Module One Part 4 Benchmarking in the Hotel
Module One - Part 4 Benchmarking in the Hotel Industry – Introduction to Competitive Sets
Benchmarking § Benchmarking your properties performance to a set of your competitors provides a much more accurate perspective. § You may think you had a great month or a great week and not realize that everyone else did much better than you.
What is a “Competitive Set”? § The properties that comprise a comp set are competitive in nature; competing for the same guests and sharing similar qualitative and quantitative features.
Attorney General Announces Agreement to Stop Hotels from Anticompetitive Exchanges of Price Information
What is a “Competitive Set”? § In the late 1980 s, STR began collecting performance data from hotels and coined the term “comp set” within the hotel industry. STR essentially became a reliable place for hotels to get accurate aggregate information about their set of competitors. § Aggregating means finding the averages based on the data from a group of hotels so that each individual hotel is protected from exploitation of their specific data. § No individual property data is ever disclosed to another property. Exam Worthy!
When are Competitive Sets Created? § Competitive sets are normally created by the time the hotel opens. § Sometimes comp sets are created long before the hotel opens while it is still under construction allowing the hotel staff to track the performance of the comp set prior to the opening of the hotel.
Who Chooses the Competitive Set? § For a larger hotel or a chain hotel, there are many stakeholders when it comes to choosing a comp set: § The Management Company § The Chain (corporate staff) § The GM § The Sales and Marketing team
Key Considerations When Creating Comp Sets The Four “P”s. § Participation – You obviously want hotels that submit data to STR. § Proximity – Normally, your competitors will be relatively close to your hotel. § Pricing – In most cases, your competitors will have similar prices to your hotel e. g. Class or Scale Categories § Product – Your competitors will generally be similar to your hotel when it comes to features and amenities.
Average Number of Properties in a Comp Set
Rules Related to Comp Sets Exam Worthy! Sufficiency § In North America and Asia Pacific, comp sets must include three or more hotels in addition to the subject. Hotels are encouraged to have four or more so that if a hotel does not report for a time period for some reason, the comp set data will still appear. § In Europe and Mideast/Africa, comp sets must include four or more hotels in addition to the subject.
Rules Related to Comp Sets Exam Worthy! Percentage Checks § Ensures that the data of a single hotel, chain or company is not isolated. § No single property or chain (e. g. Holiday Inn, Comfort Inn, etc. ) can account for more than 40% of the total participating room supply of a competitive set (50% in Europe or Mideast/Africa). § No single company (e. g. Starwood, Choice, Interstate, Host) can account for more than 60% of the total participating room supply of a competitive set.
When are Comp Sets Changed? Exam Worthy! § Comp sets may need to be changed due to: § Changes in the subject hotel, e. g. renovation, conversion, new management or owner company, contract changes. § Changes in the market, e. g. new competitive hotels open. § Strategic changes, e. g. repositioning, improving comp set strength. § It is possible to change your comp set at any time, although many people wait until the beginning of the year.
Additional Comp Sets Exam Worthy! § There are many cases where hotels have more than one comp set. § Multiple comp sets can serve different benchmarking purposes. § Hotels with multiple comp sets could have various key competitive features and/or unique qualities. § When a hotel changes its comp set, they may elect to keep the old one for a period of time to provide perspective. § A second comp set must differ from the primary comp set by at least two properties.
Reasons for Additional Comp Sets § Local versus Regional – one set nearby and another farther away § Subject hotel is between two markets or cities Exam Worthy! specific index) § Different sets for Weekday/Weekend or Group/Transient mix § Aspirational – second set for hotels § Different entities may not agree – of higher quality or performance chain versus management company level § An old comp set is linked to a prior § Different sets focusing on different contract chains § Hotel wants to be compared to a § Different set for special niche different industry segment (conference, water park, boutique) § Index-focused (aiming to achieve a
This work is licensed under the Creative Commons Attribution 4. 0 International License (CC BY). To view a copy of this license, visit Creative Commons Attribution 4. 0 International License "This workplace product was funded by a grant awarded by the U. S. Department of Labor. All other uses require the prior authorization of the copyright owner. "
- Slides: 15