SWOT Analysis of the Hotel Industry – Know the Strengths and Weaknesses

There’s no question the hotel industry is a vast sector that is responsible for trillions of US Dollars in the form of revenue. That being said, SWOT analysis of the hotel industry is, therefore, paramount.

Its magical allure lies in the fact that it can help hoteliers globally to develop and implement sound and robust business strategies.

As you might expect with an industry with such a massive financial muscle, you need to have a clear-cut business strategy. Which begs the question: do you really know your hotel industry?





If you are a hotel manager, owner of a hotel or restaurant, travel enthusiast or a wannabe entrepreneur in the hotel industry; understanding the SWOT analysis of hotel industry is a must.

Background of Hospitality and hotel industry might help to understand the zest of Service in the hotel industry and hospitality and explore the analysis further.

Even before we delve into it, what actually is a SWOT Analysis?


SWOT Analysis of the Hotel Industry


Simply put, a SWOT Analysis is a rundown of all Strengths, Weakness, Opportunities, and Threats facing a particular industry or niche.

Herein, we will provide an outlook for the hotel industry as a whole with a particular focus on its primary business strengths, weaknesses, and how these pitfalls can be harnessed into natural advantages.

With this information, hoteliers can set business goals which can be reviewed at least once a year.

Read on to get a good glimpse of how the hospitality industry and especially the hotel industry is panning out.



Image Curtesy-  LinkedIn 


Strengths of the Hotel Industry


Right off the bat, we will have to admit that the hotel industry’s strengths vary from one region to another. Every region has its own advantages and disadvantages.

But, the first step in the SWOT analysis of the hotel industry begins with an incisive look at its universal primary strengths.


1. Provides Safe Abode Away from Home


It’s undeniable that the hotel industry provides safe accommodation for people when they are away from their homes.

The industry itself boasts millions of decent rooms. With a variety of hotels across the globe – from boutique hotels to the grandeur international name brands and everything in between, there’s always a hotel that will fit a customer’s needs.

They offer everyone a place to kick back and relax away from all the hustle and bustle of everyday life and work.

Without the hotel industry, vacations and road trips wouldn’t be safer or even possible.

What else can you offer to customers as a hotelier?

Think about it. It will fall under strengths.


2. Contributes to the Local Economy


As an industry that wields significant financial power, the hotel industry can certainly tide things over in the local economies.

Sure, it’s local attractions that bring masses to the community, but it’s the hotels that keep them there.

When people stay in a place, they consume local services and goods. They will visit local malls, eat in local restaurants, and shop in local stores.

And, where do all those top dollars end up? That’s right – within the community.

So, the Hotel industry is a boon to the community.


3. It is a Mammoth of an Employer


Again, the hotel industry is an enormous sector that employs many people in myriad disciplines.

Think in the line of management, groundworks, landscaping, banking, service, and entertainment to name a few.

There are a lot of Astonishing facts about hotel industry with key facts being that within the next couple of decades 1 out of 10 people could be a hotelier or hospitality professional.


4. High-Profit Margin


Although the hotel industry requires huge initial capital, it’s still a worthy investment as the cost of labour is lower, and the profit margins are higher.


Image Courtesy- US Hotel industry revenue reports by Travel Pulse


However, this is not the case across the globe.

While Asian, Latin, African, and Middle Eastern hotels enjoy cheap labour, those in Europe and the Americas are paying a premium in wages.


Weaknesses of the Hotel industry 


Now, this is a crucial part of the SWOT analysis of the hotel industry. After all, mastering the weaknesses is what that gives hotels the competitive edge.

Let’s look at a few of the weaknesses that we need to be careful with.


1. High Hotel Rates


Here’s the thing: high-end hotels charge thousands of US Dollars to stay there for a single night.

The problem is that these rates are not within reach of an average household in today’s world.

So, the hotels are losing customers to competition inside and outside the industry.

In essence, there’s a limited demographic that the hotel industry can market their services and products to.

Although there are affordable hotels out there, they usually offer lower standards of services – and maintenance.


2. Unfavourable Tax Rates


In some countries, the hotel industry is subjected to an unfair tax structure which, in turn, takes the cost of offering hospitality services to a whole new high.

Get this: some rooms attract specific taxes which are charged per night spent there.

As if that isn’t worse enough, some hotels also receive higher sales taxes when pitted against other sub industries such as bed and breakfasts.


Opportunities for the Hotel Industry


The hotel industry is here to stay; there’s no question about that.

The best news is that every community has a raft of attractions and landmarks worth visiting.

What hoteliers have to do is add a little flair to them, and people from all walks of life will journey miles to partake in their beauty.

In principle, the hotel industry has an opportunity to enjoy a year-round influx of customers thanks to its modern structure.

During peak season, hotels typically take in domestic and international tourism – and local tourists during the off-season. And, this is the magical allure of the hotel industry.

The world is getting globalised, there are more booking and travelling options. Technology is providing a hand in helping the hotel industry grow.

The Future of Hospitality and the Hotel industry is bright for sure.


Threats to the hotel industry


This again is a crucial part of the SWOT analysis of Hotel industry.

Alternative lodging like Airbnb has already posed enough threat to the hotel industry.

1. Boutique Alternatives: Cheaper and more robust hospitality services are mushrooming each day. Airbnb is the primary threat to the hotel industry, for that matter.

2. Prevalent Conditions: Civil unrests in some foreign countries can dampen down the hotel industry both directly and indirectly.

3. Worse-Than-Expected Economies:  The hotel industry is still reeling back from the aftermath of the world’s recession. Unfavourable interest rates and low disposable income has cut down dramatically footfall in most hotels across the world.




Here you go. Quick SWOT analysis of the industry we love the most. Hope this has helped you to know your hotel industry better.

Technology has a huge role to play in all the four sections of SWOT analysis of Hotel industry but we will leave that to be covered in detail in another post.