Benchmarking: Moving beyond traditional comp sets and year over year comparison
— 15 experts shared their view
For years, revenue managers used historical data as a "compass" to navigate rates and inventory. Due to the pandemic, however, historical data lost much of their relevance, as 2020 and 2021 were statistical anomalies, to say the least. In this scenario, other information became more important, such as on-the-books reservations, pick-up, pace, and, of course, comp set. Some hotels have closed and consumer behavior has shifted.
The challenge, however, is how to clearly identify the proper comp set: is there only one or multiple competitors? How should a hotel judge it's performance, when most of the traditional KPIs have become meaningless?
Revenue Management Expert
There is a need to re-examine traditional competitive sets. Pandemic disrupted the markets and urged hotels to adapt. Hotels had to create new offers, change segmentation and pricing strategies. Some properties were permanently closed. Chances are the hotel's pre-pandemic comp set is no longer relevant, and new competition emerged.
Another question is to what extent can hotels rely on benchmarking data? Pandemic created an enormous disruption, and hoteliers can not be sure that competitors' data and actions are always reliable market demand indicators. The competition is also struggling with forecasting, pricing, and benchmarking.
In my opinion, hoteliers should:
- create several competitive sets and closely monitor how properties in the market evolve their post-pandemic strategies to identify hotel's true competition
- take advantage of STR's "Composite Comp Set" solution that gives flexibility and resolves "sufficiency" issues caused by the pandemic
- explore the idea of a "Dynamic Comp Set" suggested by OTA Insight - competitors change in line with market shifts to position the hotel against the most relevant comp set
- give more weight to the hotel's internal data. Short-term trends are especially valuable when forecasting future demand (last 7 Mondays, last 7 Tuesdays, etc.). BI that provides forward-looking market demand is also a must-have tool for revenue managers
- use indexing to baseline period pre-pandemic (2019) to understand recovery pace for the hotel and competition (Demand for the first week of June 2021 / Demand for the first week of June 2019 *100)