SWOT ANALYSIS-BAYMONT INN & SUITES-ANAHEIM

A Project

Presented to the

Faculty of

California State Polytechnic University, Pomona

In Partial Fulfillment

Of the Requirements for the Degree

Master of Science

In

Hospitality Management

By

Wen Sun

2016
 SIGNATURE PAGE

PROJECT: SWOT ANALYSIS-BAYMONT INN AND

SUITE-ANAHEIM

AUTHOR: Wen Sun

DATE SUBMITTED: Spring 2016

The Collins College of Hospitality Management

Dr. Zhenxing Mao

Project Committee Chair
Professor of Hospitality Management

Dr. Neha Singh

Project Committee Member
Professor of Hospitality Management

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 ACKNOWLEGEMENTS

I would like to express my gratitude to my committee members: Dr. Mao (Eddie) and Dr.

Neha Singh. I really appreciate their professional academic advices, remarks and

engagement through my learning process of this project. Especially I would like to thank

my chair Dr. Mao for choosing this topic with me that makes me learn from my working

experience and I also appreciate Dr. Mao and Dr. Singh’ s patience and help to finish this

case study. Furthermore, I would like to say “thank you” to all my friends Vivian, Jessy,

Ting and other classmates for companying me and encouraging me during the project

period. During the whole graduate school pursuing years, I learned a lot from all my

classmates for their insistence, good attitudes and great efforts during my master’s

academic years. Last but not the least, I would like to thank my family. I am so thankful

for my parents’ endless love that supported me finishing this project and also I would like

to send special thanks to Jay for taking care of me. Without all of the people I mentioned

above, I couldn’t finish this project by my own. Again, I want to thank all the people who

assisted me and provided me suggestions during the time I pursued my academic

achievements.

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 ABSTRACT

This case study is to research a limited economical hotel named Baymont Inn & Suites-

Anaheim via SWOT analysis to figure out the hotel’s strengths, weaknesses,

opportunities and threats. The case study firstly discussed the historical development of

hotel industry, briefly introduced the background of the Baymont Inn and Suites-

Anaheim, a franchised chain hotel under the Wyndham hotels corp. and then applied the

SWOT model on Baymont to deeply investigate this hotel’s strengths, weaknesses,

opportunities, and threats. The purpose of this case study are both understanding the

hotel’s current situation and forecasting the future trends of development. Finally the

conclusion shows that is very necessary to maximize the benefits of the hotel and bring

new services and technologies through entire SWOT analysis through this case study and

also some constructive suggestions have been raised.

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 TABLE OF CONTENTS

SIGNATURE PAGE .......................................................................................................... ii

ACKNOWLEGEMENTS .................................................................................................. iii
ABSTRACT ....................................................................................................................... iv
TABLE OF CONTENTS .................................................................................................... v
LIST OF TABLES ............................................................................................................. vi
CHAPTER 1 ....................................................................................................................... 1
CHAPTER 2 ..................................................................................................................... 11
CHAPTER 3 ..................................................................................................................... 17
CHAPTER 4 ..................................................................................................................... 22
CHAPTER 5 ..................................................................................................................... 32
REFERENCES ................................................................................................................. 35

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 LIST OF TABLES

Table 1. Results of SWOT Analysis ................................................................................. 31

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 CHAPTER 1

INTRODUCTION

The historical development of lodging industry in US

The service industry has been one of the fastest growing industries in recent years

(Weiss, 2008), and in the past few years, hospitality has been one of the largest and

fastest growing facets of the service industry worldwide (Walker, 2009). The United

States has the world’s largest travel and tourism economy, and the hotel industry is an

important component of the hospitality industry (Walker, 2009).

Today’s hotels developed from small, one room, or private dwellings that served

merchants as early as 500 B.C. (Rushmore & Baum, 2002). From these modest

beginnings, the hotel industry has grown to exert a tremendous influence on the

development of trade, commerce, and travel throughout the world The US hotel industry

experienced prosperity, decline, and renewal from the 1920s to the 1950s. In the 1920s,

economic prosperity encouraged hoteliers to expand existing properties and construct

hundreds of new and larger facilities by raising occupancy rates (Solnet, Paulse, &

Cooper, 2010). During the 1920s, hotel promoters set up shop in towns and cities

throughout the United States. During the Great Depression of the 1930s, new

construction ceased and more than 80% of the nation’s hostelries were forced into

foreclosure or receivership (Rushmore & Baum, 2002).

America’s hotel industry did not begin to recover until the early 1940s. After a radical

change in transportation that occurred in the 1950s with the improvement of technology

during the war, an increasing proportion of the population wished to take the advantage

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of the convenience of highways and airlines to enjoy more leisure time and a new

freedom to travel rather than using the railroad that had served travelers for more than a

century (Dorsey& Devine, 1964). Meanwhile, the modern motel emerged as a new type

of highway-oriented lodging facility offering inexpensive and no-frills accommodations.

Several new lodging chains were established in the late 1950s and early 1960s (Dorsey&

Devine, 1964). In the 1970s, budget hotels began to inundate the market; the entire

lodging industry experienced a construction boom reminiscent of the 1920s, and hotel

companies began to expand their chains through franchising (Sherman, 2007). During the

1980s, America’s lodging industry underwent significant changes: a massive building

boom took place, new types of hotels were introduced, hotel chains began to increase

their product lines through segmentation, and the industry began to focus on the global

hotel market after foreign investors acquired several American hotel chains and

individual properties (Rushmore & Baum, 2002).

