Hotel Competitor Analysis: How to Build and Use a Comp Set

The hotel industry is dynamic and highly competitive. Success depends on an accurate understanding of market trends and a thorough analysis of competitors’ operations and strategies.

Competitor analysis is one of the most important tools in hotel strategic planning. It helps hotels determine their own market position, recognise their strengths and weaknesses, and identify opportunities and threats (see SWOT analysis). A well-executed competitor analysis can increase market share, support rate optimisation, improve guest satisfaction and increase revenue.

Types of competitors

Identifying competitors is the first step in an effective analysis. A common mistake is for a hotel to define its competitors based on subjective assumptions instead of selecting the properties that potential guests consider genuine alternatives. For accommodation providers, there are three main categories:

• Direct competitors—Hotels that offer similar services, target the same audience and are located in the same geographical area.

• Indirect competitors—These competitors offer a different type of accommodation but compete for the same guests. This is how newly built, high-quality apartments operating as short-term rentals have become serious challengers to hotels in just a few years.

• Potential competitors—Businesses that are not normally active in the same market segment—for example, because they operate in a completely different quality category—but can create serious competition in special circumstances, such as an event tied to a clearly defined geographical location.

Criteria for analysis

A hotel competitor analysis should consider several factors, which can be grouped into the following categories:

• Pricing: Competitors’ rates can have a significant effect on a hotel’s own pricing strategy. It is important to track rates by seasonality, occupancy and different sales channels such as OTAs. When analysing prices, however, it is essential to compare like with like: offers should ideally be in a similar category, include the same services—room only, breakfast or half board, for example—and have the same booking conditions, such as free cancellation or non-refundable terms. If you use dynamic pricing, it is also important to include hotels that price according to similar principles in your competitive set.

• Service quality: Analysing guest reviews on platforms such as Tripadvisor, Google and Booking.com provides useful information about service standards, quality of service and overall guest satisfaction.

• Marketing and online presence: Examining competitors’ websites, social media activity, campaigns and search engine optimisation (SEO) can help improve your online strategy.

• Location and accessibility: Geographical location, transport options and nearby attractions can all be important factors in competition between hotels. Some observers argue, however, that location matters far less in the online marketplace when the service itself is more important than the town. For example, a family-friendly wellness hotel in western Hungary may compete more directly with a similar hotel in eastern Hungary than with an adults-only wellness hotel in the same town.

• Innovation and technology: Digital solutions—such as a revenue management application supporting dynamic pricing, mobile apps, smart rooms, contactless check-in and contactless payment—can make operations more efficient and thereby reduce costs. They can also improve guest comfort during both the booking process and the stay, creating a competitive advantage.

• Sustainability: Environmentally friendly practices such as energy efficiency, waste reduction and the use of local products are becoming increasingly important in guests’ decisions, so it is worth monitoring what competitors are doing in this area.

Analysis methods

Competitor analysis can be carried out in several ways. The simplest and most commonly used methods include:

• Online research—Data is collected from publicly available information, including hotels’ own websites, rates on OTA websites and social media activity. Digital applications such as rate shoppers and revenue management systems can greatly assist online data collection, especially the collection of OTA rates.

• Guest-review analysis—Using text-analysis tools or manual review can reveal the areas in which a competitor performs better or worse and which additional services it offers compared with your own property.

• Benchmarking—Comparing the hotel’s own performance with that of competitors using key performance indicators (KPIs), such as RevPAR (revenue per available room), ADR (average daily rate) and OCC (occupancy), is essential. Because individual hotels’ data is not public, it is generally only possible to access industry averages—such as the average for several properties in the same category or location—through data from the Hungarian Central Statistical Office (KSH) or STR.

• Mystery shopping—An employee or commissioned evaluator tries a competitor’s services and then prepares a detailed report on the experience.

The benefits of competitor analysis

Conducting competitor analysis regularly provides many benefits. It enables a hotel to:

• Understand the market environment better.

• Respond to market changes, such as new trends and rate movements, in time.

• Develop more competitive offers—something greatly supported by using an effective revenue management system such as RoomRaiser.

• Identify how it differs from its competitors, supporting clearer positioning.

• Improve its services and the guest experience.

How does RoomRaiser help with competitor analysis?

An important factor in RoomRaiser’s pricing process is that the daily rates of selected competitors can be included in the system’s algorithm, allowing market movements to be reflected through competitor rates. In the application, users can set the weight given to competitor rates within the overall algorithm—in other words, how important competitors’ prices are when setting their own rates. They can also choose what types of rates the system should search for in terms of both meal plan (with or without breakfast) and cancellation conditions (refundable or non-refundable).

During onboarding, the RoomRaiser team also helps identify suitable competitors. It also recommends how much RoomRaiser should adjust each competitor’s displayed rate based on value for money, thereby accounting for potential price differences caused by differences in quality.

RoomRaiser—Competitor weighting Once the settings are in place, RoomRaiser retrieves competitors’ market rates daily and displays them in a chart on the Dashboard alongside the property’s own rates.

RoomRaiser Dashboard After the pricing process, the Calendar view also shows how each competitor rate affected the rate recommended by RoomRaiser.

RoomRaiser Pricing Calendar

Closing thoughts

Hotel competitor analysis is not a one-off task but a continuous, cyclical process that helps underpin hotels’ strategic decisions. It is worth reconsidering from time to time whether the right competitive set has been selected, because the market position of both your own hotel and its competitors can change. Successful competitor analysis also requires openness to the market and a willingness to keep learning and adapting. Hotels that monitor their competitors and can respond quickly and effectively to market changes can gain a significant competitive advantage in the hotel industry.