Understand your market with OTA data
We have been talking a lot about the impact OTAs are having on the hospitality industry – their impact on your brand value, what you can do to win some of those bookings back if you can. In this article, we will explore a different angle to OTAs and look at them as a resource – a window into your market and your competitors. We will look at the most solid approach to setting your property’s comp set and setting you up for success by truly understanding your market with OTA data.
Of course no property exists in isolation. To get a comparable view of performance and be able to make accurate forecasts, one of the first things to do for any hotel is to set a comp set, maybe even a few. Traditionally, comp sets have often been based on subjective opinions – Opinions of the owner. Opinions of the management group. Opinions of the GM. As with anything else, “subjective opinions” aren’t the safest way to set something as crucial as your comp set.
Why is it so important to get your comp set right?
First things first. We probably don’t have to tell you about the importance of your comp set. In a nutshell it’s what gives you understanding of your market – it drives your rate strategy, marketing activities and even helps to define your product and service offering. Furthermore having the right comp set helps you evaluate your property’s true performance, make accurate forecasts based on trends and market reactions and steer business development activities. In short: It is a great tool to further maximize revenue and profitability.
It is a strategic tool. And as such it’s very important to use it correctly and to set your comp set right. Otherwise you are likely leaving money on the table.
Working with the wrong comp set means you are likely leaving money on the table.
Question is: how do you know whether you are optimized or not?
There are numerous reasons your comp set might be wrong. Maybe it was the right comp set for you a few months ago and the market has changed with new competitors coming in or other environmental factors. This might be especially true for still developing or versatile markets. Or maybe the comp set was wrong from the start as it was based on subjective opinions of the owners, management group, GM or other stakeholders.
In some cases it can be helpful to work with more than one comp set. Maybe you set up an aspirational comp set if you’re going through some changes in your property set up. Or you are in a very seasonal location and it makes sense to change the comp set based on the season. Or maybe you want to look at two comp sets – one for group and another for transient. Or you simply have a comp set you work with the owners and one for daily operations. There are numerous reasons to set up several comp sets.
In the U.S., 92% of hotels have one comp set, while 6% have two and 2% have three or more comp sets. Those numbers change when looking at upper-tier hotels, where 48% have one comp set; 36% have two; and 16% have three or more*.
The true definition of competition
The basis of the comp set is that you want to compare your property against the other options that the booker is considering. Not how other properties in your market view it. Not which hotels consider your property to be in their comp set, too. These things don’t matter to the booker. What matters is: what option are they weighing when making the purchasing decision. That is the true definition of comp set. Who are you competing against for the bookers’ business?
Understand your market with OTA data
Unfortunately it is very difficult to ask the bookers directly, take record and pull an analysis from there. Ideally even do this every week or bi-weekly to keep on track of changing conditions in the market. The next best thing is to look at the sources that bookers use to shop for their stay – Google, Tripadvisor and OTAs.
Things you want to add to the equation are pricing, ranking and positioning. For example you might be on page 1 and your major traditional competitor is on page 3. It is questionable whether you are true competitors in the booker’s view. Of course it depends on whether this is a one-off or a consistent trend. Or you might actually be surprised by who is competing in your price range, e.g. due to renovation works or a more aggressive pricing strategy.
Thoroughly monitoring your market and identifying changes and trends is exactly what we do here at BPS. Contact us here to learn more!
Consistently monitoring your market from the bookers’ perspective is invaluable in determining your true comp set.
Add this as a pillar to regular SWOT analysis and rate comparison and you have a reliable approach to setting and reviewing your comp set for maximum performance.