In the 1990s, another recession, recovery and expansion led the lodging industry to a new

chapter; a great many new lodging products were introduced, including the all-suite hotel,

the extended-stay hotel, and the hard budget hotel (Levy-Bonvin, 2003). With the lodging

industry experiencing one of its most productive years ever in 2000, and with per-unit

revenues and profits at historically high performance levels, the lodging industry should

still grow but will continue to confront new challenges in areas including finance,

development, marketing and operations (Burritt, 2001). The 2000s so far have been

marked by big deals (such as the reunification of Hilton) and major disasters (including

9/11, SARS, tsunamis and hurricanes), making them a somewhat serious time in the hotel

business. However, people are still finding time to have fun, with gaming expanding

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across the globe and aging hotel brands adopting fresh designs and new technology

(Sherman, 2007).The 2000s are characterized by two concepts in this industry. First, the

industry could not get enough of new old ideas. For instance, an increasing number of

condo hotels have been planned and developed in markets such as Miami, Las Vegas and

Chicago, though they have long been present in markets such as South America

(Globalization and the internet, 2006). Another concept is self-service. Many guests are

looking for this type of convenient technology, which enables better service. This decade

will be remembered as the one in which the Internet completely changed the way

hoteliers do business. The tough times in the wake of September 11, 2001 led to the rise

of deeply discounted rooms and the merchant model, and hoteliers faced a subsequent

loss of control of their inventory. E-marketing - from search engine optimization to

keyword buys - is a must for hoteliers, as is providing high-speed Internet access for

guests, and how these services are provided is becoming more important all the time

(Globalization and the internet, 2006).

The US lodging industry suffered one of its worst declines in operating and financial

performance in 2009, a direct result of financial crisis and economic recession. Data from

PKF's Trends®in the Hotel Industry showed an average decline of 19.6 percent in

revenue per available room (RevPAR) in 2009 from 2008, while profitability, as

measured by net operating income (NOI), fell a staggering 36.6 percent over the same

period (PKF, 2011). This dramatic change in profitability resulting from the top-line

change in RevPAR is of critical importance and interest to the lodging industry and has

recently sparked debate over which driver of RevPAR - occupancy rates or average daily

rates (ADRs) - has the greatest impact on bottom-line profitability (O'Neill and Mattila,

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2006).

In recent year, Hotel industry slowly recovered from the economic recession. The

greening of lodging industry has become a new trend in the past few years (Thapa, 2012).

For going green, or in other words being more committed to the environment, in several

industries has increasingly become a topic of discussion. It does not seem enough for

organizations to be convinced to be committed to the environment for the sole purpose

that it is the right thing to do (Graci & Dodds, 2008). A great many hotels use the label

“green hotel” as a marketing ploy to attract customers (Pizam, 2009), as a green hotel

image is believed to play a critical role in customers’ decision-making processes and

behavioral intentions (Prendergast & Man, 2002). And some customers are willing to pay

more for environmentally friendly products (Laroche, Bergeron, & Barbaro-Forleo,

2001). Therefore, many hotel managers are striving to increase their bottom lines with

different environmental services or programs and improve the green image of their hotels

(Chan & Wong, 2006).

In future, the lodging industry will keep adapting continuously to inevitable changes with

the improving society aspects: faster transportation, better communications, globalization

and stronger intents for traveling. Also, the expansion and diversiform services will be

applied continuously as strategies and goals for earning maximal profits.

The hotel organizations face a very wide range of risks that can impact the outcome of

their operations. The desired overall aim may be started as a mission or a set of corporate

objectives. Recent events in the world have brought risk into higher profile. The global

financial crisis, extreme weather events, terrorism, customer demands, and market

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globalization represent the extreme risks that are facing society and commerce. Risk

management in hotel industry is going to be a rapidly developing discipline (Ribaric,

2012). The increasing dynamism and complexity of the modern hotel business

environment are going to put risk management high on the agenda of many hotel

companies. Having a comprehensive risk management strategy to survive in future

market place will be the trend for evaluating the range of risk responses available and

deciding the most appropriate response. Responding to risks should produce benefits for

hotel organizations. Achieving benefits from risk management requires carefully planned

implementation of the risk management process in the hotel organizations, as well as the

design and successful embedding of a suitable and sufficient risk management

framework.

Overview of the Hotel Industry in US

In the hotel industry, segmentation has become the standard for corporate development

strategies. The hotel companies buy, sell and create brands that target specific markets.

Based on the level of service provided to guests, hotels are segmented into extended stay,

limited-service and full-service types (Mount & Frye, 2006). Extended stay hotels

normally cater to guests on long trips and provide amenities such as kitchens, washing

machines, and weekly housekeeping (Mount & Frye, 2006). Limited-service hotels offer

fewer amenities and services in exchange for lower rates. These types of hotels do not

provide fancy meeting areas or indoor restaurants. Extended stay and limited-service

hotels do not offer a full range of food and beverage options. Extended stay and limited-

service hotels typically have lower-paid staff and lower number of employees per room.

Unlike the extended stay and limited-service hotels, the full-service hotels offer a full

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range of services and amenities, including restaurants, room service, and bars (Mount &

Frye, 2006). To classify the target market segment specifically, the types of hotels are

further divided into deluxe (upper upscale), upscale, mid-scale with food and beverage,

mid-scale without food and beverage, economy/budget and extended stay (Miller et al,

2013).

Hotels can also be classified into two types based on operation. The first type is the

independent hotel, and the other is the chain hotel with management contracts,

franchising, or referral groups (Manuel & Diego, 2006). The independent hotels have no

management affiliation with other properties. These types of hotels offer guests some

specific and tailored services and attract a specific target market. However, a lack of

brand power and image is a major concern for these hotels, and they also have no chance

to take advantage of a central purchasing system. Compared with independent hotels,

chain hotels are controlled by chain ownerships or franchisors. These hotels normally

have strong brand image and power, national marketing and advertising and reduced cost

through mass purchasing that increases their chance of being successful. However, the

disadvantages of chain hotels include imposed standards, rules and policies; no

operational independence; and less creativity.

There are two types of hotels based on the operation. The first one is the independent

hotel and the other is the chain hotel with management contracts, franchising, or referral

groups. The independent hotels have no management affiliation with other properties.

These types of hotels will offer some specific and tailored service to the guests and also

attract specific target market. However, lack of brand power and image will be the main

concern for this type of hotels. And it also means no chance to take any advantages of

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central purchasing system. Compared to the independent hotels, the chain hotels have

been controlled by chain ownerships or franchisors. The features of this type of hotels

normally have Strong brand image and power, national marketing and advertising and

reduced cost through mass purchase that makes chain hotels have more chance of being

successful. However, the disadvantage of Chain hotels including imposed standards, rules

and policies and also no operational independence and less creativity (Manuel & Diego,

2006).

