Hotel Market Competition Analysis – Vital Questions to Ask

One of the most important aspects of market research is hotel market competition. Regardless of the market size, you must determine who your competitors are, and whether or not the market is large enough to support your entry. A hotel market competition analysis should answer the following questions:

What is the average occupancy rate (seasonally) of the surrounding area? Ideally, the higher the occupancy rate the better, as this suggests a lower barrier of entry.

Who are my main competitors? Identify those with the largest market share, as well as those who offer similar services. You want to establish a niche within the larger market segment that is under-served and fill it. For example, your research reveals that the competition is focused on the business sector, but fail to cater to families who visit the theme park just a few miles out.

What trends are working for/against me? If the competition is scarce, there might be good reason. While there may be a sizable market today, if the market has been trending down for the past several years you may want to reconsider. In this case, look for markets that offer growth opportunities. You can determine trends by checking with the American Hotel and Motel Association.

Now that you’ve laid out the biggest questions, it’s time to begin you analysis. In the past I’ve used local universities to supply the data for my research. Important metrics to look for include points of interest, population size and trends, and current amenities offered by your competitors. Separate the business and leisure markets to ascertain who is being served best by your competitors (they often aren’t the same chain) and which ones you are most likely to succeed in.

Hotel market competition should not take more than a few days before the picture becomes clear as to whether or not to proceed further. Once you’ve determined the market size, its needs and the competition, you’ll have a solid foundation on which to begin implementation.

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