A PEST analysis of a hotel is conducted by hotel management or marketing executives in an attempt to identify the various strengths and weaknesses of the location. This type of analysis is necessary because there are certain macro-environmental factors that are beyond the control of hotel ownership. As a result, a PEST analysis — which includes analysis of political, economic, sociological, and technological factors in the hotel's location — is an effective tool to minimize those issues. Hotels may also choose to conduct a PESTLE analysis, which also includes factors pertaining to legal and environmental conditions.
People who wish to get involved in hotel ownership may assume that it simply requires building the nicest possible establishment filled with lots of amenities and perks for guests. That viewpoint ignores the fact that existing conditions in the area where a hotel is located can have great impact on its success or failure. Those hotels that take these factors into account in both their choice of locations and marketing efforts are better set up for success.
The first step in a PEST analysis is taking the temperature of the political situation in the area. Whether local politicians are friendly to business owners or have composed strict business regulations can have a significant impact on a hotel. Following that, economic conditions must be studied in great detail. This is obvious, since a hotel that has access to a clientele base with great disposable income has an advantage.
Sociological factors also play a big role in a PEST analysis of a hotel. These factors can range from how much the population is growing to the religious attitudes in the community, all of which can have an affect on marketing strategies. The final step of the PEST analysis is a study of technological capabilities in the area. Hotel owners must be sure that they will be able to fulfill all of the technological programs they wish to undertake.
While the PEST for of analysis is thorough, some hotel owners might wish to go into even more detail. Such owners may choose a PESTLE analysis, which adds in a study of both legal and environmental factors in the surrounding area where the hotel is located. Legal factors may have repercussions for things like expansion plans or lawsuits brought by customers, while some hotels might wish to find a location that supports environmental initiatives.