Many properties, especially independent and small boutique hotels, have no ideas how to look at their competitors, they raise a few questions, they are not sure whom they need to recognise as competitors, if by location, size or style, brands, chains or independent…and if it is really necessary to “waste” so much time on it. Yes, it is important to have a significant understanding of the comp set, it is one of the elements that helps to create a better strategy.
In this article HotelNewsNow offers a very clear description of how to understand the competitors’ list, how many different sets of competitors the hotel can choose from and how to benchmark them.
Here are a few points to refine the comp set:
- Understand comp set composition – the average suggested is five or six properties. I personally worked most of the times with eight, depending on the area, at list for the primary list.
- Consider multiple sets – a second or even a third one can be added:
- Regional – when the typology of our property can really compete with the entire region. E.g. I used to work for a property located at 1500m and nothing else around, so we used to look into other similar properties over an area over 4,000kmq.
- Local – hotels that are not necessary of the same style.
- Aspirational – hotels we would like to become, maybe after a renovation.
- Niche – hotels that are not in the same location, but of similar characteristics.
- Seasonal – properties open during the same time.
- Group and transient mix – for properties with a great group business, it is important to focus on what the competition is doing exclusively on the group segments.
- Understand how to benchmark your comp set – STR can help on grading the properties to understand which category is better for the hotel:
[…]The grade is based on nine criteria:
- Comp set average daily rate spread
- Class variance
- Nameback percentage
- Occupancy standard deviation
- ADR standard deviation
- Revenue per available room standard deviation
- Average distance
- Room count variance
- Recognize opportunities to improve – it is important to keep an eye on the comp set and to update it, if new properties are added in the area or of a similar category, if some hotels have been refurbished or have been going through a particular change. Waiting years before changing the comp set does not give us the right information.
- Use all available tools – the right comp set is a tool and if it is not up-to-date it will bring no help to our strategy.