Hotel Market Analysis for Banks and Lenders | Hotel Marketing
January 31, 2021|Hotel Marketing
How important are market research and feasibility studies to the hotel industry? Market research is a must for a plan to be workable and a feasibility study is necessary to acquire investors therefore, these two are two key factors to determine your chances of success in this industry.
Here are a few things you might want to consider when determining your chances:
Avoid making decisions based on assumptions. This could place you in a tough situation especially with lenders and it may cost you to be unable to fulfill your loan repayments and your return of investments or ROI may not be what you’re expecting. All of these could somehow set you off to compromising your initial concept.
Compare your ideas with your competitors. To steer clear of getting outpriced by competitors, this is where you would need to do market research and a feasibility study. Start with market performance and begin with a nonspecific study. Obtain information on occupancy, average room rate, and revenues of your surrounding areas.
Having an idea of how the market is progressing through comparing the particulars of similar hotels over the past few years shows you different probabilities. You can obtain these data through press release articles that are found over the internet or if you opt to have accurate information, this is where consultants specializing in hotel market performance, statistics, and trends come in: PWC, STR, and HVS for instance.
However, before doing so, look into your business sources first. Since a productive marketing plan requires you to comprehend several things, do ponder on several key questions:
What creates the demand in your market?
What is your visitors’ purpose?
Why do people come to your destination?
Where do they come from?
What are your feeder markets?
These market statistics should be attainable from local sources such as your tourist organizations or visitor’s bureau although you can always obtain passenger data statistics from your local airports’ websites.
Next, do a competitive analysis. Examine the competition and split up the competitors into two groups: the conceptual competitors – the ones with a concept that is somewhat equivalent to yours – and the local competitors who are the ones within your immediate area.
You should begin your analysis with an outline of the following details: hotel name, address, area and concept type, number of rooms, star rating, any chain affiliation, and all facilities. You should also consider their website URL, languages in the website, and the versions it covers – whether it may be a desktop, mobile, or tablet. Also, take a look at their online reputation like their online presence and their review scores.
A further detail that may be helpful in your analysis would be their price range and average rate. You may see this information on Google hotel finder and TripAdvisor. Take notice of the different competitor’s specialties which makes them stand out from the others so you could create your strategy to outshine the others.
Another information that would be helpful for you in your market research would be checking on the monthly performance data on each hotel and being on the lookout for new hotels coming up in your area as these data could also cause an impact on your market share and profits.
Moreover, an addition to the existing developments within the area could also mean a positive effect and raise overall demand which allows you to create profit and loss statements.
Your findings then will help you and your investors get a grasp of the ROI they can expect and how much will your hotel make.
When your market research and competitive analysis are done, you will then be able to have an estimate of what kind of occupancy and average room rate your new hotel can generate.
Lastly, remember that investors will want an official feasibility study to reduce their risk thus, you would need to have a forecast five years ahead and ensure that your forecasts are achievable so do an estimate conservatively.
Showing figures which, you think investors want to see does not guarantee anything so ensure that you put in figures covering all departments to show your gross operating profit. You should: include undistributed fixed and overhead costs for your Net Operating Income (NOI) or your Earnings Before Interest Tax and Depreciation (EBITDA), use local standards as the basis for your estimated costs, and create a sensible staffing schedule for each of your department to model costings.
Keep in mind that errors can affect your profit and halt the ROI that you sold to your investors. Doing and experiencing the research and study yourself can significantly authenticate your plan so it is highly advised that you do so within your company rather than having a consulting agency. [more]