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6 secrets to calculating a better comp set

A competitive set might be the most important tool hotel operators have at their disposal. It’s used to set rate strategies, develop marketing programs, even to decide what facilities and amenities to offer. It’s a key informant GMs and department heads use in daily decision making.

The comp set calculation gives operators a benchmark from which to measure to be sure they’re on the right marketing, rate and operational tracks. And if they’re not, it tells them where they’re falling short.

Comp sets give you an insider’s look at your competition to know what business they’re attracting (or attempting to attract) that you already have or would like to have.

There’s even an element of sport to the dynamics of comp set.

Often, hotel ownership is keenly interested in comp set and in providing input to the creation of the set as a way to verify the management team is doing a solid job running the business and bringing the right business to the hotel to make the asset as profitable as possible.

Once revenue strategists understand the dynamics of their marketplace, they can adjust or elaborate strategies to improve shares. (This is why rewards and bonuses should also be linked to improving market share index, not just to exceeding revenue budgets.)

Because comp set is such an important measurement, it’s crucial for operators to calculate it correctly and to be able to adjust and refine it in a timely and orderly fashion.

Interestingly, comp sets aren’t necessarily mutually inclusive; in other words, operators of hotels you might include in your comp set don’t always include your property in theirs. According to STR, the national average of nameback percentage is a surprisingly low 48%.

Here are some tips on creating and using the best comp set metrics for your hotel:

1. Include the basics
A number of important key factors should be included in the development of a comp set:
• Location of your hotel and the distance to other properties in the market.
• Published and achieved room rates.
• Brand positionings or star ratings.
• Size of the hotel. A 40-room property might or might not really compete with a 600-room big-box hotel.
• Geographic mix of source markets. Two hotels a far distance from each other (even in different markets) might both compete for leisure Japanese clientele.
• Brand versus independent. Online distribution channels have narrowed the consideration gap between chain properties and independents.

2. Listen to your customers
When guests leave a review about your hotel on TripAdvisor or other review sites, what other hotels do they compare yours to? You can use Google Analytics to determine what hotels potential customers search. Or ask your group customers what other hotels they’re considering.

3. Be open to change
Comp set is a fluid concept and should be revised or completely redone depending on market circumstances. Seasonality is one factor. While hotels throughout the market might be in your perceived comp set, during peak season that set might only include properties on your corner.

4. Consider more than one comp set
Your internal comp set might not be the same as the one tracked by STR, so it’s important for everyone on the team to understand the differences and how each one fits into rate and marketing strategies.

5. Make comp set part of the budgeting process
A discussion of the makeup of a hotel’s comp set should be part of the budgeting process for management and ownership. A SWOT (Strengths, Weaknesses, Opportunities, Threats) matrix is a good starting point to make sure you consider new hotels in the market as well as competitors that might have been sold, undergone a repositioning or even closed.

6. Include non-traditional competitors in the mix
The swift ascent of sharing economy websites such as Airbnb means hotels might be facing a new set of competitors that are harder to identify. At this point, there aren’t many ways to effectively measure how much business that one-bedroom condo down the street is stealing from you, but everyone on the team should keep their antenna high for anecdotal information.

Thanks to Duetto’s global customer success and solution engineer teams for sharing their knowledge on this topic—especially Gayle Ehrean, Philip Niemann, Tim Tan and Vincent Lecluze—for offering the wisdom and expertise that comes from their more than 30 years of on-property experience and numerous hospitality degrees and revenue management training programs.

The 2015 Smart Decision Guide to Hospitality Revenue Management


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Ed Watkins, Contributing Editor

Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.

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