Hotel guests today are more knowledgeable and selective than they have ever been. Travelers rely on reviews, social media and websites to make their decisions. In fact, 89% of travelers say reviews influence their booking decisions. In a world of transparency and comparisons, hotel businesses need to be able to stand out.
Staying ahead in this landscape is synonymous with being data-driven, which is precisely how you should approach competitor analysis. By looking at their property in the context of their competitors, hoteliers can have a proactive management strategy.
This article provides a guide to the best practices in hotel competitor analysis, and highlights some of the most common mistakes that should be avoided.
What is competitor analysis in the hotel industry?
The process of hotel industry competitive analysis involves assessing the strengths and weaknesses of the property in relation to its competitors. Benchmarking other similar or interchangeable product on the market allows hoteliers to understand their property’s strengths and weaknesses.
If so, does your hotel have the only swimming pool among the others? Be sure to promote it as the place where people go during the scorching summer months.
The competitive set or comp set is different from the broader market analysis, in that it focuses on a wider range of indicators such as the development of the area around your hotel and even macro-level factors such as the purchasing power of consumers.
Comp set analysis is different. It focuses on a selection of hotels that have been chosen according to specific criteria. This gives a new perspective on the performance of your hotel.
Why Hotel Competition Analysis is Important
Understanding the competitive landscape of your hotel can make a huge difference to your business. By selecting a set of competitors and evaluating your hotel’s performance in comparison to your peers, you can make decisions about pricing, positioning and revenue management strategy Can be data-backed
The analysis of competitors can help hoteliers to identify untapped market demand.read: untapped revenueYou can also fine-tune the marketing communication and better understand guests’ expectations. Hotels that know where they stand in comparison to other hotels are better able to lead the way, rather than follow.
Staying up-to-date on the activities of competitors will allow you to spot trends and take advantage, like providing remote working areas for guests. Or, even better, set the trend by bringing something innovative to market in order to attract new demographics.
What is a Hotel Comp Set (HCP)?
A competitive set (also known as a comp set) is a grouping of hotels designed to reflect what your potential clients are looking for when they book a hotel stay. Comp set selection criteria can include:
- Location: Hotels nearby or similar destinations
- Scale: Hotels with similar sizes, star ratings, or price tiers
- Amenities: Similar offerings, such as restaurants, parking, event spaces, and wellness facilities
To ensure that the comparison is valid, it is necessary to use clear selection criteria. When the competitor hotels closely match your offering, it becomes easier to identify what makes your hotel stand out—and what might be missing.
When creating a set of comps, don’t forget to include qualitative sources. Reviews, OTA rankings and surveys can give you a real idea of how guests view different hotels. The comp set must reflect the guest’s booking journey.
Pro tip: Don’t limit yourself to geography. If you run a luxury resort in rural Scotland your competitors are not the nearby hotels, but the golf resorts throughout Europe. Ask yourself, “What are the other options that my guests might be considering?”
One Hotel, many Comp Sets
Many hoteliers create a comp set that is used for the entire hotel, but in reality each unit faces a unique competitive environment.
Although your hotel rooms might compete with similar properties in your area, your clients may think that your restaurant is comparable to fine dining restaurants located nearby.
A hotel spa may also compete with separate wellness centers by attracting a large number of clients from outside.
Creating separate comp sets for your spa, golf course, and F&B outlets allows you to tailor pricing, packages, and promotions based on the specificities of each market.
By segmenting the competitor analysis you can get a better picture as different business units will be evaluated in their own contexts.
How to perform hotel competitor analysis
The next step is to select the metrics you want to compare. Common metrics include
- Occupancy rate
- Average Daily Rate
- Revenue per Available Room (RevPAR)
- Guest ratings and OTA Reviews
Visual tools such as scatter plots and performance dashboards are useful to hoteliers for comparing their positioning. These tools can help you determine whether your hotel underperforms or outperforms the competition.
To go deeper, consider a SWOT analysis (Strengths, Weaknesses, Opportunities, Threaths). Your strength might be consistently outperforming the market on guest satisfaction, while your weak spot is a lagging RevPAR.
Opportunities could lie in pricing strategies, and threats include new market entrants or shifting guest preferences.
Whatever the method, the goal is the same: an actionable plan, leading to decisions that make your hotel more competitive and ultimately, more profitable.
Data Sources for Hotel Competitor Analysis
To perform an effective hotel competitor analysis, both quantitative and qualitative data sources are needed from a variety of sources. From industry reports to customer sentiment, all data streams offer a different point of view on your hotel’s position.
Below, we explore the most useful sources hoteliers can tap into – both digital and human.
