Hotel Supplier Survey 2012: SWOT
In its Hotel Supplier Survey 2012, hotel-industry.co.uk anonymously asked suppliers to the UK hotel sector what they saw as their biggest strategic opportunities and threats for business in 2012 and beyond.
We delve into the results and analyse what they mean for suppliers and the hotel industry.
The economic climate featured heavily as having both positive and negative impacts on supplier businesses. Many will gain from the sale of hotels. “Change of ownership and more hotels going into liquidation” was cited by one Revenue Management supplier as a strategic opportunity for their business. Another suggested “The recession makes my company more attractive.”
The development of UK based tourism; ‘staycations’ was identified as an opportunity in the case of people staying home rather than going abroad, resulting in new hotels being built or hotel refurbishment.
Smaller companies are gaining from larger, more upmarket clients looking for value where hotels are engaging in a revenue drive. One design and refurbishment company said: “We will try to get more upmarket larger projects where clients are looking for value but excellent service.”
Our respondents are also benefiting from large wholesaler closures and overseas growth.
However, the economic climate is also having a negative effect on these businesses. “The rising costs of raw materials”, including fuel cost increases and print cost increases were cited by many as a threat to the suppliers’ business. The cuts in refurbishment and decline in building new hotels and tightening of fund availability for hotels was an obvious difficulty for the suppliers.
The very idea of continuing recession threatens to impact on hotel suppliers’ businesses as one respondent considered; “one of the biggest strategic threats to our business is no recovery in consumer confidence.” Another backed this by saying; “Our biggest challenge is recession and fear”.
Although increased competition may benefit the hotel sector, this featured heavily as a threat to the hotel supplier industry.
As the Euro flounders, competition from non EU members such as the Far East looms. Cheaper materials and services can be obtained overseas and this can be difficult for UK suppliers to compete with.
One supplier considered the threat of “Non specialist companies ‘jumping on the bandwagon’ and supplying bolt on products to their original services”. This could also be a problem for hoteliers in that they could obtain goods and services that are not backed up by specialist expertise.
One supplier warned that in this economic climate competitors could potentially bring other companies down with them:
“Competitors whom may be in financial trouble that are pricing up without a decent profit in order to just stay afloat and keep orders coming through their books. This is a dangerous business move as not only does it put the client in a vulnerable situation (often without realising it) – they are also affecting other companies in the industry and could potentially ‘bring them down with them’.”
Provision of PMS/commission free online bookings/channel manager, EPoS, room ordering, emenu and mobile payments offered suppliers the opportunity to integrate systems and educate clients in their usage. One hotel technology supplier said:
“Our LED Display Screen Technology gives hotels an edge in attracting clients in for offers not easily portrayed through traditional advertising.”
However, some suppliers feared that hoteliers may overlook the importance of new technology or misunderstand its capability and influence:
“One challenge to our business is that hotels wouldn’t see the point in investing in technology in order to support their business.”
“Misunderstanding about our technology and its influence could threaten the relationship between our business and the client.”
One supplier considered on-line deal providers like Groupon to offer their business new opportunities while another stated:
“The commission levels taken by the largest agencies including Booking.com and LateRooms are too high, reducing the margins for smaller independent hotels to unsustainable levels. Many will go out of business due to lack of working capital”
Technology needs to be embraced by both the supplier and hotelier with care and it seems that understanding and knowledge in these areas is required in order to take them on effectively.
Strategic opportunities for hotel supplier businesses are wide ranging and varied, depending on what the supplier is supplying and the demand. Listed below are some of the areas of opportunity not previously mentioned:
- Bespoke laundry to hotel’s needs
- Growth in wine consumption
- Developing products to enter other vertical markets
- Quality British manufacturers
- Overseas development
- Olympics; flourishing restaurant/hotel/bar market particularly in London area
Hotel suppliers identified a large number of threats and challenges to their businesses, including:
- Management changes at hotel
- Anti alcohol lobby
- Government legislation changes and basic costs
- Finding well educated, rounded young individuals who want to take on responsibilities and who are personable
- The refusal of business owners to change
- Balancing cost and deliverables with client expectations in addition to managing/promoting the perception of outsourced services within the sector.
The hotel-industry.co.uk survey identified many reoccurring themes for hotel suppliers such as the economic climate and new technology which have close links with the hotel industry itself. For deeper statistical analysis of the survey, please click here.