Comparing Your Service Levels Against Your Competitor's
By Marco Albarran Managing Director, Remarkable Hospitality, Inc. | September 25, 2011
As we have been moving through a rough economical situation, we have experienced sluggish growth in ADR, with slight growth in Occupancy Percentages overall. Indicators, as well as recent conversations with hospitality leaders suggest that we will not see 2007 numbers for a few more years (the best case scenario would be two more years), yet, we are starting to see the light at the end of the tunnel, as we cautiously move forward. Many markets are still at a standstill when it comes to new supply (hotels or restaurants entering the market), so no concerns over new competitors should be of major headaches at the moment. This is, in one way, a great opportunity for existing establishments to focus more on working on their service levels as well as their service cultures. The reality of the hospitality market is that it is still under a lot of distress, so this affects the bottom line of any hospitality-based business, naturally. That said, hospitality companies should be focusing on improving its own product, tangible and intangible services, and should also be consistently aware of what the existing competitor is doing as well. Sure, we can always study STAR reports or see how our competitive brands are doing and where our positioning in the market is, for example, yet at the end of the day, what is it that the guys next door are doing, that is either bringing them customers or scaring them away?
There are fundamental service factors that we may have to keep into consideration that we want to ensure that we are, at minimum, up to par with this consistently. For example, the hotel industry lists safety, comfort and security as their main baseline for a viable service model/fundamental service factors.
Based on your property's segment, positioning and brand, you should always make the time to look into what minimum fundamentals are needed to always meet and be classified as this. There should be an understanding of this as the establishment wants to perform at a service level in which is mostly viewed as from a customer perspective. For example, if the hospitality establishment is an upper-upscale property, or a fine-dining establishment, rated at perhaps four stars or diamonds, they should do not want to attempt to go above or beyond that. You will lose customers because you will set incorrect expectations that will surely show off in customer reviews and now days, in social media sites.
Understand who your competitors are within the brand in which you are operating. For example, in lodging, Smith Travel Research develops a lodging list which classifies most well-known brands, under their respective segment categories. This should be used as a macro/initial tool to determine where your brand falls under and also, first and foremost who your competition is.
Conducting an overview of the local market (typically somewhere along the line of 5-8 miles radius) is an important concept to do as well. Keep in mind that anything beyond this radius may actually be another market which will not have anything to do with the customers you may serve. In markets that may be broader, such as in rural areas like the Caribbean or Central America, may have to do a more extensive study to further understand who may fall into their competitive set, perhaps looking into similar markets in similar islands.
Having identified both the market and the brands in your establishment's area, it is important to identify direct versus indirect competitors. Typically, a market should exemplify anywhere from 2-4 primary competitors, as well as any secondary competitors. Once this information is established, there will be a good sense of how to commence to understand who we should measure ourselves against in our local area. Always keep in mind that the consumer is the ultimate decision-maker on this as well, and price tends to be a strong motivator, however, quality and value will trump this overall.