Comp sets are not for making pricing decisions — they're for benchmarking
Comp sets are fine for historical benchmarking but a poor guide for future pricing. Why revenue managers should lean on their own primary demand data and automation instead of looking backwards at a static competitive set.
- distribution
- pricing
Using comp sets is fine for historical benchmarking, but not for making pricing decisions that impact the future. Hotel revenue managers too often get caught up looking backwards at results and trying to abstractly translate that into action — an approach that's far too simplistic.
In today's fast-paced world of online bookings, many revenue managers still lean heavily on their Smith Travel Research (STR) Competitive Set (Comp Set) to make pricing decisions. Benchmarking with comp sets gives a quick market overview, but using them as the basis for pricing or marketing strategy leads to suboptimal outcomes.
Comp sets: useful benchmark, poor pricing guide
Comp sets are often seen as a reliable way to gauge market performance, but they fall short when used to set future pricing. The data is shaped by:
- Remaining room inventory
- Market perception
- Year-to-date performance
- The subjective decisions of other revenue managers
These variables make comp-set data arbitrary and unreliable for future pricing. They reflect external conditions that don't necessarily align with your hotel's specific circumstances.
The complexity of pricing
Hotel pricing is inherently complex. Demand fluctuates regularly and competitors adjust their rates constantly. Translating vast amounts of data into actionable insight in real time is impossible for humans alone — which is exactly where traditional methods fall short.
The solution: automation plus clear reporting
The only way to manage this complexity is automation combined with intuitive reporting:
- Real-time insight: process vast amounts of data quickly and surface up-to-date pricing recommendations.
- Reduced human error: automated systems remove the subjectivity and inconsistency of manual pricing.
- Actionable reports: clear reporting means you understand — and feel comfortable with — every recommendation.
Why primary data is your best bet
Instead of relying on comp sets, focus on your internal data. Your hotel's primary data offers precise insight into actual demand patterns, booking trends, and the optimal price points for different conditions. Decisions are based on accurate, relevant information tailored to your hotel's unique market position.
Clean vs. noisy data
Statistically, the data closest to the variable you want to measure yields the cleanest result. For hotels, that means relying on your own demand data to gauge demand at various price points — leading to better decisions and higher revenue.
The bottom line
The hospitality industry has lagged in adopting modern revenue-management tools. Comp sets are useful for benchmarking, but they shouldn't drive pricing decisions. By focusing on your primary data and embracing automation, you can make more accurate, effective pricing decisions — and capture more of the revenue you're leaving on the table.
More field notes.
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