Strategic success unveiled: How competitive sets lead hoteliers to informed business decisions

Good decisions can be made with high-level information. Optimal decisions come when you have comprehensive information. That is why hotel owners and operators are best positioned to grow their business when they gain detailed insight into the competition.

A Competitive Set, commonly known as a Comp Set , comprises a collection of hotels with which a property competes for business. STR first introduced the industry to Comp Sets in the 1980s. The concept has evolved over the years alongside the industry, but the significance of Comp Sets in a comprehensive benchmarking experience remains unwavering.

Hotels included in Comp Sets are typically located in the same geographic area and offer similar services and amenities. By analyzing these properties in aggregate, revenue managers, owners and a host of additional stakeholders can better understand market position and adjust strategies accordingly.

Comp Sets are most frequently associated with top-line historical metrics but can also be developed for P&L data and forward bookings

Confidentiality provides competitive opportunity for all

Before delving deeper into the significance of Competitive Sets, it is important to define the boundaries of what Comp Sets reveal and what they do not.

The data that powers Comp Sets is not generated through an algorithm. Rather, the data is submitted directly by hotel chain headquarters, management companies, owners and properties.

Even though the data is directly sourced, Comp Sets never show the proprietary data of any of your individual competitors—properties, brands or parent companies. Comp Sets do show aggregate data for the competitors you have selected to include as well as your property ranking (or index) in a specific performance metric.

Confidentiality in sets is how all users are given the same opportunity to gain a competitive advantage. We achieve the highest standards of data confidentiality through robust data validation, relationship databases and enhanced property isolation checks.

Building the right hotel Comp Set

Regardless of the data set you are benchmarking, aggregated performance data for a selected set of your competitors is key to making the whole process work. Without a Comp Set, you are left to compare your business against yourself and the market. While those comparisons are important, Comp Sets provide the most granular intel available in learning where you can improve the performance of your property or portfolio.

When choosing a Comp Set for your property, we advise against merely opting for hotels "across the street" from your subject property. Instead, you should carefully assess the features of hotels in your vicinity, including their class, room count, meeting space, and other relevant factors. This approach is essential as selecting hotels with performance levels significantly different from your own property may lead to misleading results.

Having plenty of options for selecting your ideal Comp Set is key. CoStar and STR provide those options through the world’s largest hotel performance sample with more than 80,000 participating properties. A robust sample provides Comp Set opportunities for any property, especially those in destinations that compete globally. There are no geographic bounds to Comp Sets. Your Comp Set is developed with purpose and need in mind.

Start with a Performance Set

A Performance Set is the primary set for any property. In CoStar's Benchmarking solution, this set is automatically shared with any company that has a relationship to a property. The Performance Set puts brand, operators and owners on the same page with a common base comparison for measuring success and identifying opportunity.

Additional Competitive Sets, additional value

Your insights multiply when you build Additional Comp Sets. These sets let you measure specific parts of your business against the competition using system-defined or user-defined parameters within CoStar's Benchmarking feature.

Additional sets can be for your company use only and visible to all users who have access to a property. These sets can be shared with any eligible company that has a relationship to the hotel. 

Depending on their property types, some of the more common, additional sets that users build focus on:

• Group business
• Weekend leisure business
• New vs. old supply within market
• Aspirational performance
• Feasibility for purchases or prospective change to existing properties

A feature of CoStar, you’re in control of your additional sets through a self-service tool that provides real-time ability to create the right Competitive Set to support a specific business strategy.

Specific ways Competitive Sets empower strategies

Benchmarking is the cornerstone of informed decision-making, and Competitive Sets are foundational in any benchmarking experience. That is why so many industry disciplines look to different elements of Competitive Sets to make everyday decisions and build long-term strategies. 

• Hotel owners understand the competitiveness of their properties and look to performance rankings to collaborate with operators in improving market share. Owners also combine competitive insights with market intelligence to inform their acquisition and divestment decisions.
• Revenue managers understand their levels of success and adjust decisions based on changes in revenue generation index (RGI). Revenue managers also use Comp Sets when negotiating distribution expenses with online travel agencies (OTAs).
• General managers demonstrate their competitiveness to owners and use multiple indices to improve market share. GMs also set bonus targets for their department heads based on index percentage changes.
• Finance departments index gross operating profit per available room (GOPPAR) to understand income vs. expense variables relative to the competition.
• Sales & Marketing teams can better align their pricing strategy with their revenue managers because they are working from the same segmentation data sets and performance indices.

Brand representatives can evaluate decisions and levels of success for specific properties using RGI in addition to setting property targets by looking at change over time across the various performance indices.

Building Competitive Sets in challenging geographic areas

The commitment to confidentiality can occasionally impact Benchmarking users as they create new Comp Sets or maintain existing sets over time. Some geographic areas present difficulty in building Competitive Sets due to high proliferation of a certain brand, management company or owner. To maintain confidentiality and gain flexibility in building Competitive Sets, STR developed the concept of Composite Properties.

A Composite Property is an aggregate of multiple, anonymous properties that acts as one individual property. The hotels that make up this Composite Property are anonymized and chosen automatically by our proprietary methodology that weighs objective criteria such as location, performance, class, property size and mix of business.

Including a Composite Property allows a Comp Set to be exempt from isolation checks. Composite Properties can also fix sufficiency problems for sets that exceed composition thresholds. Further, Composite Properties can bring a data-driven relative “property” to a set, enhancing the value of the analytics.

License types matter

The ticket to full Competitive Set insights and functionality is a Benchmarking license. A Benchmarking license provides full access to product, including all STAR Report screens, Competitive Sets and advanced analytics. This license type is available for employees of companies that are direct clients of STR.

For employees of companies that are not direct STR clients, a Publish View license provides limited access to product, primarily STAR screens and the Performance Competitive Set only.