A competitive set might be the most important tool hotel operators have at their disposal, that shows where your hotel stand against your competition on a daily/weekly and monthly basis.
It’s used to set rate strategies, develop marketing programs, even to decide what facilities and amenities to offer. It’s a key informant for revenue management, sales & marketing and other department heads use in daily decision making.
The phrase “comp set” may have been derived more from appraisal terminology wherein commercial properties were selected as market rental “comps” to establish market income for a particular subject.
When hotels became a more defined vertical within commercial real estate, comparable sets became competitive sets.
Sometimes they are one and the same, but what differentiates a competitor from a comparable?
By definition, a comparable is a property that shares similar traits with another whereas a competitor needs to be a viable substitute in the consumers’ mind. The most comparable hotels are those that operate similarly, but the most competitive properties are those that share the largest consumer base who will most readily substitute your hotel for another.
The more guests of a property that perceive another as a viable substitute the more competitive the two properties are.
Distance, size, market segment, quality of service, online reputation, and ADR are all necessary factors to consider when deciding your true competitive set. Realistically, not many hotels will score A+ in all of the factors. Analyzing each of the factors will, however, help you narrow down your search and minimize the risk of choosing the wrong comp set.
There are basically 3 key areas to focus on when choosing a competitive advantage:
- Quality: You can choose to beat the competition by offering a superior quality than others.
- Price: you can choose to beat the competition by offering the lowest prices, but this strategy is not working all times.
- Service: or you can choose to beat the competition by offering an unforgettable customer service.
Once you understand your true competitors you can better evaluate your performance and, more importantly, better anticipate market actions toward traveling on certain days, within certain seasons and among certain segments as well as market reactions to rate levels and fluctuation.