Like any other business, hoteliers need to keep an eye on their competitor set if they want to make sure they’re keeping up with them. The aim is not to follow your competitors at every turn, but to monitor them to ensure you aren’t underpricing or overpricing your rooms.
Comparing your own position to the market is part of the foundation of developing a competitive pricing strategy. To benchmark your hotel’s position, it is advisable to use the following KPIs;
If you score higher than 100, it means your hotel is receiving more than its fair share and is outperforming its market / competitive set. A strong RGI score is considered the most important indicator, as it combines both occupancy and ADR. Choosing which hotels to include in your compset is therefore a balancing act, as revenue managers may have different compset goals than hotel owners, who keep the RGI score in mind.
How do you identify who in your market you’re competing with? Do you rely on the compset created by your predecessor 5 years ago? Do you take the 5 hotels located closest to your own?
The basic identifier of a hotel that may be part of your competitive set is: If a traveller would consider another hotel instead of your hotel when visiting a city or location. There are some additional factors to consider when picking your competitive set:
A good competitive set should only include about 5 to 10 hotels. Any more and it becomes a challenge to draw actionable conclusions from your price comparison analysis. In reality, finding 5 competitors who are exactly on the same level of product and service quality in your area is nearly impossible.
Having a secondary competitive set comes in handy in this case. Consider whether any of these types of compsets are relevant for your hotel:
The internet has made markets and competition exponentially more dynamic. Travellers are comparing different hotels online before making a reservation, facilitated by the OTAs and various metasearch engines. Hotel brands are no longer only competing with other brands, but need to take a plethora of other competitors in mind.
Tracking the right competitors and using dynamic competitive sets has therefore become crucial. Plan in a review session of your competitive set(s) twice a year, and don’t be afraid to change them. With a rateshopping tool like Rate Insight that you can change your own competitive set to keep up with a dynamically changing market.
With most hoteliers now competing for the same leisure customer and competition evolving as markets reopen, now is the time to step away from your traditional static compset of five to ten competitors. OTA Insight's Smart Compset feature within Market Insight is an industry-first, dynamic competitor set that automatically changes along with market shifts, this enables a realistic and more relevant analysis of the properties your guests are actually comparing you to.
Having a greater understanding of the bigger picture and how you fit in among the competition empowers you to adapt your strategy, maintain ideal positioning and find short, mid and long-term revenue opportunities.
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