Hoteliers Set Your Comp-Set Right
Taking a correct decision on the inventory price is the most important part of a Revenue Manager’s role. Most revenue managers spend a considering time calculating optimum room prices. However, not paying enough attention to this step will invariably lead to incorrect pricing and missed revenue opportunities.
Knowing your Competitive set is important.
Is your comp set the correct one? In other words, does your comp set an accurate reflection of your true competition?
What are hoteliers doing incorrectly?
There are three fundamental mistakes that hoteliers or revenue managers often make when thinking about competitive sets.
Missing the scientific approach
To determine a comp set which accurately reflects your competition, it is important to follow a scientific approach. Consider various factors, assign appropriate weights to those factors and arrive at the comp-set through a logical calculation.
Re- evaluate your comp-set
Often, after arriving at comp-set, hoteliers do not feel the need to re-examine their comp sets again for a long time.
An important competitor might not even have existed a year back! According to STR data, only 58% of hotels have modified their primary comp set within the past five years.
Working with a single comp-set
Many hoteliers still work with the approach that it is sufficient to have a single comp set. Your comp- set lies at the very foundation of your hotel pricing research. You need to know exactly whom you are going to compare your prices with.
Comp sets are also a very important criterion for deciding what additions you should offer to your customers — breakfast, in-room Wi-Fi, airport transfers, etc.
Finally, comp sets are also important for marketing campaigns, to deliver the right message to travelers so that they choose you over your competition.
It is always good to have multiple comp-sets. Usually, upper-tier hotels have more than a single comp set. However, even if your hotel does not fall into the upper-tier categories, you might want to explore having more than one comp set.
Your hotel probably caters to different customer segments. A customer who belongs to the segment “A” would consider and choose your hotel for reasons that are different to a Segment “B” customer. Having different comp sets allows you to maximize your revenues from different segments — such as a group vs transient or business vs leisure.
Here are a few points to keep in mind for creating better comp sets
1. What makes a hotel your competitor?
Each prospect guest is creating his/her own comp set while selecting a hotel. Therefore, your search for a better comp set has, to begin with, the customer.
If you listen to your guests, you will be able to see recurring patterns and trends about whom they are comparing your hotel with. Try to gather information about your guests’ preferences from various sources, especially social media and review sites. These platforms are a gold mine of information about what your guests are thinking about your hotel, who they are comparing you against, and what factors they are taking into consideration when making their choices.
2. Consider the right factors
In most cases, the following factors should be taken into consideration:
- Room rates — Price is possibly the first thing that your guests will take into account while beginning their search.
- Location and Proximity — For busy business travelers location is often the most important criteria.
- Star rating- For hotels belonging to the same star rating sometimes, a hotel with a star rating above and below might also be considered, if their price points are not too far apart and they are located close by.
3. Brand positioning
A holiday hotel would have a different brand positioning than a business hotel in terms of its offers and the clientele it caters to. There are also other factors like size of the hotel, chains vs boutique hotels, etc.
Your factors should depend on what your guests and prospects consider to be the most important factors. Listening to your customers will give you a better idea of the weightage of each factor in your calculations.
4. Impact of sharing economy
A year back, the sharing economy was not considered a serious threat to hotels as it is now. The world is changing at an extremely rapid pace, driven by technology and changing customer preferences and perceptions.
The comp set, which was looking perfect until yesterday, might be completely twisted in a few months’ time. Besides, no comp set is perfect, Revenue Managers need to revisit them very often, and then to have a better representation of who their competitors are.
Comp sets are one of the first steps in arriving at the right price for your hotel rooms. The data clearly indicates that most hotels have a scope to create better sets.
Revenue Managers need to try to make the most of this opportunity to arrive at more optimal pricing — pricing that will help them make more revenue every day.