Compared with independent hotels, chain hotels are more diversiform. Chain hotels

include three subtypes: management contracts, franchising, and referral groups. Usually,

a management company will be hired and paid to operate the hotels, with the owner

retaining financial and legal responsibility. For these types of chain hotels, professional

hotel management oversees all aspects: operation, finance, staffing, marketing, sales, and

reservation service (Hotel Investments Handbook, 2012). Hilton, Hyatt, IHG, Marriott,

and Starwood are examples of brand management companies that operate hotels in

addition to providing the product. However, this arrangement does not imply that all of

their properties are operated by the brand.

Franchising is another type of chain hotel model. In franchised businesses, the franchisee

is granted the right to sell, or distribute goods and services under a marketing format

designed by the franchisor. Normally, the franchisor establishes standards for design,

decoration, amenities and operational procedures for a franchisee. The benefits are that

the franchisee is able to own and operate a hotel with a favorable brand image and enjoy

a national/international reservation network, management training programs, professional

consulting, and a central purchasing system (Hotel Investments Handbook, 2012). The

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Baymont Inn & Suites-Anaheim is a franchised hotel under the Wyndham Hotel Group.

Other similar types of economy hotels, such as Ramada, Travelodge and Days Inn,

belong to Wyndham Hotel Groups. Another example, Marriott International, owns

franchised brands such as Fairfield Inn, Courtyard, Residence Inn and others.

The last type of chain hotels is referral group. Referral groups are groups of hospitality

organizations that are allied for the mutual benefit of the members. This type of chain

hotel provides sufficiently consistent quality of service to satisfy guest expectations.

Moreover, referral groups have a very broad level of brand exposure, am extensive

reservation system, expanded advertising and a central purchasing system. When this

model first emerged, motel owners would organize "referral chains" in which each

member lodge would voluntarily meet a set of standards and each property would

promote the others. Each property would proudly display the group's name alongside its

own; a printed directory of all member locations would generally be distributed free of

charge at each member hotel or motel. For example, United Motor Courts, founded in

1933 by a group of motel owners in the southwestern United States, published a

guidebook until the early 1950s; those who met its standards advertised its name on their

signs and motel postcards. Best Western Motels (1947) was a similar referral chain of

independent western US motels. However, many referral groups became franchised

hotels starting in the 1960s. For instance, Quality Courts was converted to a franchise

operation in 1963, ending a long-term cross-promotion in which Best Western (a western

US referral chain) and Quality Courts (originally an eastern US referral chain) were

largely marketed together. The brand still exists as the franchised Quality Inn, which is a

brand division of Choice Hotels. By 1987, franchise chains controlled 64 percent of the

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market, and referral chains were being converted to franchises or simply disappearing.

The one notable survivor of the referral chains, Best Western, offers the centralized

purchasing and reservation systems of a franchise system but nominally remains

member-owned. Overall, each different type of hotel will target and try to attract a

different segment of customers that finds that type of hotel most valuable.

Purpose

After discussing the development of the entire lodging industry, this case study will focus

on economy limited-service hotels. Limited service hotels are hotels without food

&beverage and other amenities found in full-service hotels. The services and amenities

offered to the guests of limited-service hotels are typically simple. However, in the past

10 years, these so-called limited-service hotels have become anything but, offering

design and amenities that rival the those of a full-service hotel (Serlen, 2015). In today’s

market, a limited-service hotel’s range of amenities’ might include a business center, a

fitness room, a guest laundry facility, a market pantry, an indoor and/or outdoor pool and

whirlpool, and small meeting rooms. Increasingly robust limited-service hotels offer

many of the same high-quality amenities that guests expect from full-service hotels, with

one significant difference: Limited-service hotels lack a dedicated, revenue-producing

food and beverage component. Limited-service properties are typically franchise

operations. To make limited-service hotels more efficient and profitable, franchisers

started adding extra services to the budget hotels, such as a 24-hour front desk, a fitness

center, free rich continental breakfasts every day and so on.

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Limited-service hotels normally have the lowest operating costs because they do not offer

catering services or multiple restaurants. Room rates are typically on the lower end of the

scale as well. The demand for limited-service properties generally comes from price-

sensitive commercial and leisure travelers. However, the higher quality of certain brands’

product offerings and finish-out can command a premium. The brands of hotels in this

asset class include Baymont Inn & Suites, America’s Best Value, Holiday Inn Express,

Fairfield Inn, Springhill Suites, Super 8, Motel 6 and others. Hence, knowing where a

hotel property fits into the scheme of things is crucial for owners and operators. Hotel

owners and operators should be aware of how demand segments, market conditions, and

competitive supply affect the valuations of different property types. As a case study, our

focus will be on the Baymont Inn & Suites-Anaheim, which is a typical limited-service

hotel. To maximize the benefits of the hotel and bring new services and technologies for

the future development, it is very necessary to research the hotel’s current conditions and

discuss the directions of the hotel’s future through hotel SWOT analysis by describing its

strengths, weaknesses, opportunities and threats.

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 CHAPTER 2

COMPANY OVERVIEW

This paper focuses on Baymont Inn & Suites-Anaheim, a franchised chain hotel under the

Wyndham Worldwide Corporation brand. Wyndham Worldwide Corporation is one of

the world’s largest hospitality companies, offering a range of leisure products and

services to individual and institutional customers. The company primarily operates in the

America, Europe and Asia (Wyndham Worldwide Corporation SWOT Analysis, 2013).

Wyndham Hotel Corporation was founded in 1981 in Dallas, Texas, and it merged with a

hotel real estate investment trust named Patriot American Hospitality. Since then, Patriot

has owned the real estate assets and leased the hotels to Wyndham to run (Wyndham

Worldwide Corporation SWOT Analysis, 2013). During the 1990s, the company grew

rapidly by acquiring multiple portfolios of hotels and renaming them Wyndham. At that

time, Summerfield Hotel Corporation was acquired by Wyndham and renamed

Summerfield Suites by Wyndham; the company also developed Wyndham Garden

Hotels, which are small, full-service properties located in suburban or airport locations.

