315 | COVID Comp Sets: The pandemic has dramatically altered hotels’ playing fields

Summary: <br> {caption}The coronavirus crisis has forced hotels to reexamine their traditional competitive set as nearby properties close or transition to other uses.{/caption}<br> Experts advise owners and operators look differently at business drivers, including who is booking these days<br> he coronavirus crisis has altered the business models of many hotels. For that reason, the pandemic also is forcing hotel managers to reconsider their competitive sets and how to benchmark their hotel’s business performance.<br> Just about every hotel owner and operator is familiar with STR’s STAR Report.<br> STAR is an acronym for Smith Travel Accommodations Report. Smith Travel Research is the original name of STR Inc., which switched its official company name to the initialization several years ago.<br> The STAR Report is a weekly roundup of how one hotel operation is faring against similar lodging businesses in a given market.<br> The STAR Report has been around for more than 20 years. It identifies a competitive set of hotels in a specific market and enables hoteliers to see the performance metrics of nearby hotels of like size and service levels. It’s a valuable tool for hotel managers crafting a strategy to grab their hotel’s fair share of business in a market.<br> <br> {caption}COVID COMP SETS: The pandemic has dramatically altered the playing field for hotels that use competitive sets to benchmark their business against similar hotels in their market. Episode 315 of Lodging Leaders podcast explores the origin of the competitive set and how the coronavirus crisis as reconfigured the traditional business-performance tool.{/caption}<br> <br> Birth of the Comp Set<br> As common as a competitive set or comp set has been to hotel operators, it is among many things the coronavirus crisis has changed in the lodging industry. In fact, the lead creator of the benchmarking tool says comp sets, if used today as originally conceived, can misguide business decisions during and post-pandemic.<br> Mark Lomanno was president of STR from 1999 through 2011. During his tenure, Lomanno led the creation of the traditional competitive set.<br> Each week, STR provides a hotel that pays to participate in its benchmarking program a look at its own business metrics as well as those of nearby similar hotels. Many hotel managers value the information they can glean from the regular updates.<br> However, <a href="https://www.linkedin.com/in/mark-lomanno-675b38a/" target="_blank" rel="noopener">Lomanno</a>, who is now a partner and adviser at <a href="https://www.kalibrilabs.com/" target="_blank" rel="noopener">Kalibri Labs</a>, which also tracks lodging industry business metrics, said so much more information is available to hotels these days that traditional comp sets merely reveal the tip of the iceberg of a lodging market’s performance.<br> STR first came up with the concept of a comp set at the turn of the 21st century when the company was “looking for a way to get a little bit more granular data” to help hotel businesses compare their performance against likewise competitors, Lomanno said.<br> “The idea behind the comp set was to try and mirror where a guest would choose to stay if they didn’t stay with you.”<br> The STAR Report focuses on segments of guests as “no hotel competes with another hotel for a hundred percent of its guests,” Lomanno said.<br> Today, the STAR Report is used by some hotel owners and managers in a way it was not originally intended, Lomanno said. Many companies evaluate hotel employees’ job performance and compensation on the results revealed by STAR Reports. This is not a smart way to use the report, he said.<br> “It basically reduces everybody’s pricing and view of how they want to attract customers down to the lowest common denominator of who they have in their competitive set,” he said. “And so the competitive sets were almost solely based on who was in proximity to your hotel and who ...