Competitor pricing data is meant to be a guide and a measurement, not a 'demand signal' or the sole data set off which hotels are making pricing decisions.
Some revenue managers and revenue management systems are relying too heavily on competitor prices and rate-shopping tools to make pricing decisions. This can lead to poor decisions and missed opportunities.
Instead, hoteliers make pricing decisions based on internal data and trust their demand forecast. When hotels use data to better understand their demand channels and customer needs, they’re able to push higher rates.
What Hoteliers Say
To understand the relevance of competitor data, “You have to know your own product and you have to know your competitors’ product,” says Cori Oles, VP of revenue management for IMH Financial. “You have to be very careful about what you're looking at so the data is relevant to you.”
Oles says a hotel’s comp set is never stationary and should evolve through the cycle of the hotel’s lifespan.
At CitizenM, Demand Manager Christine Jackson regularly monitors her hotels’ comp sets, however the company doesn’t expect the hotel to always be No. 1 in the market.
“We set natural RGIs for our properties, so for some properties that could be 90, for others it could be 110,” she said. “On the other hand, we don't want to look at the competition too much because we also think we are a very different product and a lot of the time it is not comparable.”
Liz Callaghan, Director of Revenue, Cheval Collection – a collection of serviced apartments located across London and the wider UK, keeps a close eye on rates in the market, but is mindful that her product differs from the five-star hotels that make up her comp set.
“It has more to do with the room type mix. We have one-bedroom and two-bedroom apartments; the two-bedroom apartments are very much in demand at weekends and for leisure. At weekends it'll be a higher premium on those compared to during the week. We price very differently to a hotel. We keep an eye on what the comp set are doing, but actually sometimes it's just as a guidance rather than something for us to act on,” she says.
This blog is adapted from our whitepaper Strength in Numbers: Unlocking Data for Actionable Insights. Download your free copy.
Jason Q. Freed, Managing Editor
Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.