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With any B-Plan Purchase
425 Page Capital Directory
Through Apr. 30


Custom Business Plan
$425 Flat Rate
No Templates Used
7 Day Turnaround

All Purchased Plans
Are Updated for 2017

Hotel SWOT Analysis

 

Strengths

 

Given their very high barriers to entry, once established, hotels tend to do very well. In times of economic duress, hotels generally remain profitable. This is especially true in densely populated metropolitan areas. The gross margins from income are substantial. The primary costs related to providing services relates to accepting payments (although the operating costs for a hotel are rather high). Hotels, as it relates to their startup costs, can vary tremendously. A small hotel can have startup costs as little as $1,000,000 or as high as $25,000,000 (if not more). Banks love providing financing to people that are acquiring hotels provided that they have the appropriate 20% to 25% down payment. All funding provided by banks is generally secured by the real estate as well as the furniture, fixtures, and equipment.

 

Weaknesses


Besides the high startup or acquisition costs, the operating expenses of a hotel are extremely high. Loan payments are large as are the ongoing payroll costs. Insurance costs for a hotel are moderate, although extensive workman's compensation policies are required for the large staff required. Competition for hotels is also substantial. This has only increased due to websites that allow people to rent out their apartments and homes for a night. This competitive trend is expected to continue in perpetuity. As such, it is imperative that hotels provide patrons with state-of-the-art lodgings in order to have occupancy remain as high as possible.

 

Opportunities

 

For most hotel owners, the key to expanding their revenues is to maintain expansive online presences among a number of different portals. This ensures that people seeking lodging will place reservations with a hotel on an ongoing basis. One of the other ways that hotels can expand their operations is to develop relationships with a national hotel franchise business. Generally, this increases occupancy by about 25%. Many major hotel franchises have online booking systems that ensure a highly predictable stream of revenues.


Threats

 

Individuals renting their apartments/homes for a night is the single biggest threat faced hotel companies. However, changes in regulations are assisting hotels with recapturing their market share. This is due to the fact that people that rent their properties on a nightly basis are required to be licensed. This creates a barrier for people that are looking to rent their apartments on an "one-off" basis. This is something that will need to be continually addressed by a hotel owner.


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