Useful Parameters for Identifying Your Hotel's Comp Set
The current oversupply of hotel rooms forces us to stand out from competitors within our market.
Competitive analysis is, therefore, an important requirement for identifying the Competitive Set (Comp Set) of your hotel.
Through data extraction and analysis, we obtain, a list of similar hotels who directly compete with the hotel that we are analyzing. In order for us not to be left behind, we need to propose an action plan for improvement.
New travelers do not base their booking decisions on traditional methods, since diversity now encourages specialization and experience. This is generally because the hospitality industry depends on the specific needs and desires of each traveler, both in time and place. We must first study the market so that the information gathered can offer us alternatives to identifying the main selection criteria for each selected segment. Then we can assess the strengths and weaknesses of certain objective and subjective concepts. The Competitive Set can become so representative and of great importance that it can largely determine the development of marketing strategies, just as the services and facilities that the hotel plans to use.
We must define competitors as those hotels that offer a product equivalent to the one being studied and with characteristics similar to those of such hotel. As an example, we could use the comparison between a two-star hotel and aparthotels in similar locations. Conversely, we should never compare local hostels with rural houses since the type of client and their needs are totally different. An Airbnb apartment whose segmentation focuses on cultural tourism travelers in large cities should not be considered a direct competititor, if the type of accommodation we analyze is specialized in business tourism and located on the outskirts of the city.
To compare hotel reference standards or any other type of accommodation, and be able to establish a relationship, we can consider the following factors:
Location. Travelers that book their lodging based on location, either out of convenience or due to limited access to transportation. This will be a direct conditioning factor when choosing hotels outside of the city center.
Capacity. Accommodation capacity will limit or enable access to certain markets and products.
Room typology. The typology of the room will greatly condition the target market or segment on which we are focusing.
Services offered. The added value of the services provided by hotels will be key to appealing to customers who base their decision making on specific complementary offers.
Room service. Customers looking for specific hotel room services will be conditioned by hotels that either offer those services or not.
Hotel and room facilities. Hotels focused on certain types of customers must have the facilities and rooms adapted to their needs.
Client type / Segmentation. The specialization required by the market forces us in certain cases to focus on the hotel´s defined segments. In the case that our competitors’ market segments are similar to ours, it is advisable to identify these hotels and analyze their proposal.
Sales channels. If the product / service matches are also transferred to sales channels, it is necessary to identify our competitors ‘position and try to differentiate ourselves within the same channel. There is also the possibility of finding new niches from different channels.
Marketing and sales strategy. Analyze what actions our potential competitors perform and see to what extent the marketing strategies can overlap.
Online reputation. Online reputation metrics are one of the key decision factors on platforms such as Online Travel Agencies (OTAs) or metasearch engines. Getting a good score is essential for entering the competition over the score/review index that has already been defined by former travelers.
Hotel Ratings. Hotel ratings lose strength online for other than less bureaucratic reasons. Despite this, the classification of hotels is a benchmark for comparing and determining the type of hotel that competes in your same “league.”
Price strategy. Pricing is the key factor for a competitive advantage. Keeping track of this variable, just as it is done with ADR, in addition to comparing prices with your competitors would be ideal when determining if hotel rooms are being sold at a competitive price.
Once you have compiled a list of hotels similar to yours, and have analyzed them using the parameters discussed above, you can start making decisions. You can now identify which factors are improvable when considering direct competitors. On the other hand, when considering your Hotel´s Competitive Set you must consider market behavior from an integral perspective, as well as demand generators on which the hospitality industry is based on.