With so many factors impacting revenue management, the key is understanding how you can optimise and leverage them.
A good competitive set should have no more than 10 hotels, to make it easier to draw accurate conclusions from your price comparison analysis. Even with the factors above it can be hard to find even five competitors who are on exactly the same level of comparison within your area. This makes it useful to have a secondary competitive set such as the following:
Seasonal: Demand can vary across the year as well as different traveller segments. So, rather than putting your high season and low season compset into one, consider splitting them out.
Aspirational: Whether the aspirational second compset is used by you, or it is an often requested point of analysis by your General Managers and Owners for RGI score purposes, it’s never a bad idea to aim high. If you’re a 4-star hotel planning renovations or a full rebranding of your image, you’ll already want to compare your prices to future competitors as part of the repositioning process.
Reverse: You are selecting hotels to be in your competitive set based on a variety of reasons, but it may be relevant to look at the properties who consider your hotel as one of their benchmarked competitors. After all, your strategic rate decisions are impacting these competitors directly. Ask your benchmarking partners if they can give you access to your reverse competitive sets.
A final consideration is having a more dynamic approach to building competitive sets. With travellers comparing different hotels online before making a reservation, a task that is increasingly done via OTAs and metasearch, hotels are not only competing with each other, but with these third parties too. Plan a review of your competitive sets twice a year and don’t be afraid to change them. Make things easier by using a rate shopping tool that allows you to change your own competitive set.