Dear WuBookers, competitor analyses are a fundamental activity for hotels and properties that want to remain competitive and improve their offering while maximizing profits. On the contrary, neglecting it or being unprepared can damage your business or cause you to miss out on important opportunities for visibility and growth. In this article, we will cover competitor analysis from A to Z.

Why competitor analyses are essential for hotels

Competitor analyses are an essential part of developing a truly effective revenue management strategy. Knowing how other properties operate allows you to understand your own positioning in the market and to anticipate any changes in demand.

Please note: this method is not a miracle that can solve everything on its own (knowing the prices of others is not enough to act effectively on your own!), but it certainly provides an important database for understanding how to adjust rates and services in order to meet customer demands.

By competitor analysis, you can:

• Identify new targets: Analyzing the expectations and needs of your audience can reveal characteristics and potential that are attractive to other customer segments.
• Increase your offer: Knowing how others operate can provide useful ideas for improving your own offering, compensating for any weaknesses or working on your distinctive features.
• remain competitive: focusing only on yourself can cause you to lose sight of industry trends. On the contrary, having an overview of your competitors allows you to adapt quickly without risking being left out of the market.

Staying grounded in reality, preventing any declines, and exploiting new opportunities are the main advantages guaranteed by a well-done analysis. But where do you start to do one properly?

Where to start to perform an effective analysis

First of all, it is good to know that there is specific software (such as RMS) that allows you to perform competitor analysis in an automated and accurate way. These are advanced and accurate solutions but, in some cases, they may be too feature-rich for smaller businesses or very expensive.

Competitor analysis can also be done manually, and it is this second option that we will focus on here.

The first step is to define your objectives. You need to ask yourself why you want to analyze the competition: is it to learn more about the market? To compare rates and try to increase your profitability? To gauge the online reputation of others?

Having a clear idea of what you want to analyze allows you to property structure your work and avoid wasting time searching for information that is of little use.

How to identify competitors to analyze: create the compset

Now that you know what aspects you want to analyze, move on to researching your competitors. Not all establishments near you are actually your competitors. First of all, you need to distinguish between direct and indirect competitors: the former are those that are immediately comparable to your property and that customers end up comparing during reservation; the latter, on the other hand, are alternatives that are not comparable in terms of offer and positioning but which could still be a valid option in certain circumstances (for example, if you run a hotel, an indirect competitor could be a B&B).

For the analysis, the focus should remain on direct competitors—at least a couple and up to five to start with—to be identified using these five parameters:

• Location: The area is one of the most important criteria for travelers. So start by narrowing the field to properties near you that meet the same proximity requirements in terms of tourist or logistical attractions;
• prices: the second deciding factor is undoubtedly cost. Only include hotels with similar rates to yours on your list, as they are likely to attract the same type of clientele;
• type: this is a slightly broader and more “abstract” parameter than the others. It means considering not only hotels of the same level or category (one, two, three stars, etc.), but also those that are comparable in style or image. Essentially, if you offer luxury experiences or run a boutique hotel, your competitor is unlikely to be a family-run guesthouse;
• offer: i.e., types of rooms and services. There does not need to be a perfect match (a hotel may have one or two additional services), but it is important that there are several points in common; otherwise, you can exclude them from the list;
• reasons for travel: i.e., types of customers. Reviewing the purposes of travel (families looking for relaxation, business targets traveling for work, and so on) helps you understand which properties meet the needs of travelers and which audiences you are targeting.

In general, putting yourself in the shoes of those who purchase accommodation is the right way to find your set of competitors, also called compset.

Some tools to streamline this task and obtain information more quickly are, for example, Google Maps and OTA platforms, but portals that collect customer reviews also provide indications of perceived quality.

Once this is done, it is time to proceed with the actual analysis.

Competitor analysis for hotels: a step-by-step guide

To do this, it is best to work with an Excel file where you can enter your hotel and other competitors in multiple columns and, in the rows, the various parameters you intend to analyze, for example: rate, location, services, rooms, reviews.

Rate evaluation

For rates, you need to calculate the average between the highest and lowest prices, and you can predict two date ranges: one close to the weekend and one midweek. By doing so, you will have an idea of how much costs increase or decrease depending on the period.

In addition, you can also create several sheets—with the same property—divided by month, to get an overview of trends over longer periods. The important thing is to always extrapolate the data in the same way (i.e., using the same source, whether it is an OTA site or the hotel’s website) and at the same time for all competitors, so that it is not distorted by temporary variations.

Other features

As for other features, you can assign a score from 1 to 10, based on review sites or online agencies.

Again, however, it is important to maintain consistency in the extraction of data.

In the end, you can obtain an average score for each competitor (and for your property) and get an idea of the perceived “qualitative” situation.

The overall picture

Finally, you may decide to correlate rates with other criteria to get an overall picture. Create a Cartesian diagram with a single quadrant: on the horizontal axis, place the average prices of the other properties and your own; on the vertical axis, place the overall average rating (the general ratings you assigned earlier). At the intersection of the two values, you will need to place the name of the corresponding hotel.

This way, you may discover, for example, that the competitor with a higher cost is lacking in terms of overall quality or, conversely, that your cost is lower than other properties offering the same services, which means there is room to increase your rates.

The interpretation varies greatly depending on what emerges, and each business will have to take into account its own objectives and possibilities for action.

3 mistakes to avoid when analyzing competitors

Analyzing competitors is not a simple task: there are many factors to consider and it is easy to make mistakes. In addition to possible typos in the transcription of data, there are frequent errors that can compromise the work done.

1. Not updating the analysis

The tourism sector is constantly evolving and it is important to consider changes to avoid making unintentional mistakes. Our advice is therefore to periodically review your compset, both to check that the competitors you have chosen are still relevant and to record any improvements or changes in their offerings that may have been developed without you noticing. Ideally, you should check and update the table twice a year to avoid falling behind the competition.

2. Choosing the wrong competitors

Both when compiling and updating the table, it is possible to be misled by subjective reasons, i.e., to consider properties that seem similar to ours as competitors simply because we would like to be like them. Aspirations and broad objectives are always useful, but in this case, they risk distorting the results and putting us in difficulty. Rather than including them at all costs, it is possible to draw up a parallel list of hotels on which to carry out the analysis and keep it in mind as a model from which to draw inspiration and to aim for.

3. Not taking advantage of technology

As we said at the beginning, there are software that can monitor competitors, often obtaining metrics that are difficult to find otherwise.

But these are not the only technological solutions that can be exploited: once the survey is complete, it is important to take action on your own rates and commercial offers. How? Through the PMS, the most suitable tool for operating quickly, uniformly, and correctly. Zak, the hotel management software by WuBook, allows you, for example, to change prices on a daily basis or in bulk for a certain period of time. Furthermore, if you already have an active RMS, you can connect it to Zak so that prices are updated automatically thanks to direct communication between the two software programs.

Technology offers fundamental support even when competitor analysis is done manually and allows you to capitalize on strategies and efforts that, otherwise, risk being wasted. A real shame considering how important they are, right?