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Are Comp Sets Still Relevant in Revenue Management Today?

Are Comp Sets Still Relevant in Revenue Management Today?

At the fifth annual Revenue Strategy Summit, Kalibri Labs CEO and co-founder Cindy Estis Green posed a question: How much do comp sets matter anymore?

“I’ve had quite a few owners come to me and say, ‘It’s just not working anymore to look at some of our traditional RevPAR metrics because comp sets don’t even make sense anymore,’” she said, adding that the merger between Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. complicated matters—many traditional comp sets had to be changed to make them legal comp sets, and as a result, hotels were added to comp sets that didn’t necessarily make sense.

“It got me thinking about what needed to be looked at in terms of some of these metrics,” she explained. “Beyond net revenue, do comp sets make sense anymore? In this age of big data, can we do something a little more effective and customized for an individual hotel?”

The CEO – along with Mark Lomanno, a partner and senior advisor at Kalibri Labs as well as the inventor of comp sets – came up with a list of problems with competitive sets:

They were created at a time when there were few intermediaries and customer acquisition costs ran between 5-7%; they measure top line revenue performance based on the average results of a group of competitors; comp sets are chosen based on proximity and hotel collected ADR, but more granular data points are not available; averages are calculated on 100% of the business of four to six competitors and there’s no ability to filter by customer segment or week part; mergers create anti-trust issues; and performance tests in management agreements dictate creation of a comp set, which results in a “box check” attitude.

Green noted that this has created a generation of C students, and it’s been acceptable to be average. “Can we do better than that? We’re in the digital age and we’re competing with A-plus technology,” she said. “Benchmarking our performance is a really important factor because the way you look at how you’re performing and compare yourselves to others really drives how you spend your resources, how it drives funding for additional projects—it drives a lot of decisions.”

Read rest of the article at HotelBusiness

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