Leveraging hotel competitive sets for a strategic success

Comparing apples with oranges expresses the idea of how we make choices about things which are similar in some ways, but different in others. The hospitality industry is based heavily on the choices that guests make, and yet they often have to compare ‘apples with oranges’ when deciding which hotel to stay in. There are numerous factors that determine choice of hotel, and of course not all hotels are equal - how could they be? Even in a narrow sector such as Boutique hotels, or Budget hotels, there are many variations influencing the decision of guests to book a particular hotel. 

Hoteliers can have a significant effect on guest choice by creating a Hotel Competitive Set - or compset - which grades their own establishment against a group of local and directly competing hotels. Knowing how your own hotel stacks up in the compset means better marketing initiatives, a more attractive offering and keener pricing, which in turn helps guests choose between ‘apples and apples’, and gives the hotel a sharper competitive edge.

Putting together a hotel compset

To create a compset ensure that you know the four or five most direct competitors in your locale. If yours is a small hotel, don’t bother including the grand luxury hotel down the road because it’s not in direct competition with you. Think instead about common features and facilities, and create a scoresheet for each hotel. You can decide on the scaling and whether scores are out of ten, or a hundred,. Look at attributes including:

• Location, location: Yes, the other hotels in the compset will be in your area otherwise you wouldn’t include them as competitors, but how do they score? They could be right by the beach, nearer to the airport, or in the buzzing city centre. Score what you believe to be the most important attributes in relation to your own hotel.
  
  
• Target guests: Naturally different locations appeal to different demographics, so you should be really sure about the type of guest you are trying to attract. Equally important is to gain an understanding of the guests going to the other hotels in your compset. Think about what drives them and what are the most important criteria they judge a hotel by. Defining and targeting guests always helps clarify the goals of a hotel.
  
  
• Evaluate facilities: What’s being offered by the other hotels in the compset? Are there meeting rooms, or spa facilities, or fine dining? This also relates to the perceived priorities of the demographic (for instance family-oriented hotels don’t need meeting rooms). Rate each facility on its suitability for the target audience, and how modern or innovative it is.
  
  
• Reputation assessment: The reputation and branding of a hotel demonstrates its core values. Assessing reputation can be surprisingly easy, thanks to the mass of reviews which guests leave on social media and OTA  sites. Do the hotel’s brand values match what people are saying about it? Assessing if a competitor ‘walks the talk’ is important. Equally, your hotel must be active on social media and curate guest comments for marketing and brand enhancement purposes.
  
  
• Analyse extras: Are there special activities or attitudes which some hotels in the compset show? For example, the awareness and practice of sustainability issues which many guests increasingly look for and value. Green hotels which pay attention to energy saving, recycling and waste reduction are riding an ever more important wave. As with all the other areas that you investigate for the compset, look at what your competitors say about themselves, and then give it a score.
  
  
• Price comparison: However beautiful or highly featured a hotel is, price plays an important part in guests making a booking, and the compset will show where your hotel is in the rack rate stakes, across different room types at different times of the year. Gather the data carefully, through the websites, OTAs, and by ‘mystery shopping’ for rates.

Hotel competitive set analysis

Assembling the data for a compset can start by simply turning detective and visiting competitor hotels - or having a member of your staff do so. Spend a little time in the coffee shop or reception area and simply observe how well the place functions. What is the general state of the building, how do staff deal with guests and what do service levels seem like? That’s the onsite investigation, which is subjective, but more objective data can be obtained by calling as a prospective guest to the hotels in your compset to do some ‘rate shopping’, and of course by checking their websites. 

Every granular piece of data can be added to the compset for later comparison and analysis. It’s important to mention here that a compset is not a ‘do it once then file and forget it’ activity. You are part of a constantly evolving and dynamic market where rates change with demand, and just as you are trying to find the competitive edge, so too are the other hotels in your compset. The needs of guests also change, so the compset has to be regularly reviewed and revised.

Looking to the long term compset goals

The importance of the compset that you are developing is that it allows you to benchmark against direct competitors at a number of important points:

• Market position: Is your hotel positioned correctly in the market, and targeted at the right demographic? Do you need to upscale some services or facilities, or tailor your offering for specific types of guest? Crucially, what answers to these questions are your competitors finding, and is their strategy potentially better or worse than yours?
  
  
• Marketing plans: Are competitor hotels doing anything innovative or unusual in the way of marketing or sales - for example, seasonal offers or events, and special deals or discounts? A new initiative from a competitor could be rolled out at any time, so keep a constant watching brief to see what’s being tried. Naturally this means your hotel must also be proactive with offers, deals and ‘specials’ that attract guests.
  
  
• Strategic thinking: While it’s important to respond tactically to what the hotels in your compset are doing, the long term value of the exercise is in strategic thinking which sets goals over time. Knowing what is happening now in the local market helps indicate future trends and opens the way for ongoing Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis.
  
  
• Pricing optimisation: The most significant thing that comes out of running a compset is what it reveals about the pricing policies of competitor hotels, and how to measure up against that. Hitting the ‘sweet spot’ of pricing is the goal of all hoteliers, to ensure good occupancy at effective rates. Too high can lead to reduced bookings, and too low… Well, let’s not go there! So let’s see how the compset can help with realistic pricing optimisation.

Implementing the compset analysis 

Doing the groundwork of defining a competitive set in marketing, pricing and sales requires years of experience , but there are also many automated processes which now help. For example Dynamic Pricing has radically changed the way the hospitality industry can respond swiftly to demand, leverage the power of the OTAs, and more crucially, hotels’ own in-house systems. That’s where we come in: SabeeApp created one of the most comprehensive cloud-based Property Management Systems in use worldwide. We also have an extended Marketplace packed with hotel technology partners  to cover every need of the modern hotelier, because we truly understand the market, and the challenges faced by managers and staff. 

Creating a competitive set analysis and implementing it goes a long way to seeing where your hotel is placed in the local market, enabling more effective marketing, pricing and sales. SabeeApp can help you all the way, and we’d really like to get things going with a free demo of what we can do for you. Let’s show you that we really know our oranges from our apples!