How to Select a Competitive Set to Maximize RGI and Win the Market
The Importance of a Relevant Comp Set
To effectively measure success and maximize the Revenue Generation Index (RGI), a hotel must carefully select its competitive set (comp set). The comp set should be relevant and strategically chosen to attract the same guests that the hotel aims to capture. A well-chosen comp set allows a hotel to benchmark its performance accurately and implement strategies that enhance market share.
Steps to Select the Optimal Comp Set
1. Identify Your Target Guest Demographics
Begin by understanding your hotel's primary guest demographics regarding psychographics and spending power. Consider factors such as:
- Purpose of Travel: Are your guests primarily business travelers, leisure tourists, or a mix?
- Psychographic Profiles: What are your typical guests' interests, lifestyles, and values? Are they looking for luxury, budget-friendly options or unique experiences?
- Spending Power: What is your guests' average spending capacity? Do they prioritize value for money, or are they willing to spend more for premium services?
- Booking Behavior: How do your guests typically book their stays (e.g., through OTAs, direct bookings, or travel agents)?
By clearly defining your target audience, you can ensure that your comp set includes hotels that appeal to the same type of guests.
2. Analyze Location and Proximity
Geographical location is a critical factor in selecting your comp set. Competitors nearby are more likely to vie for the same guests. Consider:
- Local Competitors: Hotels within a similar geographic area, such as the same city or neighborhood.
- Destination Appeal: Hotels that benefit from similar local attractions, business districts, or transport hubs.
3. Compare Similar Attributes
Ensure your comp set includes hotels with similar attributes to your property. These attributes may include:
- Price Range: Hotels that operate within the same price bracket as your hotel.
- Hotel Class: Properties that offer a similar level of service and amenities, such as luxury, mid-scale, or budget.
- Amenities and Services: Competitors provide comparable amenities like pools, restaurants, conference facilities, and fitness centers.
4. Evaluate Online Presence and Reviews
In today’s digital age, a hotel’s online presence and reputation significantly influence guest decisions. Include competitors who have:
- Strong Online Reviews: Hotels with comparable review scores and guest feedback on platforms like TripAdvisor and Google.
- SEO and Digital Marketing: Properties that appear in similar search engine results and have a solid social media presence.
5. Consider Market Segments and Seasons
Different types of guests may stay at different times, affecting your comp set. Tailor your comp set based on:
- Weekday vs. Weekend Guests: Business travelers during weekdays and leisure tourists on weekends.
- Seasonal Variations: Family vacations during holidays and solo travelers during off-peak times.
6. Incorporate Revenue Management Systems
Understand the revenue management strategies of your competitors. Look at:
- Revenue Management Systems (RMS): Hotels using advanced RMS tools and techniques.
- Revenue Manager Expertise: Competitors known for effective revenue management practices.
The Need for Multiple Comp Sets
There might not be a single comp set that perfectly fulfills all these criteria. Therefore, a hotel might need to benchmark against several comp sets to comprehensively understand its competitive landscape. This approach allows for a more nuanced and accurate comparison across different performance dimensions.
Types of Comp Sets to Consider:
- Primary Comp Set:
- Direct competitors with similar attributes, located nearby and targeting the same guest demographics.
- Secondary Comp Set:
- Hotels that may not be direct competitors in terms of location but offer similar services and amenities or cater to a similar psychographic profile of guests.
- Aspirational Comp Set:
- Higher-end properties that your hotel aspires to compete with, offering insights into advanced service offerings and premium pricing strategies.
- Seasonal Comp Set:
- Competitors are relevant during specific seasons or events, reflecting the varying demand and guest profiles.
- Digital Comp Set:
- Competitors with a solid online presence, including those dominating search engine results and online reviews.
Benefits of Using Multiple Comp Sets:
- Comprehensive Benchmarking: By comparing performance across multiple comp sets, hotels can gain a broader perspective on their market position and identify different areas for improvement.
- Targeted Strategies: Different comp sets provide insights into various aspects of competition, allowing hotels to tailor their strategies more effectively.
- Dynamic Adaptation: Regularly updating and adjusting multiple comp sets helps hotels stay responsive to market changes and emerging competitors.
Strategic Selection for Maximizing RGI
Selecting a comp set that mirrors your hotel's target market ensures you are benchmarking against the right competitors. This approach enables you to:
- Measure Performance Accurately: Use RGI to compare your hotel’s revenue performance against relevant competitors.
- Develop Targeted Strategies: Implement pricing, marketing, and service enhancements based on insights from your comp set.
- Optimize Market Position: Adjust your strategies to attract and retain more guests, ultimately increasing your market share and maximizing RGI.
The Primary Comp Set: Benchmarking for Success
While it’s essential to consider various comp sets for different strategic insights, the primary comp set is the one you benchmark against over time to assess if you are winning or losing. This primary comp set should:
- Be Closely Aligned: Include hotels most similar to yours in location, price range, and target guest demographics.
- Reflect Core Competitors: Consist of direct competitors that consistently compete for the same guests and market share.
- Provide Consistent Data: Offer reliable data for ongoing performance comparison, enabling accurate RGI and other key metrics measurement.
Conclusion
A strategically selected comp set is essential for understanding your hotel's market position and achieving success. Focusing on relevant competitors that attract the same guests and using sophisticated revenue management techniques can set the stage for winning in the competitive hospitality landscape. Regularly reviewing and updating multiple comp sets will ensure that your benchmarking remains relevant and that you continue to capture a larger market share. The primary comp set will be your constant benchmark to measure performance and strategize for growth.
