These options each come with advantages and disadvantages, but they fail to ensure that the family pet is not just watched, but pampered. This concept of pampering the family has sprouted a whole new industry of pet facilities. With more people seeing the pet as of a family member, the care of the pet is becoming more important. In 2006 families spent approximately $38 billion on their pets and around 63% of household own at least one pet (Koncius, 2006).
This has brought about a rise in pet hotels / pet bed and breakfasts. PetsHotel, a division of PetSmart, is a leader in this rising industry. PetSmart purchased a pet hotel in 2000 in the Tucson, AZ area and has expanded it to over 50 stores since then. PetSmart’s goal is to eventually have over 400 PetsHotel facilities nationwide and in Canada. However, PetSmart is not the only company getting into this rapidly expanding industry. This report is evaluating PetsHotel and its place in the industry. Specifically this report will demonstrate its position in the market through a Strength, Weakness, Opportunities, and Threats analysis, or SWOT analysis.
This analysis will provide a clearer picture of what PetsHotel is facing in regards to the competition, trends, and future expansion. It will demonstrate where PetsHotel has a significant advantage over its competitors and where it has shortfalls. Strengths. The most notable strength PetsHotel is the strong brand name and familiarity of its parent company, PetSmart. According to PetSmart’s website, the company has almost one thousand stores in the United States and Canada (PetSmart, 2007).
PetSmart entered the pet hotel industry in 2000 when it recognized “its huge potential and it fits perfectly into [its] strategy of providing the lifetime needs of pets and their parents” (PetSmart, 2008). Customer loyalty and name recognition provides assurance for those customers who may not want to take a risk with a local, known pet facility.
With how important pets have become to the owner, many owners will not want to take the risk of a bad facility. Jim Krack, founder of American Boarding Kennels Association, or ABKA, stated that "Pet owners expect the same type of amenities from their pet care providers as they receive from their child day care providers” (Shim, 2007).
It is assumed that most people would not just place their children in any childcare facility without first ensuring a certain level or standards and safety. The name brand of PetSmart gives PetsHotel that instant recognition. In the fiscal year 2007, PetSmart posted $4. 2 billion in sales and has $209 million in cash (Yahoo! Finance, 2008). This cash cow can aid in the design and construction of new facilities. This will allow PetsHotel to quickly expand into competitive areas and into new, untapped market areas. Other competitors will not have the cash available without going into substantial debt to expand as quickly as PetsHotel can.
Economies of scale also provide PetsHotel with a significant strength. Since smaller pet facilities will be unable to purchase items in the bulk level that PetsHotel can, the per item cost will be much greater than PetsHotel. Overhead and other expenses can be spread out amongst the over 50 PetsHotels already built. In comparison, Wags Hotel only has three stores to spread its costs around. Weaknesses Although the size PetsHotel is an advantage, it also lends itself to outside threats.
The perception by some is larger companies many not provide as intimate and caring service for the pets. Consequently, many will prefer smaller, local services over the big corporate service of PetsHotel. Others will not want to go to the corporate establishment in favor of the local “ma and pa” pet facilities.
The reasons for this could be the perception of intimate pet care with the smaller facility or it could just be hatred toward corporate America. Another weakness is a lack of accreditation. The American Boarding Kennels Associate, or ABKA, is a non-profit organization that seeks to assure high standards in pet care. ABKA provides pet owners with a set standard of quality of different hotels and kennels through a Pet Owner’s Bill or Rights and certifying different pet hotels. Out of 93 accredited pet facilities, none of them are PetsHotel brand pet facilities.
To obtain certification the facilities must be “in compliance with the standards of the ABKA Voluntary Facilities Accreditation Program and have successfully completed an on-site evaluation by ABKA” (ABKA, 2008). A lack of certification from a reputable firm such as ABKA is a strong weakness for PetsHotel. ABKA’s website does list PetsHotel as a facility that can house a pet, but it also lists their lack of accreditation. This could sway a potential pet owner customer away from PetsHotel in favor of a pet facility that is accredited. Opportunities
The nearly 1000 PetSmart locations provide ample opportunity for quick expansion of the PetsHotels. By utilizing the PetSmart facilities, PetsHotels can quickly set up operations and provide services already at the PetSmart stores such as grooming, training, and Bansfield pet hospital. Some of these features have already been added to PetsHotel’s Add-On features. These features include nail clipping, bath time, and access to a Banfield clinic in an emergency (PetsHotel, 2008). By utilizing PetSmart’s other services, PetsHotel could offer other services such as pet training and grooming beyond a simple bath.
