5 Comp-set tips for Independent Hoteliers

19th Apr 2015

Alicia Hoisington FrazierNB: This is an article written By : Alicia Hoisington

Competitive sets can be useful tools to help drive profits, but it’s important to think carefully about the hotels you select.

“Oversight of an independent hotel or resort does require an exceptionally keen eye on what the competition is doing and where they are positioned,” said Ted Davis, chief sales and marketing officer for Benchmark Hospitality International, via email. “As an independent hotel management company, at Benchmark we devote a significant amount of time and resources to evaluating how well we are executing and performing against our competition.”

Here are five tips, culled from interviews with independent hoteliers, to help ensure comp-set success.

Start with the benefits your target customers seek

This is where Mark van Hartesvelt, partner at the Hotel Figueroa in Los Angeles, begins.

“Is it experience or frequent traveler reward points, or a great restaurant to entertain or a spa for a weekend getaway?” he wrote via email. “Then we look at each of the competitors who offer those benefits, or features if it is something like a spa.”

The team creates a SWOT matrix (which stands for strengths, weaknesses, opportunities and threats) on the targeted segments, determining where potential guests go now and if or how the team has created or can create competitive advantages by examining the hotels those guests patronize.

Target audiences are divided into sub-market segments, van Hartesvelt said. Then the team determines which competitors are the most viable alternatives to each sub-segment versus the hotel.

For example, he said group business will be divided into two sub-segments: small corporate meetings (25 to 75 attendees) and citywide conventions.

“We are located adjacent to the LA Convention Center, so we actively compete for most citywide conventions. Our primary competitors are the larger hotels located within a one-block radius of the convention center. They are mostly large branded hotels, plus one independent hotel,” he said.

“When we look at small meetings, none of the large branded hotels are primary competitors to us on this segment. The needs of this segment are different from the needs of the citywide convention market, so our sales pitch is different and our competitors are different,” he added.

Figure out the right number of comp hotels for you

Nick Ivezaj, GM of the 232-room Hotel Mela in New York City, said his comp sets usually have between five and six hotels. He said it’s important to get a true feel for the market, and having the right amount of hotels in a comp set can help accomplish that, adding that three hotels—the minimum number required—is “too small.”

Van Hartesvelt said his comp sets usually have five to six hotels as well.

Benchmark’s Davis said that although the number of hotels in a comp set will vary by property, destination and the number hotels in a market, the company aims for a good cross-representation. This means that the comp sets can include as few as five hotels or as many as eight or nine.

Invest in more than one comp set

In addition to the number of hotels, the number of comp sets also can be important for hoteliers to get the whole picture.

Van Hartesvelt said the Hotel Figueroa has between three and five comp sets.

“We look at multiple comp sets because, as mentioned, the primary competition for the larger segments often changes based upon the needs or benefits sought of the segment,” he said.

“We look at who we compete with now (pre-renovation) as well as who we think we will compete with post-renovation,” he said. (The hotel’s renovation plans are going to the city for approval this summer.)

Davis said Benchmark, which counts approximately 28 independent properties in its portfolio, occasionally will have more than one comp set for a property.

“It can be for a number of reasons, including having a secondary aspirational comp set to monitor,” he said. “For example, if a property is preparing for a major renovation and re-positioning that will allow it to compete at a much higher level, we want to be out front with an understanding of how to ramp up against our new competition and how to best be prepared for success in the future.”

Select the right hotels to compete with

Davis said determining comp sets varies by hotel, destination and trending market conditions.

“We always try to select a good cross-representation of properties with which we compete or should be competing with,” he said. “It includes a comprehensive examination of the market mix, rates and occupancy, which can often include both independent and flagged hotels.”

He said usually comp-set hotels are local in nature, but sometimes the team includes comparable hotels with similar and desired clientele located in different destinations.

“For example, some of our properties are dedicated conference centers that have a high demand from a specific profile of group business, which may require comparison to a hotel conference center in a different destination,” he said.

Ivezaj said it’s critical to select hotels that offer a similar product, amenities, service level and have a similar guest demographic.

“We compare primarily to boutique and lifestyle hotels. Not necessarily independents only,” van Hartesvelt said. For example, brands such as Ace, Standard and Kimpton are usually direct competitors, while Marriott International, Starwood Hotels & Resorts Worldwide and InterContinental Hotels Group’s brands are not.

Ask the right questions

Van Hartesvelt said there are many questions independent hoteliers can ask when determining comp sets.

For instance: Who are your target customers’ legitimate alternatives to choosing your hotel?

“Ask it by market segment. Boutique and independent hotels are attractive to certain types of customers,” he said. “Who else are those customers considering when they are looking for lodging? What criteria are they using when making their lodging choice? Who are the alternatives to your hotel for each customer segment?

“Those hotels are you competitors. Watch them.”

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