Most hoteliers would like to think they know who their competition is today.
NB: This is an article from IDeaS
After all, hoteliers spend a great deal of time, expense and effort trying to understand what markets their competition is targeting and how they attract business. But things have obviously changed though over the past two years.
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A hotel that you used to compete with for mid-week business guests might now have pivoted to targeting upmarket family city-breaks—or may have even closed. And a luxury hotel that you never considered a threat might now be offering discounted rates to fill rooms and is attracting some of your more aspirational clientele.
In this upended environment it is important that hotels undertake an urgent competitor set review to understand exactly who your competition is today.
How has your competitive field changed?
To understand where your property sits in its competitive environment, hoteliers need to understand who their guest is: where are they coming from, how long are they staying for, and what is attracting them to a property? After all, business and leisure travel look completely different to before.
Have you seen an uptick in domestic travellers who are doing more travel by car than by airplane? How about staycations for guests in town looking for a change in scenery? Business travel doesn’t look like it used to, leading to shorter lengths of stay. Leisure travel has changed as well. There are spontaneous, last-minute trips with shorter booking windows as guests take advantage of final hour deals.
Hotels have generally determined their competitors in proximity to their property. However, as international travel reopens and guests consider leisure options based more on the style of travel (beach resort or urban experience) across a whole region rather than single destination, the property next to you is not necessarily your direct competitor.
In the case of resorts, it may be properties in Phuket, Bali or the Whitsundays are all competing for the same guests. A true competitor is a property that competes with you in most of the segments which are generating demand for your property. This might have changed drastically with the pandemic and will change again once travel reopens, and recovery begins.
Hotel managers should consider the best alternative property to yours from a guest perspective. You should have a hotel in your competitor set that your guests could turn to if you have no rooms available to meet their needs. The same goes for the opposite. Partner with other hotels that can direct guests to you when they don’t have available inventory to meet the guest’s preferences.
Defining a proper competitor set has always been vital to determine price positioning. Keep an eye on your competitors’ pricing. Look out for hotels making pricing actions, like increasing their corporate rate during the week or leisure rate on the weekends, that would force you to respond. It’s important to know how your own pricing compares, and which hotels near you are also forced to respond when you make a pricing action.
In a disrupted market you must compete against yourself
While understanding the competition is crucial, it’s also important to remember that under the current circumstances, your biggest competitor is yourself. To improve upon past performance, hotels should start competing with themselves to define strategies and commercial success. Benchmark and set areas for improvement to over-achieve where you were at the same time last year, or last month:
Price
Use holistic data insights to see if your pricing makes sense not only against your current competitor set but also your future competitor set as demand changes with travel reopening. This will enable you to forecast realistic future goals that will grow revenues over time.
Product
The best client service is no match for an outdated product. You can have the friendliest front desk, most resourceful concierge, and an eager sales team, but without a polished product, your hotel will struggle. Not every hotel will be a five-diamond property, and not every hotel should even attempt to strive for that. Each hotel has its own specialty, so it’s up to each hotel to be the best in its own category.
Perception
Is the price you’re giving the guest in line with its value perception? As widespread vaccination efforts continue, guests will be more health – and safety – conscious than ever before. Clarify what reassurance, if any, guests will have that the hotel is clean and safe. What measures are being taken to ensure the impact from COVID-19 is kept to a minimum when guests choose a hotel?
Experience
Your hotel should provide guests a unique and memorable experience. It’s time to get creative. If you have a pet-friendly hotel, a furry hotel mascot with paws and a wagging tail may be a way to advertise that.
Whether your hotel is in a major city or small town, you can partner with local shops to create pop-up stores within your hotel and bring artists in to create murals or bespoke pieces of art unique to your property. These activities will help connect guests with the local destination and offer up social media opportunities to help with organic hotel promotion.
Distribution
It’s not just about making sure you have a friendly partnership with OTAs and travel agencies today. Don’t overlook offline distribution channels, especially during these unprecedented times when customers might prefer to establish direct contact with you for reassurance of the hotel’s safety.
Monitor the competitive environment, plan for the long term
Identifying who your guests are, who the competition is and how your property is performing relative to other hotels in the market is a real challenge today. Competitor monitoring and benchmarking (even against yourself!) is not a one-off activity but an ongoing process that will help set a hotel’s long-term business strategy. Through knowing what your competitors are doing and constantly improving your property’s own offering and performance, your hotel is well placed to grow revenues and grow market share in 2022.
