Master Your Market: How to Conduct a Hotel Competitive Analysis in 6 Step
Category: Hotel Revenue Management & Technology | Reading Time: 10 Minutes | Author: Javier
Ever feel like you’re making business decisions in the dark? You’re adjusting room rates, tweaking your package offerings, and refreshing your marketing copy all while crossing your fingers and hoping it’s enough to win over guests.
The good news? Your local market is full of signals. You just need to know how to read them.
Learning how to conduct a hotel competitive analysis in 6 steps helps you cut through the noise. It allows you to spot what your rivals are doing well, identify where they are falling short, and uncover the gaps that your property can own. Done right, evaluating your hotel competition isn’t about chasing other properties; it’s about positioning yourself to win on your own terms.
Here is your step-by-step guide to conducting a competitive analysis that boosts your hotel’s revenue strategy.
What is a Hotel Competitive Analysis?
Simply put, a hotel competitive analysis is a strategic assessment of your competitors’ strengths and weaknesses compared to your own. It helps you find your property’s exact strategic position in the local hospitality market.
Think of it like studying the chessboard before a big game. How do you know what move to make next? By gathering intelligence on your competitors’ pricing, amenities, and product quality, you gain the insight needed to make smart revenue management decisions. The endgame? Checkmate.
Why You Need a Competitive Analysis for Your Hotel
A hotel competitor analysis (sometimes referred to as a value analysis) provides the hard data you need to secure a competitive edge. It prevents you from leaving money on the table with room rates that are too low, while simultaneously protecting you from losing occupancy because your prices are too high.
In the hospitality industry, this evaluation helps you find your pricing “sweet spot.” The old saying “knowledge is power” has never been truer than when dealing with market rivals. Without this intelligence, you surrender your ability to confidently control your pricing strategy and maximize your RevPAR (Revenue Per Available Room).
The 6 Steps to Analyzing Your Hotel Competition
While large hotel chains often hire dedicated revenue managers, you don’t need a massive corporate budget to understand your market. Every accommodation provider from boutique B&Bs to mid-sized independent hotels—should conduct regular market research.
Here is how to execute a successful hotel competitive analysis in six simple steps.
Step 1: Choose Your Hotel Compset
Start by selecting 3 to 5 direct competitors in your local market. For the most accurate comparison, choose properties that attract a similar target audience and offer a comparable guest experience. In the hotel industry, this group is known as your “competitive set” or “compset.”
Step 2: List the Competitive Characteristics
Create a list of features that matter most to your guests. On a scale of 1 to 10, rate where each property (including your own) falls. Here is a standard framework:
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Location: Proximity to attractions, walkability, views, and transit access.
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Property Amenities: Pool, gym, free breakfast, parking, and on-site dining.
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Room Quality: Size, decor, cleanliness, and tech features (like smart TVs or fast Wi-Fi).
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Reviews & Reputation: Both the average star rating and the total volume of reviews.
Step 3: Calculate the “Perceived Value”
Take the average of the scores you assigned in Step 2 for each hotel. This average represents the overall “perceived value” of each property in the eyes of a potential guest.
Step 4: Inventory the Rates
Now, look at the numbers. Note down both the cheapest rate and the highest rate you can find publicly listed across various channels (OTAs and direct websites) for each property in your compset.
Step 5: Plot the Results on a Value Graph
Grab a piece of paper or open a spreadsheet to visualize your hotel market analysis.
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On the X-axis (horizontal): Add the RATE. List the cheapest rate on the left and the highest rate on the right.
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On the Y-axis (vertical): Add the VALUE. This is the average score you calculated in Step 3.
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Plot each hotel on the graph based on its price versus its value score.
Step 6: Review the Results and Adjust Strategy
The graph will immediately show you where you “stack up” against your hotel competitors.
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Are you high-value but low-price? You likely have room to safely increase your rates and drive more revenue.
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Are you low-value but high-price? You need to improve your physical product, elevate your guest experience, or adjust your pricing immediately to avoid losing bookings.
Go Deeper: Creating Secondary Hotel Compsets
For a truly comprehensive view of your market, consider building secondary compsets. These allow you to get a big-picture view by including hotels that aren’t necessarily your direct competition but still influence local market shifts.
The Aspirational Set
Include a few luxury or upscale hotels with a higher price point and premium offerings. If you have an impending renovation or plan to upgrade your amenities, this shows you where you could be positioned in the future.
The Budget Set
Look at economy properties in your area. Watching how these budget hotels react to market changes, seasonal dips, or local events can help you make well-rounded, proactive decisions for your own occupancy strategy.
Conclusion: Turn Your Hotel Competitive Analysis into Action
Operating a hotel without a competitive analysis is like navigating a ship without radar. You might be moving, but you are doing so blindly, hoping you won’t hit an iceberg.
By learning how to conduct a hotel competitive analysis in 6 steps—selecting the right compset, rating value, and plotting prices you move from guesswork to a data-backed strategy. You stop asking “What are they doing?” and start asking “What should I do next?”
Remember, competitor research isn’t a one-and-done task; it’s an ongoing practice. As the market shifts and guest expectations evolve, revisiting your position ensures you never leave money on the table. The data is available. The chessboard is set. Now it’s your move.
Frequently Asked Questions (FAQ) About Hotel Competitor Analysis
Q: How often should I conduct a hotel competitive analysis?
A: Ideally, you should review your compset’s pricing daily or weekly, depending on your market’s volatility. A full, deep-dive competitive analysis (reviewing amenities, perceived value, and overall strategy) should be conducted quarterly or bi-annually.
Q: How do I identify my true hotel compset?
A: Look for hotels within your immediate geographic area that offer similar star ratings, target the same guest demographics (e.g., corporate travelers vs. families), and feature comparable amenities.
Q: What if my hotel is totally unique and has no direct competitors?
A: Even unique properties (like specialized boutique hotels or glamping resorts) compete for a guest’s travel budget. Look for properties that offer a similar experience or target the same reason for travel, even if the physical building looks different.
Q: Can software help with hotel competitive analysis?
A: Yes! Revenue management systems (RMS) and rate shopper tools automatically track your competitors’ daily rates and market shifts, saving you hours of manual spreadsheet work.
