Hotel Benchmarking: Unlocking Hotel Success to Dominate Your Market

Outperform Your Hotel Competitors, Boost Guest Satisfaction, and Drive Continuous Growth

The ability to outshine competitors isn’t just about offering better rooms or amenities.  It’s about harnessing data through customer experience benchmarking to continuously improve.

 Benchmarking gives hotel owners and hoteliers the insights needed to identify strengths, address weaknesses, and make informed decisions to enhance guest experiences and drive growth.

 But not all benchmarking is created equal.

 George Polyard, VP of Customer Experience at ComOps, shares that effective customer experience benchmarking comes with challenges that hotels must navigate.

 Here he dives into what it is, how to overcome limitations and shares a few solutions for consistent data gathering.

What is Hotel Benchmarking?

George says, “Benchmarking is the ability to take your own metrics—such as employee and guest survey results, online review feedback—and compare them against identical or comparable data points from other sources, locations, or time periods.”

 In the hotel industry, benchmarking is crucial for performance assessment, competitive analysis, and revenue management within a dynamic and evolving market.

The Importance of CX Benchmarking in the Hotel Industry

George emphasizes the value of benchmarking by citing a study, which reveals that organizations that engage in customer experience benchmarking significantly outperform their peers.

 “Organizations that benchmark broadly outperform those who don’t by a 2.4 multiple,” he explains.

 This comparison allows hotels to gauge their performance against competitors over different periods, enhancing their understanding of strategies that improve customer experience metrics and overall hotel success

Key Benchmarking Metrics

Understanding Essential Metrics for Success

To effectively use customer experience benchmarking a hotel’s performance, it’s crucial to understand the key metrics that drive success in the hospitality industry. These metrics provide a comprehensive view of a hotel’s performance and enable leaders to make informed decisions.

 The essential metrics for hotel benchmarking include: 

• Occupancy Rate: This metric indicates the percentage of available rooms occupied by guests. A higher occupancy rate often signifies strong demand and effective marketing strategies.
• Average Daily Rate (ADR): ADR measures the average rate paid by guests per room per night. It helps in understanding pricing strategies and revenue management effectiveness.
• Revenue Per Available Room (RevPAR): RevPAR is calculated by dividing the total room revenue by the number of available rooms. It combines occupancy and ADR to provide a holistic view of a hotel’s financial performance.
• Guest Satisfaction Ratings: These ratings, derived from online reviews and guest feedback, reflect the quality of guest experiences and service levels.
• Direct Channel Performance: This metric tracks the percentage of bookings made through the hotel’s website or direct channels, highlighting the effectiveness of direct marketing efforts.
• Market Penetration Index: This index measures a hotel’s market share compared to its competitors, indicating its competitive position in the market.

 By tracking these metrics, hotels can gain a deeper understanding of their performance and identify areas for improvement. This comprehensive approach ensures that revenue managers can make informed decisions to enhance the hotel’s strategy and overall success.

Overcoming Benchmarking Data Limitations

One of the fundamental challenges of benchmarking is access to consistent and reliable data.

 George highlights, “Only 27% of organizations report having access to reliable benchmarking data.”

 This often stems from competitors’ reluctance to share data, creating barriers to obtaining comprehensive insights. Despite these hurdles, hotels can still perform effective customer experience benchmarking using alternative approaches.

 Here are two viable options:

Self-Benchmarking: A Solution for Consistent Historical Data

Self-benchmarking is a key alternative to relying on external data.

George advocates for this approach, noting, “Where there is a lot of value is comparing your performance to your own past performance. It removes all of that ambiguity and controversy within benchmarking.”

 By focusing on their historical data and metrics, hotels gain a clearer picture of their progress and growth areas.

Leveraging Public Data: Online Reviews

George also suggested harnessing publicly available data, such as online reviews. Most hotels assess their performance over time compared to competitors by analyzing essential benchmarks like occupancy rate and ADR.

 “Online reviews are literally apples to apples in the sense that TripAdvisor or Google reviews are the same for your competitor as they are for you,” he says.

