The Ultimate Hotelier’s Guide to Identifying Your Hotel CompSet

October 11, 2023 Nicky. M
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Are you ready to stay ahead of the game in the competitive world of hospitality?

One of the most crucial elements to securing bookings is ensuring that your prices are on point. That’s why keeping a close eye on your hotel’s competitive set (CompSet) is an absolute game-changer for your revenue management strategy. The good news is that competitive prices have become a breeze thanks to intuitive rate shopping tools like RaccoonRev.

This tool can keep track of your competitors’ actions and adjust rates accordingly based on rules that you set. This will help you secure more bookings and increase your revenue without even lifting a finger. Before you can get started, you must determine your hotel’s unique CompSet.

Keep reading for helpful tips to identify your key competitors and accurately benchmark your hotel pricing.

What is a Hotel CompSet and How Does It Impact Your Revenue Management?

A Hotel CompSet is a list of comparable hotels in and around your area. It typically consists of three or four hotels that travellers are comparing you against when choosing where to book. Identifying your competitive set is important because it tells you more about the properties you’re competing against and how to win over business from them.

To identify your Hotel CompSet, you may ask yourself the following:

  • Which local hotels have similar prices?
  • Which local hotels offer similar amenities (pool, spa, restaurant)?
  • Which local hotels have the same star rating?
  • Which local hotels are targeting the same market segment (corporate travellers, leisure travellers)?
  • Which local hotels offer similar room types (suites with sea views)?

 

Once you have answered these questions, you will have a good understanding of your competition and how you can position your business to succeed.

5 Key Factors for a Successful Hotel CompSet Analysis

To maintain competitive pricing, it’s essential to perform a competitor analysis and choose a hotel competitive set consisting of at least three similar properties. This will enable you to gain insights into your competitors and set room rates that are both fair and competitive.

When conducting a hotel competitor analysis, it’s helpful to imagine how a traveller would use an OTA such as Booking.com to filter their search options. They typically filter by location, star rating, price, amenities, and property type.

1. Location

How does the grass look on the other side of the fence? When performing competitor analysis, you don’t need to look far. That’s because travellers tend to filter their searches by location, and properties closest to you are typically your biggest competitors. A quick tip: a lot of travellers care more about the attractions near their accommodation than the accommodation itself. So, if your hotel boasts a breathtaking view of a world-famous mountain, it’s worth looking out for competitors that also use mountain views as their main selling point.

2. Market positioning

What type of travellers do you cater for? The amenities and offerings at your hotel will appeal to different types of travellers. If you aim to be a luxury property, you should compare it with other luxury hotels, whereas if you’re targeting budget-conscious travellers, you should look at similarly priced budget hotels. Today, many hotels are adapting their spaces to accommodate blended travel – a mixture of leisure and business travellers. This is important to keep in mind to ensure that your pricing aligns with your desired market segment.

3. Room types & quality

Is your property all ‘suite’d up for success? Hotels offer a variety of room types to suit different needs and budgets, including double rooms, single rooms, and suites. Travellers tend to compare hotels with similar rooms, so it only makes sense to match against competitors with a similar number of rooms and room types. For instance, it’s a good idea to check out competitors with bridal or honeymoon suites when accommodating group bookings for weddings in your own bridal suite.

4. Star ratings and reviews

Do you have a stellar reputation? You should consider competitors with a similar star rating as you for your hotel competitive set. Star ratings are a classification system used to evaluate a hotel’s quality and features. Hotels are typically rated on a scale of one to five stars, with five stars being the highest rating. The more stars a hotel has, the higher the quality it is perceived to be. Travellers can also filter properties by star ratings on booking channels like Booking.com, Expedia, and Airbnb.

Read more about hotel star ratings and how they actually work.

5. Room rates

Are you aiming for competitor-based pricing? Competing with a lower-priced competitor can decrease your revenue per available room (RevPAR) and overall revenue. If your competitor’s prices are substantially lower and you choose to match them, you may not cover your operating costs or achieve your desired profit margins. At the same time, competing against higher-priced competitors can negatively impact your hotel’s perceived market positioning and lead to poor guest experiences due to failed expectations.

What is Hotel CompSet Benchmarking?

Once you have identified your key competitors, you can analyse rates within your competitive set, which will allow you to benchmark your hotel’s performance against them. Are you consistently priced higher or lower? How does your occupancy compare? This information can inform your revenue management strategy and help you identify opportunities to increase revenue by adjusting prices based on market dynamics, demand fluctuations, and competitive positioning.

Leveraging Pricing Software for Hotel CompSet Tracking

Automation is the name of the game these days, and that’s especially true in the hospitality industry. Back in the day, revenue managers had to cold-call hotels to compare rates and availability. But who has time for that? Not when you’re running a property and taking care of guests. That’s where exciting pricing software comes in to automate this process and save you a ton of time.

Rate Shopper Tool: RaccoonRev

 

Hotel CompSet

 

In this example, we will showcase how you can effectively keep track of your hotel’s CompSet and increase your revenue using RaccoonRev, a rate shopper tool. A rate shopper is a type of revenue management tool that retrieves rate data from specific distribution channels and presents it on an interactive dashboard.

By utilizing RaccoonRev, you can easily compare rates on Booking.com by searching for local competitors that you have selected for your CompSet through their zip or postal code. You can track a CompSet that consists of three properties. Once you have loaded your CompSet, you can start comparing prices and optimising your rates using this powerful tool.

RaccoonRev presents rate information in a 30-day graph view, making it easy to compare your rates with those of competitors for the upcoming weeks. The graph updates daily with fresh data, which enables you to identify pricing trends, develop a long-term pricing strategy, and track your property’s performance.

For instance, you manage a delightful boutique hotel in the heart of Cape Town, and it’s been a few weeks since you last reviewed the local event schedules. One day, you observe that numerous other hotels in your vicinity have notably raised their room prices for an upcoming weekend. This surge in competitor rates can be a clear indication for you to consider raising your own rates as well.

 

Competitive Dynamic Pricing Rules

One of the key features of RaccoonRev that distinguishes it from other providers is its automated competitive dynamic pricing rules, which respond immediately to changes in the industry. There is no delay; everything is automated. This means that you can create rules that will cause the system to adjust your prices, either increasing or decreasing them by a set percentage, whenever there is a change in competitor availability or pricing.

Here are some strategies for utilising RaccoonRev’s competitive yield rules to maximise occupancy and RevPAR:

CompSet Rule 1: Set a competitive yield rule that increases your rates when one or all three chosen competitors are sold out.

CompSet Rule 2: Set a competitive yield rule that increases your rates when your competitors increase their rates.

CompSet Rule 3: Set a competitive yield rule that will boost your prices when the room categories of chosen competitors are no longer available.

Checking Out

Are you aware of how your room rates stack up against those of your competitors? If you’re not keeping a close eye on their pricing strategies, you’re at a significant disadvantage. This is because travellers often consider price as the second most crucial factor when choosing accommodation. It’s highly likely that your competitors understand this as well and are conducting their own competitive analysis.

If you’re curious about how this tool can help your property stand out from the competition and boost your revenue, just schedule a free demo today, and we’ll take care of the rest!

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Nicky. M

Nicky is RoomRaccoon's Senior Content Manager, combining a love for travel with a practical approach to improving hotel performance through tech and insightful tips. Join her journey where travel, hospitality, and technology meet.

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