Benchmarking lets you peer over the walls of your own property, to uncover strategies, and assess what’s working, and what isn’t, so that you can apply that knowledge to your own commercial playbook.
NB: This is an article from OTA Insight
This is true for all types of hotels; from hotel chains, and luxury five-star hotel brands to serviced boutique apartments. Whether it’s on service, guest experience or a glowing review, hoteliers make decisions and set strategies to win market share by understanding their revenue performance and market potential, in relation to their competition.
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For revenue managers, there has been a real shift in the landscape, making benchmarking an even more important tool to turn to. Faced with more layers of complexity, and fast-moving competitors, it has become more difficult to track how your performance measures up against your market in a way that matches the dynamic nature of the modern hotel industry landscape.
So what does it take to implement effective benchmarking in the current hospitality market, and how can you use benchmarking effectively to optimise your hotel’s commercial strategy to drive growth and profitability?
Leveraging high-quality data for effective hotel benchmarking
At the heart of effective benchmarking is high-quality data. Manual data collection and analysis take too long, especially with smaller teams, as the new normal, and constant pressure on commercial teams to make quick decisions in rapidly changing markets.
Your benchmarking efforts will not be worth the investment in time without a tech solution that extracts and collects the necessary internal and external data, and brings it to the surface in a timely, efficient and comprehensive way (thereby shortening your time-to-insight).
To effectively benchmark and take the correct action, it’s crucial to use performance indicators that have a level of granularity that enables you to drill down into information around your KPIs, then comparing them to your compset. These detailed insights will help you uncover the true benefits of benchmarking and guide your decision-making process.
Typically, when using a benchmarking tool, you might spot an anomaly such as competitor restrictions, sold-out events, unsecured bookings, or promotional campaigns, that would trigger a question and warrant further investigation. You might be examining your performance against other competitors and spot trends on occupancy, ADR or RevPAR over time.
These trends might reveal days or periods of time you would like to dive deeper into in order to understand the factors driving them. By understanding these trends, you can see if they are being led by group bookings, events, channel strategies, or promotions, among other factors.
Additionally, by using market share indices, you can check that you are getting your fair share of the market. These include your MPI (Market Penetration Index), ARI (Average Rate Index) and RGI (Revenue Generation Index). When monitored regularly, these KPIs can be utilised to track your compset’s performance, giving you a better understanding of their long term strategy, and how their actions impact your hotel.
Importantly, these insights provide you with the necessary information to implement your own action plan that will improve your performance, either by establishing your own restrictions, launching promotional campaigns, or adjusting rates to better compete in the market.