Additionally, a short-lived luxury brand – Grand Bay Hotels & Resorts, which included

11 hotels and several European properties in London - was acquired and contained by

Patriot, which turned it into a multi-brand hotel operation and ownership organization.

However, in 1999, the rapid growth of the company drained its cash. The company

agreed to a $1 billion restructuring and was renamed Wyndham International. From 1999

to 2004, the company was forced to sell off many of the hotels it had acquired in the

1990s, including Grand Bay Hotels and Summerfield Suites, to pay down debt. In 2005,

Wyndham International was acquired by affiliates of the Blackstone Group. During this

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time, many hotels were sold to other investment groups or hotel corporations, and

Blackstone rebranded the remaining assets.

In August 2006, Wyndham Worldwide became an independent, pure-play hospitality

company (official website). At present, Wyndham Worldwide offers a choice of

hospitality products and services across various accommodation alternatives and price

ranges through its portfolio of 30 brands, including upscale hotels, mid-scale hotels and

economy hotels. The company operates through three business segments: Vacation

ownership, vacation exchange and rentals, and lodging.

The vacation ownership segment markets and sells vacation ownership interests to

individual consumers, provides consumer financing in connection with the sale of

vacation ownership interests and offers management services at resorts. The vacation

exchange and rentals segment provides vacation exchange products and services and

provides access to distribution systems and networks to resort developers. The lodging

segment of franchise hotels is the most important business segment. The segment

operates 15 brands with approximately 7,480 hotels representing over 645,000 rooms on

six continents (Hotel & Motel Profile: United State, 2015).

The lodging business franchise operates under two models. In America, the company

usually uses the first model, a direct franchise model through which it contracts with and

provides services and assistance directly to independent hotel owner-operators (Thapa,

B., 2012).In other parts of the world, the company may employ a direct franchise model;

however, it typically adopts a master franchise model whereby it contracts with a

qualified, experienced third party to build a franchise enterprise in the third party’s

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country or region. The company’s franchised hotels operate under the lodging brands of

Wyndham including Wyndham Hotels and Resorts, Wingate by Wyndham, Hawthorn,

Ramada, Baymont, Days Inn, Super 8, Microtel, Howard Johnson, Dream Hotels, Night

Hotels, Planet Hollywood, Travelodge and Knights Inn (Hotel & Motel Profile: United

State, 2015).

From the official website, it shows that the Wyndham Company operates a number of

loyalty programs, including Wyndham Rewards, RCI Elite Rewards and others.

Wyndham Rewards is the largest of these loyalty programs (measured by the number of

participating hotels). It allows its members to accumulate points by staying in hotels

franchised under one of the company’s brands or by purchasing everyday products and

services from the various business that participate the program. The members are able to

redeem 400 points or more for hotel stays, airline tickets, resort vacations, electronics,

sporting goods, movie and theme park tickets, and gift certificates.

Currently, the Wyndham Rewards Program has expanded from the United States to

Canada, Mexico, throughout Europe and China. Over 28 million members are enrolled in

the program, and 7 million are active. The loyalty program significantly contributes to the

overall revenues of the company. According to the Industry Profile, the company

recorded a revenue of $5,281 million in the fiscal year ending in December 2014, an

increase of 11.6% compared with 2013. The net income was $529 million in fiscal 2014,

compared with a net income of $ 432 million in the preceding year.

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 Company Mission and Value

The mission of Wyndham Worldwide is summarized as that of a global leader in travel

accommodations that welcomes the guests to iconic brands and vacation destinations

through Wyndham’s signature service. The core values of the company include acting

with integrity, respecting everyone and everywhere while working, providing individual

opportunity and accountability, improving customers’ lives by creating memorable

experiences for both franchisees and affiliates and hotel guests and supporting

communities by not just providing employment but also giving back to the communities

to develop the world around them. Wyndham targets itself as a leader in the hospitality

industry to make progress that furthers its development.

Introduction of Baymont Inn & Suites

Baymont Inn & Suites is a hotel franchise owned by Wyndham Worldwide and based

only in the United States (website). The original idea for the Baymont Inn & Suites chain

was to create a limited-service, discount-priced motel chain. The first property opened in

Oshkosh, Wisconsin in 1973. There are currently over 230 Baymont Inns & Suites open

in the United States; most locations are in the South and the Midwest, with a handful of

locations in California. The design of Baymont gives the budget hotels a distinctive

appearance. The Baymont properties are allowed to have a variety of appearances, and a

great many of them have been converted from other brands. Each hotel features oversized

rooms and interior corridors (Motel in America,).

Today, under the ownership of Wyndham Worldwide, Baymont Inn & Suites continues

to participate in the promotion program, which launched in 2008 to a creative positioning

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campaign focusing on the warm, inviting, and neighborly service. This positioning

differentiates the brand from competitors within the limited-service segment by

promoting Baymont’s “hometown hospitality”. The hotel would like guests to feel that it

is just like home, without luxury facilities and services but with comfortable beds and

traditional hot and cold breakfasts.

Baymont Inn & Suites- Anaheim

The Baymont Inn & Suites-Anaheim is located on Beach Blvd. in Anaheim, Orange

County, California. The property used to be Holiday Inn Express Anaheim, and it was

converted into Baymont Inn & Suites-Anaheim in 2009. This hotel has being owned by a

Chinese investor since January 2014. It is the only Baymont in Anaheim. It is only a 10-

to 15-minute drive from Disneyland Resort, Anaheim Convention Center and Garden

Walk Plaza. It is also within 2 miles of Knott’s Berry Farm and Water Soak City.

Additionally, there are other attractions, such as Medieval Times, Pirate’s Dinner, a wax

museum and others, within 3 miles of the hotel. A great many local restaurants surround

the hotel, including family style restaurants (Outback Steakhouse, Olive Garden, Chili’s,

etc.) and fast food (Pizza, Chinese food, Mexican food and so on) surround the hotel.

