NASHVILLE, Tennessee—Every property has a competitive set, but everyone might not fully understand the best practices when it comes to this data.
During the 6th annual Hotel Data Conference presented by STR and Hotel News Now, Alison Hoyt, senior project manager at STR Analytics, presented information for hoteliers to consider when choosing and using their comp sets. (STR is the parent company of Hotel News Now and STR Analytics is HNN’s sister company.)
“Your comp set means a lot,” Hoyt said. “Obviously, you’re benchmarking your performance off of the aggregate of their performance, so it’s driving your (revenue-per-available-room) index … and it’s your understanding of your market as a whole.”
Hoyt shared several insights when it comes to working with comp sets during the 30-minute presentation titled “Comp sets from all angles.”
1. Comp set distribution is national
There are 30,000 comp sets in the United States. STR tracks nine regions for comp sets: Pacific; Mountain; West North Central; West South Central; East North Central; East South Central; South Atlantic; Middle Atlantic; and New England.
The majority of the comp-set data comes from the South Atlantic region (23%), followed by the West South Central region (15%) and the Pacific region (14%). The New England region holds the least of the comp-set share at 3%.
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2. Comp sets follow general guidelines
U.S. comp sets have as few as three properties and as many as 36 properties.
STR sufficiency guidelines dictate comp sets must include a minimum of three participating properties. However, there isn’t a maximum number of properties allowed in a comp set.
No single property or brand can account for more than 40% of the total participating room supply. Additionally, no single company can account for more than 60% of the total participating room supply.
The average comp-set size is between five and six properties, Hoyt said.
On average, a hotel is named as a competitor an average of 5.2 times.
3. Know how comp-set metrics interact
There are a few metrics to consider when it comes to comp sets:
- primary comp set: the set of properties you determine;
- reverse comp set: the set naming you; and
- unconsidered set: the hotels that name you as a competitor that you don’t name back.
Acquiring the data for the reverse comp set is a great place to start if you’re looking to make some changes to your primary comp set, Hoyt said.
Nationally, on average, there are 2.9 properties that name a property as a competitor that is not on that property’s on radar.
4. Understand nameback percentage
“We developed (nameback percentage) as a term to evaluate that relationship between your property determining those competitors and how those competitors view you,” Hoyt said.
Where the primary set and reverse comp set overlap is where the nameback percentage is found.
Nameback percentages look at the properties put into the primary set and whether, in turn, those primary competitors are naming the hotel back as a competitor in their sets.
The national average of nameback percentage is 48%. That means on average, a little less than half name any one property as a competitor.
Buffalo, New York, is the top market in terms of nameback percentage at 58%, followed by New Mexico South at 57%. Oahu Island, Hawaii, is at the bottom of the pile at 30%, below New York City at 33%.
5. There are purposes for having multiple comp sets
Hoyt cited several reasons for hoteliers to have additional comp sets: regional; local; aspirational; niche; seasonal; and group and transient mix.
“There are those properties that cannot change their competitive sets. If it’s in your ownership contract or management contract, you might not have control over that,” Hoyt said. “So that’s another great reason to find a secondary, tertiary set that is more important to you to benchmark against.”
In the U.S., 92% of hotels have one comp set, while 6% have two and 2% have three or more comp sets. Those numbers change when looking at upper-tier hotels, where 48% have one comp set; 36% have two; and 16% have three or more.