In the dynamic world of hospitality, where every decision influences the bottom line, comp sets – or competitor sets – play a pivotal role in benchmarking and profit intelligence.
NB: This is an article from HotStats
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The right comp set doesn’t just offer data; it delivers context, enabling hotel operators to make informed decisions that optimize operations and boost profitability.
Why Comp Sets Matter
At its core, a comp set is a curated group of hotels considered direct competitors to your property. The value of benchmarking hinges on selecting the right properties for comparison. A well-defined comp set:
- Reveals actionable insights: Pinpoints areas where your hotel excels or lags behind.
- Enhances strategic decisions: Provides clarity on pricing, cost management, and resource allocation.
- Boosts profitability: Uncovers opportunities to optimize revenue and reduce expenses.
Without the right comp set, data can mislead rather than guide. For instance, comparing a boutique property to a luxury resort in a different market segment would yield skewed insights, hindering strategic growth.
The Dimensions of an Effective Comp Set
Building a comp set involves balancing two critical dimensions: similarity and competition. These dimensions ensure that comparisons are both relevant and meaningful.
Similarity: Finding Comparable Hotels
The foundation of any comp set is similarity. Hotels in the same comp set should share key characteristics, such as:
- Capacity: Number of rooms and meeting spaces.
- Offerings: F&B options, amenities, and facilities.
- Location: Geographic proximity and market segment.
- Type and class: Star rating, pricing strategy, and operational focus.
For example, if your hotel features a renowned spa, including properties with similar wellness offerings provides actionable insights. When perfect matches aren’t available, flexibility is crucial – consider secondary sets for specialized attributes like banquet revenues or F&B performance.
Competition: Seeing Through the Guest’s Perspective
Similarity defines operational traits, but competition captures market dynamics. Competition is fluid, influenced by:
- Seasonality: A beachfront resort might compete with similar properties in summer but shift focus to urban hotels during the off-season.
- Guest segmentation: Properties targeting business travelers compete differently than those attracting leisure guests.
For example, during a city’s conference season, your hotel might compete with larger business-oriented properties. Off-season, you might focus on boutique competitors catering to transient leisure travelers.
Internal vs. External Comp Sets
A robust benchmarking strategy often involves both internal and external comp sets:
- Internal Comp Sets: Compare properties within your portfolio. For instance, analyzing payroll costs across your brand’s hotels can uncover best practices to share organization-wide.
- External Comp Sets: Benchmark against properties outside your ownership. This approach provides insight into market positioning and highlights competitive advantages or deficiencies.
Best Practices for Comp Set Formation
Creating an effective comp set isn’t a one-time task. Market conditions, renovations, and rebranding efforts continuously reshape the competitive landscape. Regular reassessment ensures relevance and accuracy.