The whole hotel is non-smoking property with 94 guest rooms on 3 stories. The rooms

comprise standard 2 queen-bed rooms, standard 1 king-bed rooms, accessible rooms, and

family suites with 1 or 2 bathrooms. Each room comes with a 37’’ flat-screen TV, air

conditioning, a coffee maker with coffee/tea, a mini fridge, a hair dryer, and an iron and

ironing board. Each room offers free wireless Internet access.

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As part of the “Hometown Hospitality” promotion, the hotel provides some convenient

facilities. The variety of complimentary breakfast choices available in the breakfast

corner surpasses the so-called “continental breakfast”. A 24-hour fitness center with

limited but efficient workout machines is available on the side. The pool hours are long

enough for the guests’ enjoyment. Self-service laundry makes the hotel feel more like a

home. Twenty-four-hour front desk services and daily housekeeping assist with guests’

requirement and needs, and most front desk agents are multilingual. The specific mission

of this hotel is to provide guests with warm hospitality, superior service and a safe and

restful night’s sleep and to make the guests’ visits as enjoyable, relaxing and productive

as possible.

To achieve the goal of having guests feel just like they are staying at home, the internal

and external circumstances of the hotel need to be evaluated to understand the hotel’s

strengths, weaknesses, opportunities and threats (SWOT). This SWOT analysis will be

applied in the next chapter to analyze the hotel deeply by illustrating its strengths,

weaknesses, opportunities and threats individually.

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 CHAPTER 3

SWOT

SWOT analysis provides the foundation for realizing the desired alignment of

organizational variables or issues (Ansoff, 1965; Andrew, 1987; Porter, 1991; and

Mintzberg et al, 1998). There are no records regarding the origin of the term “SWOT”;

however, Learned et al describe SWOT analysis as a key tool for addressing complex

strategic situations by reducing the quantity of information to improve decision-making

(Learned, 1969). In 2000, Harberberg stated that SWOT was a concept used by Harvard

academics in the 1960s, while Turner attributed SWOT to Igor Ansoff. Koch also

credited the contributions of Weihrich (1982), Dealtry (1992), and Wheelan and Hunger

(1998) to SWOT’s further development and innovation in 2000. Wheelan and Hunger

(1998) used SWOT to find gaps and matches between competences and resources and the

business environment in their popular business policy and strategy text. At the same time,

Dealtry (1992) approached SWOT in terms of groups and vectors with common themes

and interactions. Although the origin of the term “SWOT” is unknown, it has been used

for half a century and is documented in the literature (Helms, 2010).

By listing favorable and unfavorable internal and external issues in the four quadrants of

a SWOT analysis grid, planners are able to better understand how strengths can be

leveraged to realize new opportunities and how weaknesses can slow down progress or

magnify organizational threats (Helms & Nixon, 2010). In addition, based on the SWOT

analysis, it is possible to postulate ways to overcome threats and weaknesses (Hofer &

Schendel, 1978, Kotler, 2000).

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 The SWOT Advantage

During the past half-century, SWOT has been used by countless practitioners and

marketing researchers and is a frequently used and popular tool for business marketing

and strategy (Helms, 2010). Its simplicity perpetuates its use to assess alternatives and

complex decisions. In business, the grouping of internal and external issues is a frequent

starting point for strategic planning. A SWOT analysis can be constructed quickly and

can benefit from multiple viewpoints as a brainstorming exercise (Helms, 2010).

Typically, internal strengths and weaknesses are represented at the top row of the grid

and include image, structure, accessing to natural resources, capacity, efficiency and

financial resources. The bottom row of the SWOT grid is for external opportunities and

threats, including customers, competitors, trends in the market, partners and suppliers,

social changes, new technology, and various environmental economic, political and

regulatory factors (Helms, 2010). Researchers have noted that a SWOT analysis assists in

the identification of environmental relationships and the development of suitable paths

for countries, organizations or other entities to follow (Proctor, 1992).

Glaister and Falshaw agree that SWOT analysis is one of the most respected and

prevalent tools for strategic planning (Glaister & Falshaw, 1999), and they found that it

was among the highest-ranked tools and analysis techniques used in strategic planning

among companies in the United Kingdom. Dickson provides insight into teaching

marketing strategy and competitive rationality skills by confirming that traditional SWOT

analysis can be re-conceptualized in terms of the direction and momentum through which

the market can be changed. Valentin advocates SWOT analysis as the traditional method

18
for seeking insights into ways to craft and maintain a profitable fit between a commercial

venture and its environment (Valentin, 2001).

SWOT analysis limitations

Although SWOT analysis is widely taught and applied, it faces serious criticism on

theoretical grounds (Agarwal, Grassl & Pahl, 2012). Critics maintain that it relies on

subjective intuitions, is unsystematic, eschews quantifications, and lacks predictive power

(Agarwal, Grassl, & Pahl, 2012). Some scholars deny that SWOT analysis serves a useful

purpose (Hill and Westbrook, 1997; Armstrong, 1984). Instead of providing a model for

situational analysis as part of a more comparative evaluation for strategic analysis, the

SWOT analysis is only used as a stand-alone tool (Fehringer, 2007). With the increasing

availability of comparative and comprehensive analyses, fewer people are using SWOT

as a planning tool (Agarwal, Grassl, & Pahl, 2012)

SWOT Analysis Application

SWOT analysis has been used in a wide range of fields, including software enterprises

(Bernroider, 2002), universities and education (Dyson, 2004; Lee, Lo, Leung &Ko,

2000), forest certification, rehabilitation and therapy, environmental metabolomics, food

microbiology, urban planning and airline management (Ahmed, Zairi, &Almarri, 2006).

This suggests that SWOT analysis has far-reaching applications in different fields of

study and that the practical value of SWOT analysis is recognized by both profit-oriented

businesses and nonprofit organizations.

19
SWOT analysis has also been widely applied in tourism studies (Hung, 2013). For

instance, SWOT analysis was applied to rural tourism in Turkey to explain its constraints

and opportunities (Akca, 2006). In that study, the situations of rural tourism in Turkey in

2006 and in the future were critiqued using a SWOT analysis technique. As a result, the

article showed that Turkey has important rural tourism potential; however, initiatives,

investments and promotion for rural tourism are inadequate and slow compared with

those of major tourism destinations in Mediterranean countries. Turkey has the potential

to be one of the most important rural tourism centers in the world in the mid-term if

appropriate policies are applied in the context of changes in world tourism and tourists’

preferences. Additionally, SWOT analysis was applied to small- and medium-sized

enterprises in the tourism industry via interviews with owners and directors of hotel and

travel agencies (Guzman, Moreno, & Tejada, 2008). That paper examines the

implications of the globalization of value chains for small- and medium-sized enterprises.

