{"id":23262,"date":"2013-07-31T16:20:37","date_gmt":"2013-07-31T16:20:37","guid":{"rendered":"https:\/\/www.xotels.com\/uncategorized\/hotel-market-research-feasibility-study"},"modified":"2025-11-20T13:13:58","modified_gmt":"2025-11-20T13:13:58","slug":"hotel-market-research","status":"publish","type":"post","link":"https:\/\/www.xotels.com\/en\/hotel-management\/hotel-market-research","title":{"rendered":"Hotel Market Research & Analysis"},"content":{"rendered":"

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No plan is viable without some form of research. Especially if you require outside investment you will need to demonstrate you have done a hotel market study for your new hotel concept.<\/strong> It will also be helpful for you to put your ideas on paper and benchmark them against the market to determine the chance of success. Based on our hotel revenue management consultin<\/a>g and hotel management<\/a>\u00b4s experience we have put some pointers on paper \u2026<\/p>\n

Having opened various hotels we have noticed that many entrepreneurs make decisions based on assumptions when it comes to their new hotel concept. This could be very dangerous as any unforeseen change you might have to implement at a later stage due to a false assumption could bring with it additional costs that will have a negative impact on your bottom line.<\/span><\/p>\n

Especially if you have raised capital investment from banks or other lenders, this puts you in a difficult predicament, as it might not be possible to pay off loans in the time frames agreed, or ROI will not reach the expected levels. Pressure will subsequently mount to make other changes to your concept to recuperate and offset the additional costs. Such changes might even affect the uniqueness of your original concept, but you will have no choice but to compromise and please investors.<\/span><\/p>\n

A typical example we face is that operators would like to save on staffing costs by selling rooms at rates including breakfast. Offering room-only prices does not fit in their cost structure and PnL forecast, as staffing numbers need to be kept low. However we studied the market we uncover that all competitors offer room-only rates, especially in city destinations. This would put a hotel at a significant disadvantage, and make the hotel less competitive as price is among the key selection factors by consumers.<\/span><\/p>\n

The assumption to simplify operations and include breakfast in the room price in order to save on operational costs is understandable. But you have to ensure that it is sustainable from a commercial perspective as well and benchmark your idea against the market.<\/span><\/p>\n

Another classic example is hotel companies that want to enter the market with a flat rate structure. In essence from a positioning perspective, it sounds great. You will attract a lot of consumer attention by offering such transparency. However in reality, as hotel markets are driven mostly by dynamic rates which fluctuate with demand (a bit like the stock market), you will find your hotel out-priced by competitors in low season<\/span><\/p>\n

So, how to prepare and avoid these kinds of situations? You will have to do thorough market research and perform a hotel market analysis.<\/span><\/p>\n

Market Performance<\/strong><\/span>
\nLet\u2019s start with a generic market study. You need to obtain statistics on occupancy, average rate, and revenues of the surrounding area of your hotel. If you get data for the last few years of similar hotels in your market you will get a good idea of how the market is evolving, giving you a rough perspective of what kind of overall results would be possible.<\/span><\/p>\n

\"hotel
\nYou can obtain data like this by researching the internet as much data is published in press releases. To get exact numbers you should contact consulting companies like PWC, STR, and HVS. They are specialized in collecting hotel market performance statistics and trends.<\/span><\/p>\n

Business Sources
\n<\/strong>What creates demand in your market? Why do travelers come to your destination? What is the motive for their trip? Where are they coming from, or rather, what are your feeder markets? These are all questions that need to be answered. Your local tourist organization or hotel marketing agency<\/a> will probably be able to provide you with valuable market statistics. But also go on the website of nearby airports, it will provide you with interesting statistics in terms of passenger data. You need to understand your sources of business and market segments to be able to make an effective marketing plan.<\/span><\/p>\n

Competitive Analysis
\n<\/strong>Next step, you need to make a detailed overview of your competition. We differentiate competitors into 2 groups. First, we look at conceptual competitors that have a concept that is similar or comparable to yours in essence. And second, there are proximity competitors that are in your immediate surroundings and this will be your local competition.<\/span><\/p>\n

Start with building a summary outlining in detail:<\/span><\/p>\n