In 2006, PetsHotel announced that it wanted to reach a total of 435 hotels throughout the United States and Canada (PetSmart, 2008). This is an achievable goal in part because of the huge cash flow PetSmart can generate through its other business segments and because of the already established name brand in those areas. Companies such as Wags Hotels only recently added two more hotels. Those two new hotels are still within the general geographic area of central California (WagsHotel, 2008). However, PetsHotel is already in 26 states and plans three more openings in the next few months (PetsHotel, 2008).
Threats PetsHotel’s website lists its hours of operations 7:00 AM to 9:00 PM Monday thru Saturday and 8:00 AM to 6:00 PM on Sundays. PetsHotel has a check-in and check-out time of 12:00 PM (PetsHotel, 2008). The problem that PetsHotel can run into is a 24-hour service such as Wags Hotel. By offering 24-availability, Wags Hotel allows travelers who arrive late at night to pick up their pet once they arrive. PetsHotel’s model would force the traveler to pick up their pet the next day and charge them for that extra night.
Smaller pet facility companies are seeing the need for emergency veterinarian services. PetsHotel uses Banfield which is partnered with PetSmart. These smaller companies are starting to team up with the local veterinarians to provide the same quality service. Although the overhead for this service is spread out amongst the larger PetSmart Corporation, PetsHotel will further have to demonstrate that its corporate services are as good, caring and intimate as the local facilities and veterinarians. An example of this is Wagg Inn Pet Hotel with the Animal Hospital of Ashwaubenon, WI.
At home pet nannies are another source of threat to PetsHotel’s business. People have been turning to high-class pet hotels because of how much they care about their pets. However, many feel reservations about leaving their pet in a facility at all. The alternative is to leave the pet at home and hire a pet nanny. One concern is whether the other “guests” at the pet hotel are current on their vaccinations. If the pet is left at home, there is no concern at all. Also, the pet will be comfortable in its normal routine and happy places.
This alleviates any concerns of trying to settle the pet back into normal routines, especially where to go to the bathroom. Conclusions and Recommendations PetsHotel is in a very good strategic position compared to its competition. Availability of cash in conjunction with the strong brand recognition of PetSmart means it can place a facility anywhere in the United States and Canada and have instant credibility as a company that will provide quality pet care. PetsHotel should continue to innovate in pet quality and care through better designs of its facilities and services.
It needs to continue to emphasize its high pet care and quality of service of both PetsHotel and PetSmart. Because PetsHotel is a division of PetSmart, and damage to the brand reputation of PetSmart will instantly translate into damage to the PetsHotel reputation. If the quality of service at the PetSmart stores declines, the perception will be that quality has also decreased in its pet hotels.
Where PetsHotel needs to be concerned is in its accreditation and availability. Although AKBA is just one organization, PetsHotel can ill afford to ignore any organization devoted to pet facility quality and care. For people who want to ensure their pets are well taken care of, the lack of accreditation could mean a loss in customers. If the people are happy with both the service of AKBA and the local pet hotel, PetsHotel could lose more potential customers through word of mouth. By gaining accreditation, PetsMart not only retains its corporate brand of quality, but it is substantiated through AKBA.
PetsHotel must also find a way to address those who do not want to disrupt their pet’s routine. PetsHotel and other pet hotel websites do list how the pet will re-enter its routine once it goes home. However, more is needed than just a small blurb on the website. PetsHotel needs to reassure anyone who inquires about this and possible provide examples through customer satisfaction surveys and testimonials.
American Boarding Kennel Association. (2008). American Boarding Kennel Association.
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