A number of case studies were developed in hotels and travel agencies. A SWOT

analysis was conducted to support the results, and some policy recommendations

supporting the role of tourism in small- and medium-sized enterprises in a global value

chain are presented. SWOT analysis was also used to examine the tourism industry in Fiji

(Narayan, 2000), with the goal of presenting a clear picture of the tourism industry in Fiji

and providing information, particularly to policy makers, that will assist with policy

decisions regarding the future growth and development of the industry. The hotel sector

is also very familiar with SWOT analysis. Many scholars have applied this analytic tool

in their studies; some have focused on a particular enterprise or sector of hotels, while

others focused on the overall hotel industry in a particular country. Some examples of the

20
use of SWOT analysis in hotel research include Kee and Ghosh (1990), who analyzed

hotels in Singapore and recommended some strategies for the further development, and

Blery and Kapetaniou (2008), who used SWOT to analyze a Holiday Inn hotel in Greece.

In additional, Telephone Interviews with US-based hotel owners were conducted by

Simons and Namasivayam (1999) to identify threats and opportunities. Based on previous

study experiences, the present case study aims to investigate the Baymont Inn & Suites-

Anaheim using SWOT analysis. The hotel’s strengths, weaknesses, opportunities and

threats will be discussed in detail to examine the current situation and enhance future

development.

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 CHAPTER 4

SWOT ANALYSIS OF THE BAYMONT INN & SUITES-ANAHEIM

Strengths

Competitive Rate: Compared with hotels of the same level with a similar location, the

room rate is definitely one of the greatest strengths of Baymont Inn & Suites–Anaheim.

The average rate for last year was only $95; compared with the 2.5-star to 3-stars hotels

near Disneyland and within 5 miles of our case hotel, which have an average rate of over

$120-$150 per night, Baymont Inn & Suites-Anaheim’s price is very affordable and

reasonable. Currently, an increasing number of people tend to consume rationally. They

prefer economy hotels with a reasonable price to fancy hotels with high rates, especially

for family trips. The five types of rooms (including 2 queen beds, 1 king bed, a handicap-

accessible room and family suites with 1 or 2 bathrooms) provide multiple choices for all

types of customers’ needs at reasonable prices. Meanwhile, the seasonal price difference is

very small; the difference between peak season and low season is only $20, so travelers

will not experience a large price gap if they travel at different times.

The absence of surcharges is another attractive point for customers. Once guests pay the

room rate, they do not need to worry about any surcharges at the hotel. Guests can enjoy

many value-added services without paying extra. They can contact the 24-hour front desk

for taxi service, local information, and fast food delivery information and can enjoy the

outdoor swimming pool and Jacuzzi from morning to night. The fitness center and

business center are open 24 hours, and copies and printing are free for all customers.

22
Additionally, the hotel provides wireless Internet in each room, and a spacious parking

lot connected to the hotel is available free of charge to hotel guests.

The free hot breakfast is another feature. The hotel provides a full breakfast every

morning. The cook changes the menu every day to ensure that guests have fresh and

different breakfast options all the time. Normally, every breakfast includes meat, eggs,

waffles, toast, cereal, milk, yogurt, juice, fruits and pastries. Customers always comment

that the breakfast is the best part of the hotel. Most returning guests note the value-added

services they experienced at this hotel. It is believed that more guests will be attracted by

receiving services without surcharges.

Location: Location is another great strength of this hotel. It is located on the Beach Blvd.,

in the heart of Anaheim and Buena Park, near many tourism attractions. For instance, the

hotel is only 1.6 miles away from Knott’s Berry Farm and only 5 miles away from the

Disneyland Resort. A great many people stay here with their families when vacationing at

Disneyland. The short 10- to 15-minute drive can save families a great deal of money;

hotels within walking distance of Disneyland cost as much as twice the rate of the Baymont

Inn & Suites-Anaheim. In addition to Knott’s Berry Farm and The Disneyland Resort,

attractions within 4 miles of the hotel include Medieval Times Dinner & Tournament,

Pirates Dinner Adventure, and the wax museum featuring the “Bodies” and “Titanic”

exhibits, and Soak City Water Park. Additionally, the famous Huntington Beach is only 10

miles down Beach Blvd., and it is very easy for guests to drive or take public transportation

to get there.

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The lifestyle around the hotel is also very convenient. CVS and Walmart Neighborhood

are around the corner and within walking distance. Also within walking distance are

numerous fast food restaurant chains, such as Subway, Waba Grill, and Chinese and

Mexican fast food. Family style restaurants, such as Outback Steakhouse, Chili’s, Olive

Garden, Boiling Crab and Portillo’s Hot Dogs are all within a 10-minute drive. For

shopping, downtown Buena Park, Anaheim Plaza and The Outlets at Orange will satisfy

tourists’ preferences.

Networks with Wyndham: Like other franchised branded hotels in the Wyndham

group, the Baymont Inn & Suites-Anaheim is fully supported by the Wyndham group.

The Wyndham has its own standard requirements for customer service, from the system

to the facilities, based on operations management to match the standards of Wyndham

and to improve services to attract new customers. Wyndham periodically sends trainers to

inspect the hotel site and help the managers to train the staff. A site inspection is

performed first, and then the inspectors and managers discuss current issues and make

sure everything will be fixed within a given time period. Moreover, all the front desk

agents can contact Wyndham’s technical support when they need assistance. This level of

support is convenient and helpful for the hotel staff.

