SWOT ANALYSIS-BAYMONT & 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

ii 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.

iii ABSTRACT

This case study is to research a limited economical 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 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.

iv 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

v LIST OF TABLES

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

vi 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 and economy, and the hotel industry is an important component of the (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

1 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 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

2 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,

3 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

4 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 . 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

5 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

6 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

7 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. (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

8 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.

9 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, 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.

10 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 & , 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

11 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: 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 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

12 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 , 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.

13 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 & 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

14 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 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.

15 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.

16 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).

17 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 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.

21 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.

23 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 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

24 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 . 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 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.

28

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

31 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 REFERENCES

Agarwal, R., Grassl, W., & Pahl, J. (2012). Meta-SWOT: Introducing a new strategic planning tool. The Journal of Business Strategy, 33(2), 12-21. doi: http://dx.doi.org/10.1108/02756661211206708

Burritt, M. C. (2001). Lodging Industry Fundamentals Remain Strong Despite Cautious

Stance On New Development. Real Estate Issues, 26(1), 1.

Graci, S., &Dodds, R. (2008). Why Go Green? The Business Case for Environmental

Commitment in the Canadian Hotel Industry. Anatolia: An International Journal of

Tourism & Hospitality Research, 19(2), 251-270.

Helms, M. M., & Nixon, J. (2010). Exploring SWOT analysis - where are we now?

Journal of Strategy and Management, 3(3), 215-251. doi: http://dx.doi.org/10.1108/17554251011064837

Hotels & Motels Industry Profile: United States. (2015). Hotels & Motels Industry

Profile: United States, 1-34.

Hotels & Resorts: Trends. (2014). Travel & Tourism Market Research

Hotels & Motels Industry Profile: United States. Hotels & Motels Industry Profile:

United States [serial online]. May 2015;:1-34. Available from: Hospitality & Tourism

Complete, Ipswich, MA. Accessed October 5, 2015.

Hung, K. (2013). Understanding China's Hotel Industry: A SWOT Analysis 中国酒店业

35 的SWOT分析. Journal of China Tourism Research, 9(1), 81-93. doi:10.1080/19388160.2013.756771

Mount, D. J., & Frye, W. D. (2006). The Impact of Hotel Size and Service Type on

Employee Job Satisfaction. FIU Hospitality Review, 24(1), 60-68.

Ribaric, R. (2012). Future of Risk Management in the Hotel Industry. Faculty of Tourism

& Hospitality Management in Opatija. Biennial International Congress. Tourism &

Hospitality Industry, 396-401.

Rushmore, S., & Baum, E. (2002). Growth and Development of the Hotel-Motel

Industry. Appraisal Journal, 70(2), 148

Serlen, B. (2015). Cost effective, profitable top limited-service hotel appeal. Hotel

Management (21582122), 230(5), 1-37.

Singh, A., Dev, C. S., & Mandelbaum, R. (2014). A flow-through analysis of the US lodging industry during the great recession. International Journal of Contemporary

Hospitality Management, 26(2), 205-224. Retrieved fromhttp://search.proquest.com.proxy.library.cpp.edu/docview/1469873559?accountid=1

0357

Solnet, D. J., Paulsen, N., & Cooper, C. (2010). Decline and turnaround: A literature review and proposed research agenda for the hotel sector. Current Issues In Tourism,

13(2), 139-159. doi:10.1080/1368350080263821

Thapa, B. (2012). Environmental management in the lodging and hospitality industries: A

36 review. Tourism (13327461), 60(3), 339-345.

Wyndham Worldwide Corporation SWOT Analysis. (2013). Wyndham International

SWOT Analysis, 1-8.

37