Hotel Benchmarking – 3 Easy Steps to Get Started
Hotel Benchmarking isn’t just a nice-to-have but is essential for the success of your hotel.
It allows you to see how you stack up against competitors and optimize your hotel’s performance.
In this blog, we deep dive into the topic and share how you can easily get started with benchmarking.
What is hotel benchmarking?
Benchmarking is the process of comparing whether your hotel KPIs are performing better or worse than your competitors.
To give you a clear understanding, here’s our best definition of hotel benchmarking:
“Benchmarking allows a company to understand its competitors, compare against them and know whether the processes and the performance KPIs are being delivered, better or worse than their competition.”
Francisco Martinez, Key Account Director, Hoist Group
Most importantly, it helps hoteliers understand their market better, make data-driven decisions, find performance gaps, and adjust strategies to improve hotel performance.
Why is benchmarking so important for hotels?
Benchmarking in the hotel industry provides a very specific value.
This is because the performance of your hotel is dependent on so many contextual factors, like:
Weather and the time of the year
Epidemics and other extraordinary circumstances
Local and regional events and the list goes on…
These uncontrollable factors will have a huge impact on your KPIs, like RevPar, ADR, or Occupancy rate, making it difficult to determine whether your strategy is really working.
And that’s where benchmarking comes in.
It’s the most reliable and powerful way to help you accurately measure the impact of your strategies and the success of your hotel’s performance.
Without it, it’s almost impossible to know whether your marketing strategy, new pricing policy, or booking.com campaigns, are delivering the results they should be.
How to perform hotel benchmarking analysis?
Now that you understand the importance of competitor benchmarking, you’ll want to know exactly how to perform an analysis.
In a recent article, Joyce de Kruif, Principal Industry Consultant at IDeaS put it nicely,
“Competitor monitoring and benchmarking is not a one-time exercise but an ongoing process as an integral component of a hotel’s business strategy.”
In other words, it’s is a long-term continuous process.
This framework by Inspirage also illustrates a typical benchmarking framework well.
Luckily, tech has come a long way and benchmarking solutions have simplified the process for hoteliers.
Solutions such as Hoist Dashboard make it easy for hoteliers to analyze the performance of their hotel or hotels and compare them to their competitors.
It helps to aggregate data from different tech and data sources, like property management systems, into one single view.
This data on your competitors is “the secret sauce” to success, helping you seamlessly make comparisons.
Learn how to use Hoist Dashboard by taking our free certificate course!
3 steps to get started with benchmarking in the hotel industry
Once equipped with the right tools, here’s how we suggest you get started:
1. Define who you want to compare against
Benchmarking works best if you compare your hotel to hotels in the same conditions or the same local category.
For example, you could compare your hotel against other hotels in your city targeting the same guest market.
Here’s what you could drill down into:
Your hotel vs global average
Your hotel vs country average
Your hotel vs city average
One of your hotel locations against another
These comparisons allow you to truly understand whether your hotel did well or not. Watch our latest webinar to get benchmarking examples and best practices using Hoist Dashboard.
2. Decide what hotel metrics to benchmark
It’s likely that you already have a clear picture of the KPIs you want to track or are already tracking. When it comes to benchmarking, you can use those same metrics to compare against your competitors.
Some key metrics you might want to compare are:
Your performance metrics
Booked Room Nights
Pickup Occupancy Forecast
Pickup Average Daily Rate Forecast
Your reputation metrics
Number of Reviews
For example, when doing your analysis, you might find that your occupancy rate is at 95% compared to other hotels in your area.
This could mean that you’re not getting all the business you could and that your competitors are doing better.
On the other hand, if your ADR is 102% compared to the average in your local area, you can assume that your pricing strategy is up to par.
Image from Hoistgroup.com
3. Compare historical data with future data
Finally, we suggest that you explore both your historical and future-looking data.
Here are a few examples of common timeline indicators:
Year-on-year: You could choose to compare your KPIs against competitors on a year-on-year view. With the current world situation, this traditional year-on-year comparison may not be as effective and is probably less actionable when benchmarking your hotel’s performance.
Week-on-week: You could choose to compare this week’s occupancy rate with last week’s, and compare it to the competitors in the same city. This is a more efficient way to investigate and compare your hotel’s performance.
Forecast data: By selecting your Business on Books data you could get insights into the current booking trends and forecast indicators compared to your competitors.
Looking into your BOB data, allows you to know your future performance and make changes to optimize it.
Digging into both historical and forward-looking data will help you get a clear picture of how your hotel is doing.
Image from Hoistgroup.com
But remember, it’s is a process helping you learn what’s working in your strategy and act on what’s not.
Tracking metrics and comparing your hotel against your competitors means nothing if you don’t put those insights into action.
Magic Hotel is a great example of how to do it the right way.
By using Hoist Dashboard to monitor their bookings, revenues, and occupancy, they are able to better implement efficient marketing and pricing strategies to optimize performance.
Start Benchmarking Your Hotel Today
There’s no doubt that competitor analysis is vital for optimizing a hotel’s performance and with a tool like Hoist Dashboard it’s easy.
What makes our tool unique is the amount of data we aggregate, making it effortless for you to compare your key metrics against other hotels on the market.
About the Author
Dani Rees is a Software Sales Specialist at Hoist Group.
She grew up in hotels and her interest in Hospitality started from day one. She has a keen understanding of what it takes to run a successful property from the ground up. She is a Hoist Dashboard expert and can help you be the first one out of the gate and get ahead of your competitors!