April 2nd, 2015
Briefly define benchmarking as it relates to the hotel industry.
Benchmarking in the hotel industry is when the individual hotels will compare their performance to the performance of their competitor hotels. Then the information will be tracked by the subject hotel. The hotels will also compare their performance to the hotels in the pre-fined industry segments near the hotel.
Explain how hotels perform benchmarking.
The hotels will compare their own hotels to a variety of comparative group of hotels in order to gauge the performance of their performance. This is going to be done through a competitive set. A competitive set is a group of hotels that are used primarily for comparing their hotel against a subject property for the purpose of benchmarking.
Identify the rules related to creating a comp set.
There are four rules for creating a comp set. The first rule is to obtain a census database file for a specific geographic area like a market. This is going to depend on the hotels that you are working with, the file could also include similar unique hotels in a broader geographic area. The second rule is to select specific hotels in the area and create come sets for these properties. You can select a wide range of different hotels. The third rule is to review the fields in the census database file to narrow down the choices by participation, scale, and tract. You can use Google to help identify where the hotels are located and current rates. The fourth rule is to review additional fields to further narrow down your choices. Check the web sites of possible competitor hotels to look for features and similarities.
Identify the rules related to changing a comp set.
There are two main rules related to changing a comp set. The first rule is if a property wishes to change the comp set, they must do so by a net change of two or more properties. They can add two hotels, or remove two hotels. They could also add one hotel and remove one hotel, add two hotels and drop one hotel, drop two hotels and add one hotel. The second rule is if only making a change with two properties, both must be in a different chain, parent company, and management company from the subject hotel.
Why do hotels have multiple comp sets?
There are several reasons why hotels have multiple comp sets. The first reason is to the local versus regional so one set will be nearby and the other one will be farther away. The second reason is the subject hotel might be between two markets or cities. The third reason is that it is aspirational meaning that the second set of hotels of higher quality or performance level. The fourth reason is the different sets can focus on different hotel chains. The fifth reason is the different set will be for special niches. The sixth reason is that it could be index-focused. The seventh reason is the different sets could be for weekday or weekend or even the group/transient mix. The eighth reason is that the different entities might not agree.
Briefly describe how companies perform benchmarking.
Companies will benchmark the performance of their portfolio in a variety of manners. They will compare their own business to all of the competitive businesses. This means that they will compare the performance of a chain to the respective scale. Most companies will create a corporate comp set that will allow them to compare their company to a user-group of chains that they feel they compete most closely with (Share, 2013).
References:
The Share Center. (2013). Hotel Industry Analytical Foundations. [Powerpoint slides].
