A competitive set might be the most important tool hotel operators have at their disposal, that shows where your hotel stand against your competition on a daily/weekly and monthly basis. It’s used to set rate strategies, develop marketing programs, even to decide what facilities and amenities to offer. It’s a key informant for revenue management, sales & marketing and other department heads use in daily decision making.
The phrase “comp set” may have been derived more from appraisal terminology wherein commercial properties were selected as market rental “comps” to establish market income for a particular subject. When hotels became a more defined vertical within commercial real estate, comp (arable) sets became comp (etitive) sets. Sometimes they are one and the same, but what differentiates a competitor from a comparable? By definition, a comparable is a property that shares similar traits with another whereas a competitor needs to be a viable substitute in the consumers’ mind. The most comparable hotels are those that operate similarly, but the most competitive properties are those that share the largest consumer base who will most readily substitute your hotel for another. The more guests of a property that perceive another as a viable substitute the more competitive the two properties are.
Distance, size, market segment, quality of service, online reputation, and ADR are all necessary factors to consider when deciding your true comp set. Realistically, not many hotels will score A+ in all of the factors. Analyzing each of the factors will, however, help you narrow down your search and minimize the risk of choosing the wrong comp set.
There are basically 3 key areas to focus on when choosing a competitive advantage;
* Quality: You can choose to beat the competition by offering a superior quality than others.
* Price: you can choose to beat the competition by offering the lowest prices, but this strategy is not working all times.
* Service: or you can choose to beat the competition by offering an unforgettable customer service.
Once you understand your true competitors you can better evaluate your performance and, more importantly, better anticipate market actions toward traveling on certain days, within certain seasons and among certain segments as well as market reactions to rate levels and fluctuation. This will allow you to use your performance ranking to not only know where you stand, but more importantly to improve revenue and profitability every day.
The facing dilemma for many hotels nowadays, is how many comp set my hotel should have and where to trace them, let us examine the top three of them
Hotel Performance vs Comp Set
The very well-known report STR, (formerly known as Smith Travel Research) , is an American company that tracks supply and demand data for multiple market sectors, including the global hotel industry. STR provides market share analysis for major hotel chains and brands all over the world.
See which specific properties are within your competition set and how you measure against them in an STR report. Rating factors in an STR report can also tell you where to focus your future hotel marketing efforts. An STR report is updated regularly, so keeping an eye on it can fill you in on new competitors in your competition set and their performance.
Having the relevant data on STR report is vital for any revenue manager to adjust the revenue strategy before it is too late. After all, an increase in RevPar index means nothing if your growth ranked last in your comp-set. Vice-versa, even if you are ranked last in RevPar Index, having a high RevPar Growth Index would indicate that you have the correct strategy in place. All the analysis, however, would be meaningless if you were comparing your property to the wrong competition.
Hotel Pricing strategy vs Comp Set
Out of penetration, indexing and ranking in today’s economy, savvy revenue managers need a more complete picture of how they are positioned their hotels and performing against their competitive set, thus they need to compete aggressively for business against their competitive set to maintain performance and achieve budget targets and to determine their strategies for future dates. In order to do so hotels need competitive intelligence pricing data which has evolved significantly to includes your comp set pricing from branded web sites , GDS, and OTA’s , the reason behind this is many hotels has different rates in each and every selling channels with no consideration of rate parity .
The Business intelligence tools is rapidly evolving from static reports to readily available multidimensional, web-based interactive applications .Today there are products that can help you understand the positioning of your hotel both historically and into the future. The breadth of information goes beyond just competitive rate shopping i.e. Market Vision report , Rategain shopping tools , to include future share of demand i.e. 360 Degree report by TravelClick , and consumer ratings.
The question will be here, how many hotel you are shopping for rates , are they the direct comp set where you have them in STR report , or indirect comp set ??!!, some hotels has different comp set for rate shopping , are you one of them ??!!
Hotel Online Reputation vs Comp Set
Hotel Reputation Management is recognized as the practice of monitoring and influencing the image of your property throughout the web either through social media or OTA’s reviews and ranking. The concept arose within public relations but quickly shifted its focus towards newly emerging review sites, social media and search engine results. People all over the world and from all age groups use to perform online travel research before booking an accommodation. According to TripAdvisor, 93% of the people find reviews important when determining which Hotel they want to stay at. 53% of the people surveyed would not book a Hotel without having a guest opinion about it. Hence, user generated content, as reviews or feedback, grew to a major decision factor for customers.
In the very competitive field of hospitality industry, your online reputation directly affects your sales volume. Thus, effective Hotel Reputation Management can help you to obtain a competitive advantage for your property in terms of revenue management
So, positive feedback from satisfied guests sharing their experiences with your Hotel is very precious. Negative reviews – in contrast, it could potentially sum up to serious revenue losses – in the other hand it should be diminished and used to improve the quality of the Hotel services. For this reason, it is becoming more and more important for you as an hotelier to build up a professional Hotel Reputation Management that keeps tracking your reputation all over the web and in addition to Leverage review analytics to prioritize operational and service enhancements to deliver better guest experiences and exceed expectations.
Being proactive about managing your E-Reputation and knowing what’s being said online is a key component of good Hotel business practices, Reputation Management is Revenue Management.
The goal of a competitor analysis wherever it is from is to develop a profile of the nature of strategy changes each competitor might make, each competitor’s possible response to the range of likely strategic moves other hotels could make, and each competitor’s likely reaction to industry changes and environmental shifts that might take place. Competitive intelligence should have a single-minded objective –to develop the strategies and tactics necessary to transfer market share profitably and consistently from specific competitors to your hotel.
Many hotels operating still under an antiquated business model rely heavily on their STR Comp Set analysis. As a tool and gauge for their performance, the STR comp set is useful for at-the-moment assessment, not as a basis for a pricing or marketing strategy to individual consumers. In the above mentioned examples we examine three areas where you compete with your comp set, pricing, performance, reviews, OTA’s ranking, review and rating, so do you think you need to stick to one comp set and chase them everywhere to measure your hotel performance agonist them, or you expand your comp set in some areas for more enhancement performance, In certain markets with homogenous competitors this strategy may bear fruit. But for most other markets with a diverse range of rate levels, service standards and amenity offerings, hotels would be well served by looking outside of their comp set for sales opportunities, particularly in times of weak demand.
In a competitive market, you need to make sure your hotel stands out from the rest, there are many tools helps your hotel to segment your audience based on guest data so you can personalize your guest communication that will inspire them to select your property, hence you can imagine that 1 point increase in your hotel’s Global Review Index can lead to an increase of up to 1.50% in RevPAR.