What is Hotel Industry Analysis?

C. Mitchell

Hotel industry analysis is the application of statistics, econometrics, and cross-section data comparisons in order to project the overall industry’s direction over time. Some industry analysis is limited by sector, for example, high-end hotels or hotels in vacation destinations. Other analysis is more general, aiming to give managers and proprietors a broad set of tools to maximize profitability and occupancy.

Trends in the hotel industry change over time and should be analyzed regularly.
Trends in the hotel industry change over time and should be analyzed regularly.

The crux of hotel industry analysis is an understanding of industry averages and baseline statistics over time. Most hotels keep accurate records of their own history, including which days are typically the busiest, which seasons are most in-demand, and how much people are typically willing to pay for different types of rooms. What they often do not know is how their statistics compare with competitors and other similarly-situated hotels, or how risky it would be to make changes to the way things have always been done. Hotel industry analysis helps hotel owners and operators understand the market dynamics of the broader hotel industry trends, which often is the basis for hotel decision-making and risk-taking.

Hotel industry analysis uses statistics to project the overall industry's direction over time.
Hotel industry analysis uses statistics to project the overall industry's direction over time.

A hotel that has been losing money may appoint a team to conduct industry analysis of how other brands are faring and what sort of advertising strategies and pricing structures are successful elsewhere. If expansion is on a hotel’s agenda, studying the hotel climate in the potential new location can help the hotel make sound planning decisions. Even hotels that do not anticipate any big changes can benefit from keeping abreast of industry trends, for comparison’s sake if nothing else.

A hotel industry analysis may look at which type of restroom facilities are available to guests.
A hotel industry analysis may look at which type of restroom facilities are available to guests.

Hotel industry analysis is useful for more than just hotel operators, however. Reports analyzing the hotel industry outlook can be very valuable for investors who may be looking to buy properties or fund certain hotel plans. A knowledge of where the industry is strong versus where it is weak can help potential investors determine when—and where—their money would best be put.

Industry analysts might focus on which types of room are popular among travelers.
Industry analysts might focus on which types of room are popular among travelers.

Advertising agencies and brand management firms that work closely with hotel clients also use hotel industry market research and analysis. Hotel industry competition finds its core in advertisements, particularly when hotels are competing in the same market sector of a certain geographic location. An advertising agent who knows from reading hotel industry analysis that online ads and social network promotions are yielding statistically significant results might recommend these strategies, for instance. Knowing that ads in certain magazines have a relatively low success rate is similarly important.

Some industry analysis is limited by sector, such as hotels in vacation destinations.
Some industry analysis is limited by sector, such as hotels in vacation destinations.

Most hotel industry trends change over time. Accordingly, there is almost always a place for fresh hotel industry analysis. Analysis keeps hotels competitive and up to speed with current market trends. When performed and used properly, reports can inform anything from weekday room prices to spa services and restaurant menus, on a local, national, or global scale.

An industry analysis might look at hotel extras, such as complimentary breakfast.
An industry analysis might look at hotel extras, such as complimentary breakfast.
An industry analysis may look at the percentage of hotels that have some kind of bar or restaurant for guests.
An industry analysis may look at the percentage of hotels that have some kind of bar or restaurant for guests.

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