is key to ensuring smooth operations and reducing the impact on your hotel’s operations and costs. For example, if you rely heavily on a single supplier for essential items, their bargaining power could impact your procurement costs and overall profitability or impact your procurement costs.
3. Threat of new entrants: New kids on the block can be quite disruptive! Let's investigate the potential threat of new competitors entering the hotel scene. To protect your market share, it's essential to be prepared with competitive advantages. For instance, if entry barriers are low and new hotels keep popping up in your area, your market share could be at risk. Think about what sets your hotel apart and strengthens your position against newcomers.
4. Threat of substitutes: Ah, the sneaky substitutes! Let's uncover any lurking alternatives that might tempt your guests away. Armed with this knowledge, we'll create a fortress of offerings that'll keep your guests returning for more. For example, if vacation rentals or alternative lodging options become popular in your area, they could threaten direct bookings. Enhancing the unique experiences your hotel offers can deter guests from seeking alternatives.
5. Competitive rivalry among existing players: Last but not least, let's dive into the exciting world of competitive rivalry. We'll gauge the intensity of the battle among existing players in the hotel industry. Focusing on unique offerings or standout promotions may be essential to stay ahead of the pack. For example, if there's fierce competition among hotels in your area, differentiating your hotel through exceptional customer service or exclusive hotel amenities can be a game-changer.

By performing a comprehensive Porter's Five Forces Analysis of the hotel industry, you'll gain valuable insights that will help you strategically position your hotel and thrive amid intense competition. So, gear up, superhero, and embark on this journey of strategic excellence to secure your hotel's success! 🚀🏨💼

Collecting relevant data

You've laid the groundwork with SWOT analysis and Porter's Five Forces. Now, it's time to gather the data that will fuel your hotel's strategic decisions. Here are some effective methods to collect relevant data:

Utilizing online tools and resources

• Customer reviews and ratings: Dive into the treasure trove of customer reviews and ratings (as well as your competitors’ reviews). Platforms like TripAdvisor, Google Reviews, and OTA websites provide valuable insights into what guests love about your hotel and areas where improvements are needed.
• Hotel POS system: Your hotel POS system can provide valuable data that comprehensively views your operations. You can track sales trends, inventory levels, and customer preferences through the POS system. This data is vital for making informed decisions, enhancing guest experiences, and improving overall efficiency.
• Pricing and promotional strategies: Keep a close eye on your competitors' pricing and promotional tactics. Online travel agencies (OTAs) and meta-search platforms are excellent sources for monitoring pricing trends and offers. Understanding how your competitors attract guests can help you fine-tune your strategies.
• Social media presence and engagement: Social media platforms are a goldmine of information about your competitors' engagement with guests. Observe how they interact with their hotel branding, respond to feedback, and share information about your hotel business. This data can guide your social media strategy and help you build a stronger online presence.

Conducting surveys and interviews with guests and industry experts

• Surveys with guests: Create well-crafted surveys to gather feedback directly from your guests. You can distribute surveys through email or in person during their stay. Ask about their experience, preferences, and suggestions for improvement. This firsthand feedback will be invaluable in tailoring your services to meet guest expectations.
• Interviews with industry experts: Connect with seasoned professionals in the hotel industry for their insights and perspectives. Industry experts can provide valuable guidance on current trends, best practices, and emerging opportunities. Their knowledge can help you stay ahead in the competitive hotel landscape.

Benchmarking against best practices and industry standards

• Industry reports and studies: Keep an eye on industry reports and studies from reputable organizations. These reports often provide comprehensive data on market trends, consumer behavior, and performance benchmarks. Use this data to benchmark your hotel's performance against industry standards in your hotel competitor analysis.
• Best-in-class hotels: Identify hotels recognized as industry leaders and analyze their strategies and practices. Learn from their successes and adapt their best practices to suit your hotel's unique identity and goals in your hotel competitive analysis.

By collecting relevant data through these methods, you'll gain a wealth of information to refine your hotel's strategy, enhance guest experiences, improve business growth, and gain a competitive edge.

Conclusion

Congratulations, hotelier! You've embarked on an epic adventure of strategic analysis and data-driven decision-making. You've gained a competitive edge in the hotel industry by performing a SWOT analysis, understanding your competition, and leveraging insights from Porter's Five Forces analysis.

As you move forward, remember that strategic success requires continuous monitoring and adaptation. Keep collecting relevant data, engaging with your guests, and learning from industry trends. Embrace change and always be ready to innovate.

With your newfound strategic response and knowledge of your hotel's unique strengths and the market landscape, you're on the path to thriving in the dynamic and ever-changing hotel industry.

Like this blog? Learn more about how to run a successful hotel, including how to value your hotel, hotel marketing techniques and what hotel business model you should choose in our guides!