How should you decide your hotel's comp set?
One of the most important jobs for any hotelier to ensure you are keeping up with your competition is selecting the right competitors. Not only to be aware of what they might be doing differently but also to ensure you aren’t underpricing or overpricing your rooms. Understanding your position in the market and monitoring your comp-set strategy allows you to make informed decisions when working out your pricing strategy.
Identifying your competition
At Fornova, we know the importance of deciding your Comp-set and identifying your direct competitors. However, it’s not always the easiest task choosing which hotels to include, and defining who you are competing with. We spoke to Berengere Brohan, Revenue Optimisation expert and Managing Director at My O.C about the best ways to boost and enhance your property's competitive analysis. We have also put together the parameters to take into account when deciding your comp-set based on what we see our customers doing.
Firstly, we suggest looking at the type of accommodation, paying attention to what the hotel offers and if a stay at your hotel would be a similar experience for the guest. Is it similar in terms of size? Quality of service? Star rating? As well as this, compare your facilities; is your property primarily leisure, business, or both and what are they offering?
Another important factor when it comes to identifying your competitors and looking into your competitor analysis is your online reputation. Your online reputation metrics are key on platforms such as OTAs and MSEs in terms of decision-making by travelers. So, by reviewing your online reputation compared to your competitors you will be able to make more informed decisions.
Understanding your guests
Your hotel might cater to different types of guests throughout the week, therefore we recommend thinking about your weekend compared to your weekday guests. On weekdays, if you find you have more corporate guests, compare yourself to hotels that usually have a lot of corporate guests, and then similarly, at the weekend if you have more leisure guests, focus on hotels that have more leisure guests.
Another thing to take into consideration is to what extent Covid-19 has affected your comp set. We asked Berengere her thoughts on how Covid-19 might affect your comp-set lists and what decisions to make as a result. She explained that not only may your usual competitors be closed, but travelers might now have different criteria when booking hotels, and may be looking for different experiences, so you might be seeing different customer profiles. For example, customers who haven't traveled for nearly a year might be concerned now more than ever about quality over quantity, and therefore might be looking for more and spending more. As well as this, you can ask yourself if your hotel, who once attracted mostly business travelers, now is attracting more domestic leisure travelers and what this means when creating your competitive set analysis.
The same can be said for seasons. While in the summer season you may find you have lots of leisure travelers, it may be the case that in the winter season your hotel is used more for business travel. With this in mind, you can split your comp-set based on different seasons.
Finally, be aspirational. If you are a 4* hotel, monitor the rates of local 3* ensuring your rates are higher as well as monitoring the rates of local 5*s to ensure your prices are lower. With this being said, if you are planning on increasing the value of your property by improving the rooms or the facilities, start comparing your prices to 5* and think about how you can compete in that market.
So how often should you change your comp set?
According to Berengere, there are various reasons and triggers for changing your comp set. She explains that while it is still important to have a stable and consistent comp set to keep a steady reliable understanding of your competition and for long-term reviews, it is important to stay on top of the market. By reviewing your comp set frequently as part of your day-to-day operations means you are staying on top of any new hotels opening, competitors closing or a hotel perhaps refurbishing and as a result becoming more of a competition to you.
Overall, there is no perfect comp-set, but instead look at what your goals are, and what you want to get from them, says Berengere as you might have to define different comp-sets for different types of customers. FornovaCI allows for multiple comp-sets, giving you a better understanding of how your hotel is performing against the competition, so you can shape your pricing strategy using comprehensive comp-set data. Knowing the trends and strategies of the pricing of your competition will help you define your own strategy and review what seems to be working the best and potentially may give you some new ideas on what to do in the future. To find out more about FornovaCI, contact us today!