In the hotel industry, just as in other markets, competition is fierce; therefore, it is necessary to conduct studies or analyses to identify which hotels are competing with ours. This is where hotel benchmarking comes into play. By doing so, we can implement changes or strategies to differentiate ourselves in the market and position ourselves to achieve the company’s goals. In this article, IHCS shows you how to conduct a study to analyze your hotel’s competition.
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Aspects to Evaluate Regarding the Competition
Along these lines, to truly understand our competition, we must take several concepts into account. First, we must have a clear understanding of the reality of our business. To do this, we must consider factors such as:
- Location: Where is our hotel located? What sets it apart, and what advantages does it offer to our guests?
- Hotel Size: How many rooms does our hotel have, and what amenities are offered in them?
- General amenities: Aside from the amenities included with the rooms, what other services do we offer? Do we have a spa, pool, conference room, restaurant, and other amenities?
- Adaptability: It’s important to ask ourselves whether our hotel can cater to various customer profiles or segments.
- SWOT Analysis: Finally, we need to conduct an analysis of the weaknesses, threats, strengths, and opportunities facing our independent hotel. This will help us develop strategies to correct mistakes and mitigate threats, as well as leverage our strengths and capitalize on opportunities.
Second, we must understand that a competitive analysis primarily takes into account the strengths and weaknesses of local competitors. This allows us to compare our establishment with theirs and see where we stand. To do this, it is necessary to evaluate concepts such as benchmarking. Additionally, we must consider factors such as occupancy rates, ADR, RevPAR, our hotel’s market share, and that of our competitors.
Knowing your competition – hotel benchmarking
To truly understand our competition, we must apply concepts like hotel benchmarking. This involves analyzing and gathering information about the performance or operations of our competitors, and not only our competitors, but also our own accommodation. To evaluate performance, we must consider elements such as product or service quality, efficiency, customer service, profitability, and others.
Benchmarking is an analysis that allows us to compare ourselves with local competitors. It also helps us determine our hotel’s position in the market. Furthermore, we can identify best practices from other establishments and replicate them in our own. Ultimately, all of this is aimed at increasing the hotel’s productivity and profitability.
One of the reasons for implementing hotel benchmarking is to understand how the hotel market works. In turn, this will help us avoid challenges and gain a competitive edge.
Benefits of Benchmarking
- It promotes a culture of change and learning. In the hospitality industry, change is constant; therefore, benchmarking allows companies to adapt and stay current.
- It improves the company’s competitiveness. By understanding where we stand in the market and how our property is performing compared to competitors and industry leaders, we can implement strategies to address any shortcomings.
- It boosts performance. When you know how your competitors are performing, you can identify opportunities to implement methods that improve your hotel’s performance. This translates into greater customer satisfaction and, consequently, higher profitability.
- Expand growth opportunities. Benchmarking allows you to achieve or grow in areas such as reservation management and service diversification, among others.
- Clarity for decision-making. When you have a clearer picture of how your hotel is performing compared to the competition, you have greater clarity to make wise decisions that positively impact business management.
- It promotes professional growth. This study also fosters a culture of learning and professional development in hotels. This is because some of the applications of benchmarking involve updating practices, which in turn requires, for example, that staff stay current and continue their education. In turn, this boosts staff motivation to perform their duties.
How to Apply Hotel Benchmarking to Your Business
Below are some tips and steps for successfully conducting benchmarking:
Keep the market segment in mind
When conducting benchmarking, you must take into account the market segment in which you operate. Therefore, you cannot perform a competitive analysis without using information about the market segment, as this is one of the main sources of information you are seeking.
In addition, it is important to study market trends and short-, medium-, and long-term projections. This allows us to determine whether our hotel is in line with them.
Select the competition
The second step is to select the competitive set—that is, those hotels that are direct competitors. Select 3 to 5 hotels, and remember that to ensure the study is as accurate as possible, it’s best to choose those that cater to the same market segment.
You may also have competitors that aren’t exactly the same—for example, in terms of size or concept. But perhaps these are hotels that can provide useful information.
Determine the main comparison criteria
Once we have identified our competitors, the next step is to establish the comparison criteria. The most commonly used and most important criteria are room rates, hotel occupancy rates, location, services and products, and online reputation. Furthermore, it is essential to remember that these criteria are measured using metrics such as ADR, RevPAR, and occupancy rate, among others.
Collect and process the data
The next step is to gather information. This information should pertain to our competitors. As mentioned earlier, this includes rates, services, occupancy, and other factors. One way to do this could be through surveys, reports, websites, social media, and other sources.
Once the data has been collected, it must be processed to obtain the results. Based on the results, a report is prepared. This report allows us to identify strengths and weaknesses. These insights are essential for implementing effective marketing strategies—all with the goal of improving the business’s profitability.
Remember, if you need help conducting a benchmarking study for your hotel, IHCS is here to help. Let our expertise take your hotel to the next level.
