Great sports teams have a clear way of showing how they measure up to the competition: They win trophies. In the hospitality industry it’s more difficult to assess how you compare to competitors, and yet understanding where your hotel is in the rankings is a vital exercise, which can significantly improve the bottom line. We’re talking about hotel competitor analysis and in this article, we will throw some light on this dark art, and give some tips on how to go about it.

Competitor analysis involves looking at similar and relatively local hotels to yours so that you get a true sense of what you’re up against, and what the Strengths, Weaknesses, Opportunities and Threats are for each of them. In doing a SWOT analysis of your competitors, you can also then clearly see how you stand, and what changes must be made for your hotel to become more effective and profitable.

Comparing like with like

First, you should examine the local market and decide which hotels seem most like your own. There’s little point in benchmarking an Airbnb cottage against a five-star luxury hotel. Look at the hotels that are similar in terms of pricing, location, facilities, and size:

• Be selective in deciding which competitors to measure against. It’s better to analyse 4 or 5 local hotels and really drill down into their offerings than ‘scattergun’ many more in the area. For every feature of every hotel, assign a rating from 1 to 10 as a pricing-to-features ratio.
• Pricing is easy to investigate, through the other hotels’ own websites, and Online Travel Agents. Be aware that pricing changes according to seasonal demand and special events taking place in the area, and can be very volatile when automated dynamic pricing is utilised. Get a general sense of competitor pricing, average it, and see how your pricing compares. Are you underselling your rooms and services, or pricing your hotel too high for specific seasons? 
• Location is often a hugely important factor in guests deciding where to stay. Score your competitors according to your assessment of how important their location is in attracting business. Are they on the beach, in the centre of town, or great for business visitors?
• Facilities of any hotel are a great decider too, so check out what is offered elsewhere. Are there gym, spa or other wellness activities? Are there grounds that can be walked around? And how do food and beverage offerings stack up? For every facility, add your estimated figures to the scorecard.
• Size can be important too and there are pros and cons that come with the scale of some hotels, from ‘intimate’, in various steps through to ‘boutique’ (generally considered to be a maximum of 100 rooms), and beyond. The key is in comparing like with like to create a picture of the true competition.

Not every guest is the same

Every hotel is in some ways unique, based on facilities, location, and so on, but so too are guests. It’s necessary to understand the demographic for competitor hotels and study whether such guests could be attracted to your hotel too. Golfers are not the same as Digital Nomads, for example, and being clear about who the ‘audience’ for each competitor hotel forms an essential part of understanding what demographic gaps exist to be exploited in the market. And if you think your hotel can or should appeal to ‘everyone’, take a step back and have another think! You simply can’t be all things to all people, so be realistic in assessing the demographic that your competitors are chasing, and then decide whether you want to go after the same type of guests, or nurture your own. The more you can appeal to a specific set or type of guest, the clearer your marketing and communication can be to them. A clear and effective hotel marketing strategy results in more bookings, which of course boosts the bottom line. Know your customer is an important mantra for all businesses, but in hospitality, it’s a cardinal rule.

Experience the competitions

So far we’re talking about information-gathering of hotel competition that can be done ‘remotely’ by looking at pricing, what hotels are offering in the way of facilities, and the type of guests they are reaching out to. This is all very good, but as in all walks of life, it’s the experience that often counts most. That can mean doing the legwork of actually going to a couple of chosen competitor hotels to get a real feel of what it’s like there and how they operate. If they have a gym, drop in as a day member. Dine there, or even wait in the lobby at a busy time of day, and observe how staff interact with guests. It’s the old ‘secret shopper’ approach, and why not? You’re in the process of gathering as much information as you can about competitors, so don’t be shy about finding out how their business feels.

The corollary is the need for a spot of ‘secret shopping’ in your own hotel, and you need to be as analytical about what you are truly offering guests, as in paying attention to the competition.

Read the reviews on social media

Social media and the OTAs are a massive influence on how guests book their accommodation. Good reviews from guests boost ratings, and bad reviews can impact bookings. Curating social media is a vital activity for any hotel because even negative reviews if properly monitored and responded to, can be turned to a hotel’s benefit. The social media process is not one-way, with the hotel merely waiting to have comments made about it. In fact your hotel should be making the running in posting snippets of information, news, and special offers - always with great images and videos. Social media marketing is very powerful, so assess how well your competitors are using it. If they come out weak on your scorecard, then boost your own activity further. If they are proactive and strong on social media, then you should recognise that you’ll have to up your game. But collecting the reviews doesn’t stop with social media. There are several websites that travelers use to help them select the best place to stay. Pages like Tripadvisor, Booking.com, and even Google Maps are relevant platforms to collect guest reviews. With the wide scale of review sites, it is becoming more and more complex to follow the ratings. Nevertheless, you should carefully monitor these pages for reviews to improve your marketing activity and stand out from the competition.

