A good primary competitivie set (compset) typically consists of 5 to 10 competitor hotels. Tracking too many competitors can make it harder to draw the right conclusions, so focus on your main rivals. However, in some cases it can be valuable to create a secondary and tertiary compset.
NB: This is an article from Lighthouse
Subscribe to our weekly newsletter and stay up to date
That way, you can really compare apples to apples by grouping competitors based on seasonality or niche target audience.
Key factors in identifying your hotel competitive set
A good way to find important criteria for identifying your hotel competitive set is to think about the filters that travelers are setting on booking platforms like Booking.com, Expedia or Google Hotel Search: radius, price range, accommodation type, star rating, swimming pool or spa facilities, restaurant …
Give it a try: go to the Google Lodging module or a large, global OTA (Online Travel Agency) and set the main search filters to match your accommodation’s characteristics. The properties that appear in the search results give you a good indication of who your main competitors will be.
These are the main criteria you should take into account when identifying your hotel competitors:
- Location: Hotels in the same city, neighborhood or area are likely direct competitors, as travelers view location as one of the most important criteria. The exact location isn’t necessarily what matters most. Rather, proximity to major tourist attractions and transportation hubs can be a more important deciding factor. The radius in which to look for competitors can also vary depending on your destination (e.g., city center, coast or countryside).
- Type of accommodation: The type and size of the accommodation can often be a determining factor. A small bed and breakfast won’t typically compete with a 100-room chain hotel, as they cater to different traveler preferences and expectations. However, the lines between small boutique hotels, B&Bs and vacation rentals are becoming increasingly blurred, with guests prioritizing other criteria like unique experiences.
- Price range: Price remains a key factor in travelers’ booking decisions, especially given current inflation. Guests are increasingly budget-conscious, wanting value for money. Hotels with similar rates for rooms and services are often competing for the same customer segment.
- Rating: Online reviews heavily influence guests’ choice of accommodation. Travelers often even filter their searches by setting a minimum review score (e.g., 4 stars and up). If your hotel has a 4-star rating, chances are high you won’t compete directly with a 3-star rated hotel.
- Online exposure: Does the hotel have an online presence that is similar to yours or possibly stronger? If a hotel is hard to find on booking platforms, it’s likely not attracting many bookings and therefore not a strong competitor. The number of reviews is often a good indicator of this, as well as presence on metasearch and ranking on OTAs.