Additionally, participation in the Wyndham Rewards promotion means Wyndham will

bring more customers to the Baymont Inn & Suites–Anaheim. Once a guest has signed up

for Wyndham rewards, he or she begins collecting points with every hotel stay. These

points can be redeemed for a free night’s stay, which inspires customers to become loyal

or returning guests

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Weaknesses

Facilities: The hotel property is over 30 years old, and numerous facilities need to be

updated via communication with the operations manager. For instance, the hot water was

shut down at the end of December 2015, during the busiest time of year, because the

boiler was broken. It took maintenance 2 days to fix it, but they warned the manager that

the boiler should be replaced as soon as possible or the same thing would happen again.

Many guests were unsatisfied with their stay at the hotel because there was no hot water

during the cold holiday season, and they complained to the general manager. Instead of

making the maximum profit, the managers were busy comforting all the guests and

providing refunds.

A similar situation happened with the elevator. The elevator maintenance staff suggested

replacing the elevator so that they would not need to worry about it again in next 10

years. The hotel is 3-story property, and there is only one elevator. When the elevator

shuts down, all the guests staying on the upper floors have to use the stairs, which is very

inconvenient for arriving guests with heavy luggage. Another example of poor design at

the hotel is that the handicap-accessible rooms are all on the second story, which means

that all of the guests who require accessible rooms are completely reliant on the one and

only elevator. The elevator currently exhibits small problems, and although these

problems can be fixed by maintenance, the old elevator is still a significant concern until

it is replaced with a new one.

Operation/Management: The front desk at the hotel is open 24 hours for all the guests,

but the management is not available around the clock. Although front desk agents can

25
assist customers 24/7, if a manager is not available, emergencies may not be responded to

immediately. As we know, in the service industry, quick responses and actions are the

best way to address customer complaints or emergencies.

When guests come to the front desk complaining about their stays, the first thing most of

them would like to do is talk to the management. Although the hotel’s front desk agents

have the rights to act as a manager on duty and provide some compensation or credit to

customers, consumer behavior shows that sometimes customers are more satisfied when

they feel listened to and cared for than when they only receive a partial refund. All guests

would like to be taken care of by management when they first complain. In addition to

guests, cooperating companies may need to communicate with management at certain

times. Thus, unlike managers in other industries, hotel managers need to put in more time

on site, including taking turns to provide 24-hour manager availability and quick

responses to emergencies, because the hotel is never closed.

Fund: The Baymont Inn & Suites-Anaheim is a franchised hotel, which means that all

improvements or investments have to be approved by the owner. Now is the time for the

franchisor to make financial investments in the hotel to increase profits in the long run.

However, the franchisors have a limited budget during this period, which has affected the

speed of the upgrading process. The hotel is remodeling and upgrading slowly, and so

far, the speed of the upgrade does not match the speed at which customers’ expectations

are growing. The hotel also does not have the financial abilities to avoid or prevent

problems and react as soon as possible before the problems grow.

26
Employees’ professions: The Baymont Inn & Suites-Anaheim contains three main

departments: Front Desk, Maintenance and Housekeeping. Most of its employees have

worked in this industry for years and have rich experiences. They also received training

from the Wyndham group. However, most of them are not hospitality professionals, and

they are lack professional knowledge of this industry. Normally, they are very helpful and

welcoming toward the guests, but the lack of professional knowledge of the industry carries

potential risks of legal issues. The managers need to provide more training programs

regarding hospitality laws and awareness of working at a hotel and dealing with guests.

Additionally, the hotel manager should work on providing the regulations for all

employees at this specific hotel so that all employees clearly understand their job

assignments and how to cooperate with other departments.

Opportunities

Expansion: At present, convenience and efficiency are becoming increasingly important

to people. Consequently, a great many leisure and business travelers are focusing on

choosing convenient and economical hotels with comfortable beds and a hot continental

breakfast and instead of fancy decoded and functional luxury hotels, especially in

convenient locations within a city. So far, the Baymont brand still fully depends on the

domestic market. Unlike Super 8 and Howard Johnson, which are already worldwide

brands, customers can still only find Baymont in the United States. Now is a good time and

opportunity for the brand to expand to markets outside the United States. With its

competitive rates, convenient locations and efficient facilities, I believe the Baymont brand

will attract new business travelers and new customers who are pursuing a good-quality but

27
simple lifestyle. The brand is likely to gradually gain a share of larger markets outside the

United States and establish a brand image.

Enhance Loyalty: The Baymont Inn & Suites–Anaheim still has considerable potential

for improvement. Currently, the front desk is introducing the Wyndham Rewards program

for its guests to attract more new and loyal customers. Additionally, the manager is offering

discounts for returning customers and encouraging them to make reservations directly

through the hotel. Returning guests are given 15%-20% discounts when they call for

reservations.

Meanwhile, enhancing the service quality and remodeling the property could offer

another chance for Baymont Inn & Suites-Anaheim to keep their original guests and even

appeal to more new customers. A hotel’s facility is the most essential element for

maintaining customers’ loyalty. As mentioned above, one of the hotel’s strengths is the

absence of surcharges for its services, which turns many new guests into returning ones.

In fact, the Baymont Inn & Suites-Anaheim has the potential for greater improvements by

providing additional services. For example, canceling the shuttle service and directing

full energy and capital toward finishing the property update more quickly would be

understandable for the short term. However, resuming the shuttle service is very

necessary for long-term development. The hotel is close to Disneyland, Knott’s Berry

Farm and other destinations within driving distance. Shuttle service provides convenience

for guests who are traveling from out of town without cars. In addition, Baymont could

also cooperate with different travel agencies to help sell the park tickets and register

guests with city tour groups.

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Enlarging cooperation with Third-Party: To increase revenue, hotels like to corporate

with major third-party online travel agencies to sell as many rooms as possible. There are

two ways for hotels to pay commissions for these agencies. The first is through a prepaid

reservation that allows third parties who contract with hotels to receive comparable rates

and then sell the rooms to guests through their own websites. The second way is for the

online third party to help hotels sell rooms in exchange for sales commissions, usually at

rates of 15%-25%.