Hotel Competitor Reports
There is a lot of market data available through industry platforms such as STR and HotStats. Reports from these sources help with assessing metrics such as occupancy, ADR, and RevPAR within a comp set or against industry standards.
Tools like STR’s STAR report provide very detailed data, which can help evaluate your hotel’s performance Real-time comparisons of your property to other properties, based on seasonality and events.
Context is important. If, for example, all the hotels included in a comp set have a declining RevPAR in a given month, this could indicate a wider slump in demand than an internal problem.
Guest reviews, social media, and surveys
The qualitative information provided by benchmarking is as valuable as the quantitative data. When assessing guest satisfaction with your comps, online reviews from OTAs, Google and TripAdvisor as well social media comments can be gold mines.
It is easy to create a simple grid that compares your hotel’s reviews with those of its competitors. This can be extremely helpful. Surveys, whether conducted by an internal team or a third-party company, can reveal guest preferences when combined to competitor feedback.
Pro tip: Remember that review scores might be incomparable if the number of reviews vastly differs between the comp set properties – a five-star rating on Google with only one review does not say much on its own.
Staff Input
Frontline staff are the closest to guests and competitors. Front desk staff often hear comparisons between hotels and opinions of guests from housekeeping staff. Encourage your employees to be aware and share their observations.
Open Sharing Between Competitors
The most innovative strategy may not be to outcompete but to align. This is because all participants benefit from a transparent marketplace. A great example for collaboration between competitors is the Grindelwald area in Switzerland. The new generation of hoteliers regularly meet to share updates, local victories, and challenges.
The hotels decided to work together to bring in more tourists from larger destinations, such as Interlaken.
Moreover, the hotels took a collective stance in opposition to OTA bidding. This means that they are paying more for higher placements such as Booking.com. The result is a fairer market with higher margins.
This type of open-market cooperation shows that comp set consciousness does not necessarily mean aggressive rivalry, but can open the doors to joint development and growth.
How to turn competitor insights into hotel strategy
Understanding the strengths, weaknesses and similarities of your competition and your own are important for strategic management. Regular competitor analysis allows you to update or clarify your hotel’s strategy, and respond to a changing environment. Dr. Stefan Güldenberg, Masters Professor at EHL and Academic Director at EHL’s Graduate School
Data collection is only half the battle. What you do after gathering information is what gives a competitive analysis its real value.
You may have noticed that your ADR was significantly lower than other hotels in the same category, despite your better guest reviews. This could indicate that your property has been undervalued. You can then raise your rates slowly while promoting your unique selling point.
You may have noticed that your competitors offer perks to their guests that enhance the experience. For example, flexible check-in and late check-out. These perks are gaining them loyalty. You want to reduce the gap between your offerings and those of your competitors while also considering what will best serve clients.
As we have already mentioned, a competitor study can be a great tool for your advertising campaign, since it allows you to determine what features or products are most important in the communications. In the end, you’ll want to position yourself in a way that your hotel can flourish with data-backed insight.
Common Pitfalls of Hotel Competitor Analysis
Like any analysis, it is important to make sure that the conclusions are accurate. Also, there are certain pitfalls you need to avoid. Unconscious copying of marketing and offerings by competitors without understanding the underlying strategy is one of the biggest mistakes made by hotels.
The same hotel may have different operational costs, brand identity, and business mix.
Another mistake is relying only on quantitative KPIs. Both numbers and guest expectations are equally important. When you keep your eyes open, ask staff about their interactions with guests and feedback, as well as staying current on reviews, you can get a sense of the guest sentiment.
Finally, if you don’t update your comps over time, the results can be inaccurate and outdated. Hotel landscapes are constantly changing, with renovations and new openings that can change the competitive dynamics within a few short months. Reassessing your comps regularly should become a habit.
Getting Started
What are you still waiting for if you’ve not done a competitor study?
This is a simple but powerful tool for your business. What makes your property special can be the guiding light for daily operations and long-term planning.
It is important to avoid copying and pasting what your competitors do, because authenticity will ultimately attract customers and keep them coming back.
FAQ: Hotel Competitor Analysis
What is a Hotel Comp Set?
A comp set is a collection of hotels similar to yours that you can use to benchmark the performance of your hotel based on metrics like pricing, occupancy and guest satisfaction.
How often should my competitor analysis be updated?
Idealy, you should do this every quarter, or at the very least whenever there are significant changes in your market such as new openings of hotels, renovations or changes in demographics.
Do small hotels require a competitor’s analysis?
Absolutely. Comparative analysis may be most beneficial to smaller hotels. Public data such as reviews online and guest interactions can be as valuable as expensive reports in terms of staying competitive.
EHL Hospitality Business School
Communications Department
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