Katz Motel’s SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis

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Table of Contents

Business Venture Description
SWOT Analysis
Explanation
Monetary Information
Evaluation
Reference List

Business Venture Description

Katz Motel is a new prospective business venture located in New York, NY. Its purpose is to provide house animals, such as dogs and cats, with temporary housing and care while their owners are out of the city for a vacation or a business trip. During the owners’ absence, Katz Motel will look after the animals, offering a full range of services, including feeding, playing, walking, cleaning, washing, and medical care, if necessary.

Instead of utilizing small cages (a staple for most of the NY pet hotels), Katz Motel will be utilizing separated small compartments made of medical glass, which are easy to clean, are see-through, and will provide a stress-free and trauma-free environment for the animals. Two apartment sizes will be available for choosing: the standard 1.5×1.5×2 meter compartment, suitable for smaller animals, such as cats, and a larger 2.5×2.5×2 meter apartment for larger animals, dogs, and pets that enjoy the extra freedom.

Customers will be allowed to survey their pets through cameras installed into the apartments through a specialized application. The hotel will be able to hold between 60-80 individual pets at the same time and will be staffed by 10 personnel, including animal caretakers, a cleaning specialist, and a veterinarian. The business will be aimed at the upper-middle class and rich owners, as these are the most likely to own pets that require specialized and immersive care while they are away. The improved conditions compared to those offered by the majority of the animal hotels coupled with the scarcity of dedicated facilities for extended animal stays are the main sales pitches of the prospective business.

SWOT Analysis

Explanation

Strengths

The first strong point of setting up Katz Motel in NYC is the close proximity to a great number of potential customers, making it possible to offer services to many people in a location. New York has over 8 million inhabitants in it, occupying an area of circa 300 square miles (Carter 2014). The number of pets in the city is estimated to be over 1 million, with circa 600,000 cats and 500,000 dogs, thus making every 1 inhabitant in 8 a potential customer (Carter 2014). The number of animal lodging available in NYC is much smaller, with the number of businesses in the industry being far less than a hundred companies. The scarcity of the much-needed service makes it in low supply and high demand, thus becoming a strength of Katz Motel.

Another strong point of Katz Motel is its positioning. New York is a natural traveling destination to and from the US, meaning that many people residing in New York would be traveling (Veblen and Dowd 2017). Pets are notorious for taking badly to the road, as it is a great stress to them, especially if they travel by plane. In addition, not every hotel is pet-friendly, making the option of taking animals with oneself a costly venture. These factors will improve the attendance at Katz Motel. Finally, the business model does not require exceptional resources to start functioning. Animal handlers are relatively easy to train, thus contributing to a relatively low barrier of entry, and the motel itself does not require much other than space and amenities for animals, such as cleaning, feeding, and play materials. The only high-upkeep element of the venture is the veterinarian.

Weaknesses

The primary weakness of Katz Motel in regards to the location would lie in the expenses associated with operating in NYC. The prices for a square foot of office space range between 77 to 84 dollars, meaning that a space of 1000 square feet would cost roughly 75,000 USD a month (Veblen and Dowd 2017). This means that the venture would have to become highly profitable in a short amount of time or incur financial risks associated with starting cash. Alternatively, Katz Motel would have to start with a significant amount of money to cover the initial months of getting itself into the industry, where profits would not exceed the expenses.

Another weakness of the proposed business venture is the fact that it is tied to the tourism industry. If customers stay at home, they do not need Katz Motel to look after their pets. Therefore, whenever tourism is low, the profits of the venture will also drop. The third vulnerability of the model is that it is a high-responsibility venture, as it has to deal with animal lives (Veblen and Dowd 2017). Katz Motel will have to receive all of the appropriate certifications from the city administration, which will take time and effort. In addition, high responsibility ties in with potential reputational losses in the event of failure (Veblen and Dowd 2017). If an animal is injured, gets sick, or dies in the Motel’s care, it will result in a great degree of dissatisfaction as well as a loss of customers and profits. Finally, handling animals may result in employees becoming injured or sick, requiring additional safeguards and training.

