Setting rates without looking at the competition is like pricing in the dark. But blindly copying the hotel next door isn't a strategy either, it's just outsourcing your pricing to someone else. The sweet spot lies in a well-executed competitor analysis that informs, rather than dictates, your rate structure.
Step 1: Define Your True Competitive Set
It’s not about comparing yourself to every accommodation in your area, but rather to the 4 to 6 properties genuinely competing for the same guest: those with similar positioning, location, amenities, and price points. Comparing your rate against a luxury hotel or a hostel, for example, offers zero useful insight.
Step 2: Track Rates Over Time, Not Just Once
Competitor pricing fluctuates based on the day of the week, booking window, and seasonality. A single snapshot only gives you part of the picture the real value comes from tracking patterns over several weeks to understand how each competitor reacts to shifting demand.
Step 3: Cross-Reference Price with Estimated Occupancy
A competitor with lower rates isn't necessarily making more money. If their calendar fills up too quickly on booking platforms, they might be underpricing their inventory. If their prices stay high but their availability remains wide open, they could be struggling with occupancy. Price only tells half the story.
Step 4: Define a Pricing Structure, Not Just a Single Rate
A complete rate structure includes: a seasonal base rate, minimum length of stay (MLOS) restrictions during peak dates, a clear cancellation policy, and differentials by room type or channel. Setting this up systematically prevents reactive, ad-hoc decisions every time demand shifts.
Step 5: Adjust Based on Your Own Performance, Not Just the Market’s
Benchmarking is an input, not a rule. Your historical occupancy, operating costs, and unique value proposition should carry just as much weight as what your competitors are doing. The ultimate goal is a rate structure that is both competitive and profitable—not simply the cheapest on the market.
Want us to analyze your competitors and design your pricing structure? Let’s talk.