Are you ready to stay ahead of the game in the competitive world of hospitality?
One of the most crucial elements to securing bookings is ensuring that your prices are on point. That’s why keeping a close eye on your hotel’s competitive set (CompSet) is an absolute game-changer for your revenue management strategy. The good news is that competitive prices have become a breeze thanks to intuitive rate shopping tools like RaccoonRev.
This tool can keep track of your competitors’ actions and adjust rates accordingly based on rules that you set. This will help you secure more bookings and increase your revenue without even lifting a finger. Before you can get started, you must determine your hotel’s unique CompSet.
Keep reading for helpful tips to identify your key competitors and accurately benchmark your hotel pricing.
A Hotel CompSet is a list of comparable hotels in and around your area. It typically consists of three or four hotels that travelers are comparing you against when choosing where to book. Identifying your competitive set is important because it tells you more about the properties you’re competing against and how to win over business from them.
To identify your Hotel CompSet, you may ask yourself the following:
Once you have answered these questions, you will have a good understanding of your competition and how you can position your business to succeed.
To maintain competitive pricing, it’s essential to perform a competitor analysis and choose a hotel competitive set consisting of at least three similar properties. This will enable you to gain insights into your competitors and set room rates that are both fair and competitive.
When conducting a hotel competitor analysis, it’s helpful to imagine how a traveler would use an OTA such as Booking.com to filter their search options. They typically filter by location, star rating, price, amenities, and property type.
How does the grass look on the other side of the fence? When performing competitor analysis, you don’t need to look far. It’s because travelers tend to filter their searches by location, and properties closest to you are typically your biggest competitors. A quick tip: a lot of travelers care more about the attractions near their accommodation than the accommodation itself. So, if your hotel boasts a breathtaking view of a world-famous mountain, it’s worth looking out for competitors that also use mountain views as their main selling point.
What type of travelers do you cater for? The amenities and offerings at your hotel will appeal to different types of travelers. If you aim to be a luxury property, you should compare it with other luxury hotels, whereas if you’re targeting budget-conscious travelers, you should look at similarly priced budget hotels. Today, many hotels are adapting their spaces to accommodate blended travel – a mixture of leisure and business travelers. This is important to keep in mind to ensure that your pricing aligns with your desired market segment.
Is your property all ‘suite’d up for success? Hotels offer a variety of room types to suit different needs and budgets, including double rooms, single rooms, and suites. Travelers tend to compare hotels with similar rooms, so it only makes sense to match against competitors with a similar number of rooms and room types. For instance, it’s a good idea to check out competitors with bridal or honeymoon suites when accommodating group bookings for weddings in your own bridal suite.
Do you have a stellar reputation? You should consider competitors with a similar star rating as you for your hotel competitive set. Star ratings are a classification system used to evaluate a hotel’s quality and features. Hotels are typically rated on a scale of one to five stars, with five stars being the highest rating. The more stars a hotel has, the higher the quality it is perceived to be. Travelers can also filter properties by star ratings on booking channels like Booking.com, Expedia, and Airbnb.
Read more about hotel star ratings and how they actually work.
Are you aiming for competitor-based pricing? Competing with a lower-priced competitor can decrease your revenue per available room (RevPAR) and overall revenue. If your competitor’s prices are substantially lower and you choose to match them, you may not cover your operating costs or achieve your desired profit margins. At the same time, competing against higher-priced competitors can negatively impact your hotel’s perceived market positioning and lead to poor guest experiences due to failed expectations.
Once you have identified your key competitors, you can analyze rates within your competitive set, which will allow you to benchmark your hotel’s performance against them. Are you consistently priced higher or lower? How does your occupancy compare? This information can inform your revenue management strategy and help you identify opportunities to increase revenue by adjusting prices based on market dynamics, demand fluctuations, and competitive positioning.
Automation is the name of the game these days, and that’s especially true in the hospitality industry. Back in the day, revenue managers had to cold-call hotels to compare rates and availability. But who has time for that? Not when you’re running a property and taking care of guests. That’s where exciting pricing software comes in to automate this process and save you a ton of time.
In this example, we will showcase how you can effectively keep track of your hotel’s CompSet and increase your revenue using RaccoonRev, a rate shopper tool. A rate shopper is a type of revenue management tool that retrieves rate data from specific distribution channels and presents it on an interactive dashboard.
By utilizing RaccoonRev, you can easily compare rates on Booking.com by searching for local competitors that you have selected for your CompSet through their zip or postal code. You can track a CompSet that consists of three properties. Once you have loaded your CompSet, you can start comparing prices and optimizing your rates using this powerful tool.
RaccoonRev presents rate information in a 30-day graph view, making it easy to compare your rates with those of competitors for the upcoming weeks. The graph updates daily with fresh data, which enables you to identify pricing trends, develop a long-term pricing strategy, and track your property’s performance.
For example, you run a charming boutique hotel downtown, and it’s been a few weeks since you checked the local event listings. One day, you notice that several other hotels in your area have significantly increased their room rates for a particular weekend. This increase in competitor rates can serve as a signal for you to consider raising your rates as well.
One of the key features of RaccoonRev that distinguishes it from other providers is its automated competitive yield rules, which respond immediately to changes in the industry. There is no delay; everything is automated. This means that you can create rules that will cause the system to adjust your prices, either increasing or decreasing them by a set percentage, whenever there is a change in competitor availability or pricing.
CompSet Yield Rule 1: Set a competitive yield rule that increases your rates when one or all three chosen competitors are sold out.
CompSet Yield Rule 2: Set a competitive yield rule that increases your rates when your competitors increase their rates.
CompSet Yield Rule 3: Set a competitive yield rule that will boost your prices when the room categories of chosen competitors are no longer available.
Are you aware of how your room rates stack up against those of your competitors? If you’re not keeping a close eye on their pricing strategies, you’re at a significant disadvantage. This is because travelers often consider price as the second most crucial factor when choosing accommodation. It’s highly likely that your competitors understand this as well and are conducting their own competitive analysis.
If you’re curious about how this tool can help your property stand out from the competition and boost your revenue, just schedule a free demo today, and we’ll take care of the rest!
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