At the start of the season, Vettel harboured hopes of clinching a fifth world title and drawing level with F1 legend Juan Manuel Fangio.
But the German made too many costly errors and Hamilton – who was near immaculate throughout the campaign – recorded his 11th victory at the Abu Dhabi Grand Prix on Sunday in the final race.
Vettel pinpointed where Ferrari went wrong, however also admitted that Hamilton deserved to be crowned champion.
“Towards the end, we were lacking a bit of everything and then one thing led to another,” Vettel said.
“If we had the speed, you start from a different place and you are out of trouble. As a matter of fact, we didn’t have that speed.
“The gap is quite a big. Yes, we could have been closer.
“But being realistic, in none of the final races could we put the car on pole and lead the race in our style. Ultimately, we were not quick enough.
“But the way l see it is ‘well done Lewis and Mercedes’, they were just better than us this year.”
Vettel also reckons Ferrari had a tough year both on and off the track.
He added: “We lost our path a little bit halfway through the year.
“Things didn’t come together so obviously we did a step back towards the end of the year which enabled us to be more competitive again but I think we’ve understood what went wrong.
“We had a lot of lessons, it was a tough year in general.
“I think the team is strong and the team has potential.
“The passing of our chairman, Mr Marchionne obviously had an impact and was tough so I think it’s up to us to look into every single detail and make sure we come out as a stronger group, enabling us to build a stronger package for next year and for the future.”