 With the help of online reputation management tools, hotels can easily benchmark their performance and verbatim feedback against competitors to gain valuable insights and identify potential opportunities for improvement.

Choosing the Right Benchmarking Tool

Evaluating Tools for Optimal Performance

Selecting the right customer experience benchmarking tool is critical for hotels to gain accurate and actionable insights into their performance.

 When evaluating benchmarking tools, consider the following factors:

• Data Quality and Relevancy: Ensure the tool provides high-quality, relevant data that accurately reflects the hotel’s market and performance. Reliable data is the foundation of effective benchmarking.
• Data Granularity: Choose a tool that offers granular data analysis, enabling hotels to drill down into specific metrics and segments. This level of detail is essential for identifying precise areas for improvement.
• User Interface: Opt for a tool with an intuitive interface that is easy to use and navigate. A user-friendly interface ensures that all team members can efficiently utilize the tool.
• Integration: Consider a tool that integrates seamlessly with existing business intelligence (BI) tools and systems. Integration simplifies data analysis and enhances the overall efficiency of benchmarking processes.
• Support: Look for a tool with reliable customer support and minimal waiting time. Effective support ensures that any issues or questions are promptly addressed, maintaining the smooth operation of benchmarking activities.

By carefully evaluating these factors, hotels can select a customer experience benchmarking tool that meets their specific needs and provides optimal performance. This strategic choice will empower hotels to leverage data analysis for continuous improvement and competitive advantage.

Best Practices for Hotel Benchmarking

Strategies for Effective Implementation

To maximize the benefits of customer experience benchmarking, it’s essential to implement best practices that drive effective decision-making.

 Here are some strategies for successful hotel benchmarking:

• Set Clear Goals and Objectives: Establish specific goals and objectives for benchmarking, such as improving revenue management or increasing direct bookings. Clear goals provide direction and focus for benchmarking efforts.
• Choose Relevant Metrics: Select metrics that align with the hotel’s goals and objectives, such as occupancy rate, ADR, and RevPAR. Relevant metrics ensure that benchmarking efforts are targeted and meaningful.
• Analyze Data Regularly: Regularly analyze benchmarking data to identify trends, opportunities, and areas for improvement. Consistent data analysis helps in staying informed and proactive.
• Use Data to Inform Decisions: Use benchmarking data to inform marketing strategies, revenue management decisions, and operational improvements. Data-driven decisions enhance the effectiveness of the hotel’s strategy.
• Continuously Monitor and Adjust: Continuously monitor the hotel’s performance and adjust strategies as needed to stay competitive. Ongoing monitoring ensures that the hotel remains agile and responsive to market changes.

By implementing these best practices, hotels can unlock the full potential of customer experience benchmarking and drive business success. This approach fosters a culture of continuous improvement, enabling hotels to thrive in a competitive market.

ComOps’ Approach to Benchmarking

ComOps employs various customer experience benchmarking strategies within our client portfolio to drive operational improvements.

 George shares, “We have clients with multiple units in one brand who benchmark individual properties against the entire portfolio.”

 Understanding the hotel business segment is crucial for assessing market dynamics and performance across different parts of the industry. This internal benchmarking allows brands to maintain consistency and identify top-performing properties as benchmarks for the rest.

ComOps utilizes the Medallia platform’s “Rivals” feature for broader benchmarking efforts, which incorporates competitor data from online reviews.

“The thing I love about it is that it’s public. You can bring in metrics that are consistent and also analyze competitor comments,” he says.

 This approach provides hotels with actionable insights by revealing successful competitors’ strategies.

Benchmarking: A Strategic Tool

Customer experience benchmarking is not just about comparison; it’s a strategic tool that enables hotels to clarify their current standing, uncover improvement areas, and optimize their hotel's strategy.

 As George states, “By leveraging self-benchmarking and public data, hotels can enhance their performance, regardless of access to competitor data.”

 Embracing benchmarking practices can lead to a culture of continuous improvement, helping hotels stay ahead in a competitive market.

 Looking for help with your customer experience benchmarking? Reach out to us below.