A competitive set is an essential piece to any property’s overall strategy. It influences several different aspects of your property that have a larger impact than you might think. A comp set helps you keep an eye on the competitive landscape a few different ways. First, it helps keep your rates competitive. And second, it influences the types of services and amenities you might offer. Keeping up with changes in your comp set will help fuel your yield management strategy and help you make more money, both in the short and long term.
Here are some things to keep in mind while building a comp set.
Some General Guidelines to Follow
Hospitality News Net and STR created some basic guidelines for your property follow when creating comp sets. Your comp set should have a minimum of three properties and may have up to as many as 29 properties. No single property within the comp set should account for more than 40% of the total number of rooms and no company should account for 60% of the room supply. You want to ensure that your comp set includes some sort of diversity. The average comp set contains five or 6 properties according to Hospitality Net.
Create More Than One Comp Set
We suggest creating more than one comp set. There are multiple competitive sets to consider, especially if your property is in a busy travel area where there are a lot of options. For example, let’s say you run a small, independent hotel in Cancun. There may be a handful of other small, independent hotels in Cancun which would make up your competitive set. However, it’s also necessary to include the big box hotels and resorts because guests will likely consider both.
What Factors Go Into Choosing a Comp Set
Location and Distance
Location and distance are the obvious first components to look at. Take a look at properties within your city or neighboring area that are likely your main competition.
You may compete with other properties that aren’t located in your direct location. There are plenty of travel destinations that mimic one another. For example, there is not a huge difference between Santa Monica, CA and Long Beach, CA and travelers may consider both when booking their travel. There are likely properties in other destinations that are competing against yours.
Another factor you should consider is cost. Your guests may or may not be choosing their accommodation solely based on price, but it’s a likely starting point for most consumers.
Property Type or Segment
You should also take into consideration your property type. Properties of the same type are often researched together, whether it’s a big box hotel or a vacation rental. But in today’s travel market, we see consumers searching and comparing different types of accommodations. For example, travelers who previously stayed at big, branded hotels are turning to Airbnb.
Brands vs. Independents
It’s also worth looking at your comp set in terms of branded properties vs. independent properties, as Duetto lays out in their post. Because of software like channel managers, independent properties are able to compete on the same playing field as big brand hotels.
Depending on your location and seasonality trends, your competitors could change throughout the year. Some destinations are busy year-round, while others turn into ghost towns in the off-season. You know your destination best, so take a look at how your competitors could change throughout the year.
Regularly Audit Your Comp Sets
Your comp sets should be a living and breathing entity. Your competition likely changes from year-to-year as new properties enter the market or existing competitors get better or worse. Change is inevitable and your comp sets should reflect that. Keep your eyes open for new types of accommodations that may threaten your business. Airbnb, VRBO, HomeAway, etc are actively acquiring new travelers looking for different experiences.
Listen to Your Customers
Listening to your customers can help you determine a better comp set. Sometimes, customers will mention other properties in surveys or online reviews and make comparisons. These mentions can offer insights into how consumers view your property in relation to others. Even if the mentioned property is not in your direct region, you can analyze their offering to find similar properties in your own area.
If you’re really lucky, your guests will tell you which other properties in your direct area. Talking to your guests offers several benefits, and this is one of them.
When approaching your comp sets, we suggest you take into consideration many of the factors listed above. No comp set should be written in stone and you should allow for them to change over time. Once you’ve determined your comp set, you’ll be able to track your performance against there’s and more accurately respond to changes in the market.