An accurate, relevant rate shop is one of the most important tools that a revenue manager can have in their arsenal. In this blog we’ll share the best ways to set up your rate-shop competitive set!
Here are some of the factors you should weigh when assembling a compset
Proximity – How close are your competitors? As a general rule of thumb the closer a competitor is, the more likely it is that they should at least be added to your every-day rate shop, even if they are not an exact match when it comes to the other factors listed below.
Amenities – Add hotels to your compset that offer similar amenities, so if your hotel offers an indoor pool, free hot breakfast, and shuttle service, try to include hotels that offer similar amenities. If meeting space, or restaurant is a big factor for your hotel, try to include competitors with similar offerings and dedicate a slot to them in your compset.
Brand – While you do not want a compset that only consists of other hotels within your brang/flag, it is often useful to include a few other hotels that are within your flag. A perfect example would be a Towneplace Suites by Marriott. A Towneplace would be smart to add a Residence Inn in the same market to have a gauge for how they are pricing for several reasons: they are the same brand, they are both extended stay product, and Residence Inn is technically ‘higher’ in the Marriott product hierarchy, so the Towneplace property wouldn’t want to consistently price significantly over the Residence Inn lest they scare away Bonvoy members who are extremely familiar with the brand hierarchy. The rules are a bit different for independent hotels, but if you are independent consider adding independent hotels where possible so long as they meet the other criteria listed here.
Service Level/Product Type – A good compset includes a majority of hotels that are in the same service level, or product class. As a general rule of thumb, an extended stay economy hotel’s compset should also include mostly other economy, extended stay properties. Since different kinds of properties compete for very different kinds of guests staying for different reasons, there should be some commonalities in this criteria when building your rate-shop compset.
Now that you know the major criteria you can do a SWOT analysis with them (more to come on what a SWOT is!), and assign score values to see which one really is the most relevant and add them to your rate shop! This is a good time to get creative and come up with your own scoring system – for example in some markets, a single demand driver such as a concert venue or stadium is the most important thing to consider, so in this case when coming up with a rate shop comp set, proximity would be the most important criteria and would get the heaviest weight. In a market with tons of other supply, perhaps the most important criteria when building a rate shop compset would be Service Level/Product type since guests have a range of options to choose from.
If you still need help building out your rate shop competitive set, feel free to reach out to our consulting team to get a professional opinion!
Here’s an example of how we track our competive sets at RevGEN using the Revshop!