Part 3 of 4
Hotels Choose your Competitive Set Wisely
Selecting competitive set wisely is important for any hotelier. However, with the ease of search for the consumer, the obvious comp set is not always the case. In part 1 and part 2 of this series, we have read about How Modern Revenue Managers Bid Adieu to Traditional Revenue Managers with Evolving Role of Hotel Revenue Managers and Moving The Technology Way… Are You Ready Hoteliers.
In this part, let us talk about the importance of choosing your comp set wisely.
Comp sets have become more dynamic now
Hotels should consider all relevant factors including location, hotel size, star rating, published room rates, hotel type and brand affiliation as well as other not so obvious factors such as hotel guest sentiment, hotel facilities, and amenities, access to transportation, seasonality and mix of business.
The three most common causes for competitive set selections include brand building, market positioning and performance bench-marking. Picking a fitting competitive set and evaluating this selection over time as market conditions change is a worthwhile undertaking.
This should be done minimally 2 times per year where a hotel monitors fluctuation in the comp sets by identifying other hotels competing most directly for business based on the criteria mentioned above. This provides the chance to observe fluctuations in comp set, indicating that when market dynamics change, so the hotel’s comp set should change too.
Shared below are the few pointers to keep in mind, while selecting your competitive set:
Market segment: It is very important that hoteliers understand the business mix of their competitor to help them better understand which hotels are similar to their own and also help hotels identify where potential advantages may exist.
Market size: It is a very critical job again and yet very important to decide your competition size (number). For price positioning and competitive price analysis, it is suggested to track more than just direct competitors, thus the number of properties in your comp-set needs to be carefully chosen. Following this, hotels are able to better understand market trends and, when required take appropriate action to moderate or control those trends to their own lead.
Location factor: Proximity and location play an important role in encouraging more bookings. In addition, with the easy availability of internet, travellers now have easy access to details like location, room price, guest reviews, etc. broadening their criteria for search and booking options. Interestingly, at times, other factors such as online reputation & reviews, aesthetics, amenities and services can reduce the impact that mere location can have on guest selection.
When choosing your comp-set, do consider hotels in your not so near vicinity as well.
Competitive set selection should be based on several factors – all of which can be considered to varying degrees, depending on the specifics of any given situation. In the case of convention centre property, a relevant competitor may be in another city or even another region.
Guest sentiment: Online reviews are a very valuable source of information for both, you and about your competitors.
Spending time to read the guest reviews posted on popular OTA and review sites will provide actionable insights into the type of guests that are staying at various properties and also divulge what those guests are saying about their experiences (both positive and negative) at the competing properties.
While doing your hotel guest survey, take notice of properties that consistently appear amongst the top of the natural display order on various OTA and Metasearch sites.
Visit your competitors and potential competitors: Create a SWOT analysis of your comp set by physically visiting them and evaluating their service, amenities, location, online reviews, etc. However, you need to evaluate them from the unbiased approach and a fresh set of eyes. You may discover some new additions to your list of competitors and find some of them irrelevant in your current list.
Average rate/Price range theory: This is another very common and essential basis for choosing your comp set.
For most guests, their decision to book is based on a specific price range including a ceiling price. The guest will not prefer to pay above the ceiling price if they have a sound option available in the same location. This guest price range can change over time, based on economic circumstances and also guest’s taste preferences may change.
We cannot ignore the role of brand value, star rating and guest reviews in influencing whether or not a particular price point is acceptable to guest for a specific property.
Considering the fact that properties in a given vicinity are not likely to be uniform with respect to their size & segment, channel mix, room type & room mix, sales tactic, price positioning and management effectiveness.
Probably this will answer questions like why a mid-level hotel’s ADR might consistently outperform a full-service property in the same market.
Assessing the competitive strength and your own: Being aware of the positives about your comp set is an advantage. It helps you compare your strengths and weaknesses against your competitors. However, when evaluating attributes, place them by weighing them in relation to the influence they may have in attracting and retaining certain customer segments.
This practice above will enable you to eliminate or include hotels for consideration as you select your primary competitive set as well as develop secondary or dynamic competitive sets.
Stay tuned for the last part of this series, where we will talk about How Hoteliers Should Leverage Big data.