Hotel Vertu: Financing the Venture in the Boutique Hotel Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Hotel Vertu: Financing the Venture in the Boutique Hotel Industry
Two recent MBA graduates are considering a business opportunity in the boutique hotel industry. Having found a seemingly attractive property in Savannah, Georgia, Yvonne D'Arcy and Elisabeth Whiting face questions about financing, deal structure, and unequal power dynamics. This case covers opportunity analysis, financing and deal structuring, and partnership issues. Students are asked to assess the overall financial returns on the project and how those returns should be parsed between investors and owners. Students also examine how the deal with investors should be structured. Exhibits include a Letter of Agreement between the founders, the hotel's historical performance data, the project budget, financial forecasts, and cash flow and return projections. The HBS Brief Case series contains two cases on Hotel Vertu. Both cases are set within the same disguised context, but take place two months apart. The earlier case, Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry (917-501) overlaps with this case, but focuses more on the nature of the opportunity itself, an industry analysis of the boutique hotel segment, issues related to early career entrepreneurship, and only hints at the power dynamic between investors and entrepreneurs. Although each case can be taught on its own (i.e., students do not require data or knowledge from one case in order to benefit fully from the other), the two can be paired in order to give students a more complete sense of the challenges that aspiring entrepreneurs may face. If both cases are taught, it is recommended that instructors begin with Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry.
Authors :: Howard H. Stevenson, Michael J. Roberts
Swot Analysis of "Hotel Vertu: Financing the Venture in the Boutique Hotel Industry" written by Howard H. Stevenson, Michael J. Roberts includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hotel Vertu facing as an external strategic factors. Some of the topics covered in Hotel Vertu: Financing the Venture in the Boutique Hotel Industry case study are - Strategic Management Strategies, Financial analysis, Growth strategy, Joint ventures, Negotiations, Strategic planning and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Hotel Vertu: Financing the Venture in the Boutique Hotel Industry casestudy better are - – challanges to central banks by blockchain based private currencies, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models,
increasing transportation and logistics costs, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Hotel Vertu: Financing the Venture in the Boutique Hotel Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hotel Vertu: Financing the Venture in the Boutique Hotel Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hotel Vertu, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hotel Vertu operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Hotel Vertu: Financing the Venture in the Boutique Hotel Industry can be done for the following purposes –
1. Strategic planning using facts provided in Hotel Vertu: Financing the Venture in the Boutique Hotel Industry case study
2. Improving business portfolio management of Hotel Vertu
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hotel Vertu
Strengths Hotel Vertu: Financing the Venture in the Boutique Hotel Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hotel Vertu in Hotel Vertu: Financing the Venture in the Boutique Hotel Industry Harvard Business Review case study are -
Successful track record of launching new products
– Hotel Vertu has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hotel Vertu has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Hotel Vertu in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Hotel Vertu has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hotel Vertu to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Hotel Vertu is one of the leading recruiters in the industry. Managers in the Hotel Vertu: Financing the Venture in the Boutique Hotel Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Hotel Vertu is present in almost all the verticals within the industry. This has provided firm in Hotel Vertu: Financing the Venture in the Boutique Hotel Industry case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Hotel Vertu has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Training and development
– Hotel Vertu has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Hotel Vertu: Financing the Venture in the Boutique Hotel Industry Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Cross disciplinary teams
– Horizontal connected teams at the Hotel Vertu are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Low bargaining power of suppliers
– Suppliers of Hotel Vertu in the sector have low bargaining power. Hotel Vertu: Financing the Venture in the Boutique Hotel Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hotel Vertu to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Hotel Vertu
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hotel Vertu does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Hotel Vertu is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Hotel Vertu is one of the most innovative firm in sector. Manager in Hotel Vertu: Financing the Venture in the Boutique Hotel Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Hotel Vertu: Financing the Venture in the Boutique Hotel Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hotel Vertu: Financing the Venture in the Boutique Hotel Industry are -
Capital Spending Reduction
– Even during the low interest decade, Hotel Vertu has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry, in the dynamic environment Hotel Vertu has struggled to respond to the nimble upstart competition. Hotel Vertu has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Hotel Vertu needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Hotel Vertu products
– To increase the profitability and margins on the products, Hotel Vertu needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High cash cycle compare to competitors
Hotel Vertu has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Hotel Vertu has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Increasing silos among functional specialists
– The organizational structure of Hotel Vertu is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Hotel Vertu needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hotel Vertu to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Hotel Vertu has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Hotel Vertu even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hotel Vertu is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry, is just above the industry average. Hotel Vertu needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Hotel Vertu: Financing the Venture in the Boutique Hotel Industry | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Hotel Vertu to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Using analytics as competitive advantage
– Hotel Vertu has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hotel Vertu to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hotel Vertu is facing challenges because of the dominance of functional experts in the organization. Hotel Vertu: Financing the Venture in the Boutique Hotel Industry case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Hotel Vertu can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Building a culture of innovation
– managers at Hotel Vertu can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hotel Vertu in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Hotel Vertu in the consumer business. Now Hotel Vertu can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Hotel Vertu has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– Hotel Vertu can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Better consumer reach
– The expansion of the 5G network will help Hotel Vertu to increase its market reach. Hotel Vertu will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hotel Vertu can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Hotel Vertu can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hotel Vertu can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hotel Vertu can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Hotel Vertu: Financing the Venture in the Boutique Hotel Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hotel Vertu can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry .
Consumer confidence and its impact on Hotel Vertu demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Hotel Vertu high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Hotel Vertu.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Hotel Vertu needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Hotel Vertu can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Hotel Vertu is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hotel Vertu in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hotel Vertu can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Hotel Vertu in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Hotel Vertu business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Hotel Vertu will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Hotel Vertu: Financing the Venture in the Boutique Hotel Industry Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Hotel Vertu: Financing the Venture in the Boutique Hotel Industry is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Hotel Vertu: Financing the Venture in the Boutique Hotel Industry is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Hotel Vertu needs to make to build a sustainable competitive advantage.
