By Kristi White
Competitive sets have been the driving force in the hospitality industry since the mid-1980s. It’s how hotels are measured, and how employees are bonused. And since we have to measure against more than just our own numbers, it’s not completely bad.
However, it can become somewhat self-limiting. Especially if your sales team is using it as the barometer for selling and prospecting. The fact is, customers don’t know who is in your comp set. So, limiting your prospecting pool to a few hotels you benchmark against is limiting your ability to fill your hotel. This is true in economic downturns, and one could argue, it’s even truer during times of disruption like now.
Why Your Comp Set Needs to Evolve
As our world and our business has been disrupted, we need to redefine who we sell to. In most markets, companies are beginning to book again. However, where they are booking might not be where they have always booked.
Some of this might be due to the disruption itself. Hotels are still closed or have greatly limited the services they offer. This is resulting in companies broadening their horizons in the facilities they use. As a result, your teams need to broaden their horizons as well.
Looking beyond a competitive set into an entire market is the way forward for the savvy hotelier. Understanding where companies are booking as a whole and not just who they are booking with in your competitive set will give you a broader understanding of demand in your market, not just a subset of hotels.
Don’t Limit Yourself
What should you be doing instead? It’s time to stretch your imagination and look past the five to eight hotels in your comp set. These competitors are not the entire universe of hotels in your market, and they should not be your entire universe when it comes to selling.
Companies and their travelers are wary in a way they have never been. This wariness is leading to different buying decisions. Combine this with smaller meeting sizes, the addition of hybrid meetings and who and what customers are buying, and you will find a whole new world.
A company that only held meetings in large hotels might be looking at vastly smaller hotels. They can move into a smaller facility and be the only event at the hotel. This way they limit the exposure of their travelers.
This same premise might apply to the type of hotel they purchase. Many hotels don’t have all of their services available, so companies might be looking at select feature properties rather than full-service properties.
Expanding your approach to prospecting beyond a limited comp set will allow your sales team to understand more about the demand in your area. Knowing more about overall demand will not only help with prospecting; it will also help with the forecasting process.
Reading in the Dark
Limiting yourself to the same hotels creates a myopia that damages every aspect of your hotel. Your sales team might think a key customer is no longer booking when they moved to a smaller hotel two miles away. Additionally, you might miss new customers who have moved into the market but are booking outside of your small pond.
Your revenue teams might not see share shifting to other hotels if they are solely focused on a select few. It will impact pricing decisions at both the transient and the group levels. Those decisions will impact your recovery for years to come.
Recovery will come from everywhere; and it will be more important for you to think about what is driving demand in your market. It will be key to look at the broader market and hotels you might not have considered in your traditional comp set.
Up, Down, All Around
During disruptive times, business moves around. Obviously if you are a luxury hotel, you may not need to worry about the economy hotels, but you may need to worry about the upscale hotel. The best rule of thumb is to look up and/or down one chain scale. This will help you identify business that is shifting because of rate shifts in markets. This will help you most with transient business.
However, with group, you need to monitor size as well as chain scale. Meetings are smaller now, so organizations might be looking at hotels with less meeting space than you have. Being flexible with the hotels you monitor based upon their meeting space is crucial. That 4,000-sq.-ft. hotel you’ve overlooked for years might just be the market leader now. If you’ve neglected them in the past and continue to do so, you do so at your own peril.
Stepping outside the comfort zone of your comp set will allow you to understand not only where your customers might be booking but also what other customers are booking. Once you have a clear understanding of the overall demand (not just what exists in your small comp set), you can develop accurate sales strategies to target the business. More importantly, your revenue team can partner to help you price more effectively.
The Future Is Now
Meetings are happening. If your sales team is busy looking at your comp set, they are most likely missing a good portion of what is happening in your market. Comp sets have their place. They serve you well to measure relative performance. However, inside the sales world and even from a revenue management perspective, they create a myopia that is harmful.
It’s past time to let go of the constraint of the competitive set and open your eyes to the broader market. Customers don’t restrict their purchases based upon who’s in your competitive set. You shouldn’t inhibit your sales strategy in the same way.
Kristi White is VP of product management at Knowland. With two decades of experience in the hotel and revenue management side of the industry, she has advised hundreds of hotels worldwide on improving their business strategy, hotel performance and overall profitability.
This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.