Opportunities

Katz Motel’s business opportunities are largely associated with an increased opportunity for expansion. The industry of animal catering is largely underdeveloped in the West, even in cities like New York, meaning there is plenty of opportunities to expand and claim additional market share. The service is yet to become a Red Ocean; thus, the companies that establish themselves first would have a dominant position over newcomers due to a history of good service and experience (Veblen and Dowd 2017). Therefore, it is important for Katz Motel to provide good service early on and invest in expanding facilities to house more pets. It is possible to open shop in different areas of the city as well, now that many businesses have vacated and left their spaces open. Starting a business in NYC presents an opportunity to create a loyal customer base and establish a strong brand associated with quality, which will propel Katz Motel to new heights as it would later expand to other cities (Veblen and Dowd 2017). The opportunities described above are associated with an increased amount of revenue.

Threats

The primary threat to Katz Motel at this time is COVID-19. The disease harms the tourism industry, forces the government to impose restrictions on businesses and people, and harms the local and international economy. If the pandemic continues for a few more years, Katz Motel would be hard-pressed to survive in a situation where most customers are quarantined at home or are not allowed to leave their premises for traveling purposes. The shutdown of the tourism industry in the US currently being experienced is a significant threat associated with COVID-19. A threat associated with the economy is the rise of rental prices. As it stands, the prices of conducting business in NYC are some of the highest. Increases in renting space would reduce the number of profits the venture makes, making it a likely threat. Finally, the venture-specific threats include animals getting sick due to a localized epidemic and competitors copying the premium-sector modus operandi of Katz Motel before the company establishes itself. The former risks the company losing its reputation and getting in trouble with the local law enforcement and sanitation services(Veblen and Dowd 2017). The latter would mean the company would lose its edge against the competition. While it will not destroy the company outright, such an eventuality might hinder its growth.

Monetary Information

Some of the expenditures associated with the business would include renting spaces, salaries for employees, purchasing animal food, medicine, and other supplies, as well as advertising costs to make sure people know about the company. These expenditures are presented in the table below (Veblen and Dowd 2017):

Position Name	Expenditures per Month
Renting costs	75,000 USD (for a 1000 sq. ft. space)
Employee salaries	30,000 USD
Food, medicine, and other supplies	20,000 USD
Advertising costs	9,000 USD
Miscellaneous expenditures	10,000 USD

This makes the total expenditures for a month of operations to be circa 144,000 USD. In order to make up for it, the company would have to acquire revenue higher than that amount. With an average price for an animal stay a day being around 70 USD and 100 USD for a premium service sector (which is what Katz Motel is aiming for), it will require approximately 1440 animal/days a month to make even. At 80 rooms operating at their peak capacity, the venture can potentially achieve 2400 animal days in a month, with an approximation of 100,000 USD monthly profit. However, the venture will require set-up, which will take at least a month. Therefore, Katz Motel will require around 250,000 USD to start the business, hire employees, outfit the place according to specifications, and survive the first 2 months before the customers become aware of the company.

Evaluation

Based on the provided facts, including strengths, weaknesses, opportunities, and threats, it can be concluded that Katz Motel is a prospective potential venture. It has the opportunity to succeed due to relatively low barriers of entry, and a large potential market to expand into. However, the restrictions imposed by COVID-19 and the associated economic downturn may make it risky to start the venture at this time. Once the epidemic passes, it would be more profitable to start, as the economy would seek to balance itself after a long period of depression. Another potential strategy could involve buying out potential competitors prior to the pandemic ending, thus eliminating competition while receiving a ready brand name, skilled personnel, and facilities ready for handling animals. In either case, the projected revenue from an 80-shelter facility will exceed the amount necessary to break even by about 40%, meaning that the business can operate at 60% capacity during low seasons and still be able to maintain itself. Overall, it is a very stable venture model that will likely succeed in a post-COVID period.

Reference List

Carter, K. E. 2014. The Dog Lover’s Guide to Travel: Best Destinations, Hotels, Events, and Advice to Please Your Pet-and You. National Geographic Books.

Veblen, T. and Dowd, D. 2017. The theory of business enterprise. Routledge.

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