How can competition benchmarking help you grow your hotel business

With increased competition, hoteliers like you today are focusing on the guest service aspect to stay competitive. While better guest service helps you gain a competitive advantage, you also need to keep an eye on your competitors to understand what they are doing in terms of attracting guests and selling more rooms. And, this can happen only when you come up with efficient competition benchmarking parameters, which also helps you with competent revenue management.

Analysing your competition is critical to predicting their current and future strategies. This also helps you understand where you stand compared to them – what are the areas you score over them, and on all the aspects where they have an edge over you. Once you succeed in this, you can make changes in your approach and strategy to stay ahead of them.

How hotels are looking at their competitions?

Even though competition benchmarking as a concept helps grow business, the hotel industry seems to be a little slow in finding its real value. Look at this – only 10% to 11% of hoteliers keep a keen eye on their competitions.

How to do it?

As a hotelier, you need to keep in mind several parameters while creating a competitive set for your hotel. For example – if you run a 50-room independent hotel in Los Angeles, United States, you need to consider hotels in your vicinity those offer more or less the same type of amenities and services to guests.

Now, let’s get a little deeper with our understanding how this works.

Hotel category, location, pricing, guest profile and amenities

Try to find out hotels in the surrounding area those match your star rating, room price, food price and other amenities. As discussed above, if you manage a 50-room property in Los Angeles, you should create a list of hotels with up to 60 – 70 rooms. Compare your room rates, too. If you sell your rooms $90 a night, you still can look at hotels selling rooms at $100 to $110 a night. Because, your common target guests will neither prefer a hotel at $200 a night, nor they will consider booking a hotel at $50 per night.

The next step

Once you are ready with your list, it’s now time to get to the task – tracking their performance. Here are some ways to do that –

Keep an eye on their room rates

Room rate is the most critical factor that influences a guest’s booking decision. Visit your competitors’ websites, look at their rates. Understand what discounts/benefits they offer on direct bookings. Look at their rates published on OTAs. All these will give you an idea on how to price your rooms competitively, to attract more guests.

Consider studying their booking sources

See if they get to drive more direct bookings via their websites. If they have an edge over you in this, work on your website and integrate a booking engine to get more direct bookings. Find out their OTA and metasearch strategy. If they are doing it better than you, analyse all the channels they are connected to. If you get to know their top 3 performing hotel distribution platforms, then you must list your property on them, if you haven’t already.

Understand what guests are talking about them

Keep a track of their hotel online reputation on various review sites and hotel booking portals. See what guests are talking about them. Compare the same with the kind of reviews you have garnered. If guests have good things to say about the food or any other amenities, try to make changes if you find yourself lagging in those areas. Remember that guest reviews are an excellent source to help you understand your competition’s performance.

Try to know their marketing activities

For this, you need to sign-up for their emails. It will help you understand how they communicate with their guests while launching new amenities. You will also get to know what special steps they take to inform and attract guests during local festivals. Take for example the LA County Fair. If you can lay your hands on one of their emails specially designed to appeal to the crowd during the LA County Fair, it will give you a lot of insight on their marketing and promotion strategy. Overall, this exercise will help you understand their mailing frequency and guest engagement tactics.

Find out if they are technologically ahead of you

Like in any other business, technology is considered as a key enabler in the hotel industry, too. If your competitors are ahead of you in terms of ease and profitability of business, chances are that they are using some of the new-age hospitality technology solutions.

For example, if you are still stuck with an on-premise Hotel PMS, you are bound to face operational bottlenecks. And if you find out that your competitors are using cloud Hotel PMS, you must change your approach as soon as possible. Because an on-premise PMS restricts your capabilities to streamline operations. It also doesn’t allow you to work with a host of other third-party solutions like channel manager and booking engine, etc. to make more out of today’s online hotel booking.

Additionally, a smart cloud PMS like Hotelogix helps you to connect with a host of advanced revenue management solution via deep integration. This would offer you insights on your competition pricing strategy, the local market demand based on the season and on the eve of special events. It has the potential to help hotels like you maximize profitability by finding the best combination of consumer demand and hotel supply in your locality.

Now, considering the fact that you have analysed your competitors by the parameters we just discussed, you are certainly in a better position to make better decisions. Because creating an insightful and strategic comparison between competing hotels is a critical factor to your hotel’s success.