The guest journey and experience

What guests use social media for most is to comment on their journey and experience in a particular hotel, so assessing how good the guest journey is in competitor hotels is a very important part of your analysis. Carefully read all the comments that are posted, and any replies made by the hotel. Are they defensive? Combative? A hotel lives or dies by its reputation, and that reputation is formed around the guest journey. A great guest journey begins well before they occupy a room. It starts with how welcoming and easy to navigate the website is, how clear the pricing and payment methods are, and how responsive staff are during the guest’s stay. All of this can be gleaned from guest comments on social media, and any replies made by the hotel. So award your competitors points for how well they appear to manage their messaging to guests, and how much guests have appreciated the whole arc of the journey and experience.

Aggregating the scores

By now you should be well on the way to understanding what makes Competitor A different to Competitor B, C, and D. Based on your subjective scoring criteria, you’ll be able to see that Competitor C has newly refurbished rooms, while Competitor D is majoring on their food and beverage offering, and so on. It will start to become obvious that there is a ranking of competitors, often with one consistently outperforming others across the board. This will be your main competitor to benchmark against. If this isn’t clear, then start aggregating all the scores you’ve awarded each competitor, at which point a simple graph of value can be drawn which indicates where each hotel stands. Make one axis your assessment of all the aggregated values you’ve examined, and the other axis the averaged room rates of your competitors. What will emerge is a pretty clear picture of who your strongest competitors are. Your aim is to be at the top of the graph by taking any remedial actions that are necessary to be competitive. 

Leveraging the compset

This matrix of features is now your compset which allows you to compare and contrast competitors with your own offerings. Any and every feature can be examined against what your hotel is currently offering, so that you can make decisions whether to challenge competitors in a particular area. For example, if a nearby hotel has invested in wellness facilities, perhaps it's best to ‘give ground’ on that and put your energy and budget into another area. (And there again, perhaps you’ll decide to go head-to-head on the wellness front). By creating an in-depth hotel competitor analysis you are able to see your situation with clarity, and take appropriate and informed actions.

Strategising based on data

So far we’ve talked about largely human responses to the competition in your immediate area, and making judgements about how successful competitors are. This is a very important exercise, and a well-researched compset will do wonders to showing you the big picture. There is also another way of gathering and analysing data however, and it’s something we know rather a lot about. That’s because we are SabeeApp, and have been providing software specifically for the global hospitality industry for over a decade. In doing so, we are also very adept at helping hotels mine their own data, to get a real and accurate picture of everything that’s going on in their business. Our cloud-based Property Management System provides business insights that were previously only available to the largest chains to every size and type of hotel. Reporting and strategising based on solid data, derived from a smoothly functioning PMS is something we’d really like to tell you more about, so please do contact us for a free, no-obligation demo of our system.

Understanding and beating the competition

Our technology provides seamless operation and business insights, and we know what we’re talking about, having helped clients around the world to improve efficiencies and profitability. But we also know that technology can’t do everything, and that’s why we are keen to promote the methodology of hotel competitor analysis. The simple thing is: It works! The more scorecard points you can add to your compset, the more powerful you become in understanding, challenging, and beating the competition. Competitor analysis provides many benefits for hotels, including:

• Market positioning: By analysing competitors, you can identify your unique selling points and differentiate your hotel in the market. This helps to focus on and attract a target audience.
• Price optimisation: In understanding competitors' pricing strategies, hotels can set competitive and attractive rates to maximise revenue within market expectations. Your pricing will be realistic.
• Facilities and service improvement: Competitor analysis identifies areas for improvement, which can then enhance the guest experience. Sometimes improvements don’t have to be about big ‘infrastructure’ changes to have an effect for guests. For example, look at how to improve housekeeping services to enhance the guest experience. 
• Marketing strategy: Looking at and understanding the marketing strategies of competitors gives insights into effective marketing and channels. What are they doing that works? Are they partnering with other businesses in the area, or being proactive in promoting seasonal and other special offers? 
• Guest satisfaction: Regular in-depth monitoring of customer reviews and feedback for competitors helps to understand guest expectations. Use this information to enhance service quality and improve overall guest satisfaction. Social media is a goldmine to understand what guests are thinking and feeling about your competitors.
• Identify trends: Watch and learn! Studying what competitors are doing means staying up to date on hospitality industry trends and technologies, and ever-changing consumer preferences. Has a competitor hotel latched on to a new movement in the market (such as Bleisure travellers, or specifically kid-friendly breaks), and if so what can you adopt from that and apply to your own business?

Strategic planning

When it comes down to it, every hotel has to plan ahead strategically. You can’t simply be blown around by the whims of the market, or by a competitor coming up with a bright new idea ahead of you. Seeing trends as they are impacting the market is a lot more effective than a ‘wait and see’ approach. The hospitality industry has changed enormously in the past twenty years, with the dominance of OTA ecosystems, guest behaviours becoming more ‘tribal’, and the deep adoption by both hotels and guests of easy-to-use software. Staying ahead of the curve is essential, and competitor analysis is not a one-off activity. It should be a regular iterative process to interrogate the strengths and weaknesses of your immediate competition and to learn from your findings. 

Competitor analysis underscores effective strategic planning, providing the cornerstone for informed decisions, allocating resources and developing sustained success for your hotel.