The Baymont Inn & Suites–Anaheim contracts with Booking.com, Expedia.com and

other third-party online agencies. Maintaining good relationships with existing third

parties is a must for the hotel’s long-term development. For further developments, the

Baymont Inn & Suites-Anaheim should expand its cooperation with hotel wholesalers to

ensure that it sells enough rooms during the slow season; additionally, it should cooperate

with regular travel agencies to increase its room rates. Without hotel wholesalers,

building corporate relationships with travel agencies will increase profits by eliminating

commissions for hotels and will reduce the costs by allowing travel agencies to get better

rates from hotels. It is an ideal win-win cooperative relationship.

Threats

Competitive hotels on site: The hotel faces strong competition with similar hotels in the

same location. There are many different brands of economy hotels including Ramada Inn,

Travelodge, Knights Inn and others. These types of hotels provide such similar services

that the Baymont Inn & Suites-Anaheim is not only choice in its location. The intense

29
competition results in price battles among the hotels to draw potential customers’

attention. Meanwhile, the competition makes potential customers more critical of the

hotel’s condition. They may require more services to be assured that they have made the

best choice. Additionally, they will have more confidence to bargain for better rates

because a great many similar hotels are available.

The rise of Airbnb: As mentioned in chapter two, the Baymont Inn & Suites-Anaheim’s

achievement is making guests feel right at home. However, the rise of Airbnb has taken

the place of economy-style hotels such as Baymont and has gradually become the best

way to feel at home while traveling. Airbnb began in 2008, when two designers who had

space to share hosted three travelers looking for a place to stay. Now, millions of hosts

and travelers choose to create a free Airbnb account so they can list their spaces and book

unique accommodations anywhere in the world. Airbnb connects people to unique travel

experiences at any price point in more than 34,000 cities and 190 countries. With its

world-class customer service and a growing community of users, Airbnb is the most

home-like style of accommodation for travelers. Airbnb is definitely one of the most

powerful competitors for hotels in this market.

Expenditure in long term: As mentioned above, the Baymont Inn & Suites-Anaheim

property is over three decades old, and numerous updates to its facilities are necessary. In

this case, the owner needs to invest capital to keep the hotel competing with newer,

fresher properties. It is still a long-term investment for the owner to make the old

property more powerfully competitive with other new hotels near Disneyland. Moreover,

employees represent another large portion of the hotel’s operating expenses. As we know,

the hotel industry is plagued with extremely high staff turnover. To address this situation,

30
the owner and manager have determined that a facility that is operationally efficient and

well designed in both the public areas and behind the scenes will attract qualified staff,

enhance morale, reduce employee turnover, and increase productivity.

Table1: Results of SWOT Analysis

Strengths Weaknesses

 Competitive rate  Facilities

 Location  Operation/Management
 Networks Wyndham  Fund
 Employees’ professions

Opportunities Threats

 Expansion  Competitive hotels on side

 Loyalty programs  Conflicts of Airbnb
 Enlarging cooperation  Expenditure in long term

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 CHAPTER 5

CONCLUSION

In conclusion, the hotel industry in the United States has experienced rapid growth in

recent decades. The examples above show that the Baymont Inn & Suites-Anaheim

expand its competitive elements. First, maintaining affordable rates without surcharges

will ensure the loyalty of existing guests and attract new ones. The guests who are

interested in this hotel are mostly family-oriented; they stay for leisure vacations near

Disneyland and are very sensitive to price. Maintaining a competitive rate is always a

good choice.

Second, the hotel should advertise its good and appealing location by providing detailed

location information on its own and third party websites and by giving as much

information as possible to existing guests so that more tourists who come for the

attractions will be attracted because of the word of mouth. Accurate information will

reduce disappointment and inspire greater confidence among incoming guests. Returning

guests are the lowest-cost advertising medium; they provide good advertisement by

talking about their experiences. Third, the hotel should maintain intimate contact with

Wyndham to learn the newest technology, update the facilities and services and provide

professional training for employees. It is very necessary to update and learn new

knowledge to compete with other, similar types of hotels. Taking full advantage of

resources from Wyndham will upgrade the service quality and bring more professional

elements to the hotel.

32
To address its weaknesses, the hotel should pay more attention to the property facilities

and take action to finish remodeling malfunctioning features as soon as possible.

Ensuring a good cash flow by making adequate investments in advance is another

concern for the owner and management, keeping in mind that wise investments should

come before thoughts about returns. Meanwhile, 24-hour management should be

available to improve the image of good management and provide support for lower-level

employees when addressing customers’ complaints and responding to emergencies.

These changes will show customers that the management will always be on their side and

will allow the hotel to response to guests’ concerns as quickly as possible. In addition,

professional employees can serve as a bridge connecting the hotel management to the

guests. With their professional knowledge and personal abilities, professional employees

will interact with guests tactfully and effectively to avoid legal issues and other troubles.

In the future, the Baymont Inn & Suites-Anaheim should look for more opportunities,

such as exploring markets outside the United States, to serve more leisure and business

guests with its simple and welcoming home-style features and competitive rates; should

enhance its loyalty programs with good services and deal packages for loyal customers;

and should expand cooperation with third-party travel agencies to achieve maximum

revenues. Threats from the outside environment are inevitable, especially the threats

from other similar hotels nearby. Additionally, with the competition from Airbnb and

other styles of hotels, the Baymont Inn & Suites-Anaheim will face a great many severe

threats in different ways; therefore, it is very necessary to thoroughly research the hotel

using SWOT analysis to examine its current situations. The SWOT analysis is also a

good guide for helping hotel management achieve its goals and provide better services.

33
 Limitations

Three study limitations should be noted at this point. First, this research is a typical case

study, and as such, it only focused on the Baymont Inn & Suites-Anaheim hotel.

Therefore, the results are not generalizable, meaning that its findings will not apply to

other studies. Second, there is a lack of data support for the evidence of the SWOT

analysis. Combining qualitative and quantitative methods would enhance the

identification of the results. Third, although the study identified a number of strengths,

weaknesses, opportunities and threats associated with the Baymont Inn & Suites-

Anaheim, the usefulness of the results would be improved if the identified issues were

prioritized. From the limitations, we know that this research is not generalized. However,

a SWOT analysis of the hotel is still very meaningful to help the hotel improve its service

quality and appeal to more customers to achieve maximum profits.

34
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