Hotel Competitor Pricing Analysis: How to Monitor and Compare Rates

A competing hotel lowers its room rate by 20%. Should you do the same? Not necessarily. The competitor may have more rooms left to sell, offer different booking conditions, or target a different type of guest.

Understanding why competitors change their prices can help you make better pricing decisions for your own hotel.

What is hotel competitor pricing analysis?

Hotel competitor pricing analysis involves comparing room rates and booking conditions at hotels that compete for similar guests. It helps you understand your position in the market and how competitors' prices change for different stay dates.

Two related terms are often used:

• Rate shopping is the process of checking competitor prices and booking conditions for selected dates.
• Rate intelligence involves analyzing this data to identify pricing trends and changes in the market.

For example, rate shopping may show that several competitors have raised their prices for an upcoming weekend. Rate intelligence helps you assess whether the increase is part of a wider market trend.

How to build your hotel comp set

A comp set, or competitive set, is a group of hotels that compete with your property for similar guests. These should be hotels that potential guests would really consider alongside yours.

Choose hotels that compete for the same guests

When selecting hotels for your comp set, consider:

• Location: proximity to your property, major attractions, business districts, and transport links.
• Star rating and positioning: hotel category and market segment, such as budget, midscale, upscale, or luxury.
• Room quality and facilities: room size, amenities, breakfast, parking, and other services.
• Guest segments: business travelers, leisure guests, families, or groups.
• Reputation: guest reviews and ratings.

Keep your comp set focused

For many independent hotels, five to eight competitors provide a manageable starting point. A smaller destination may have fewer relevant properties, while a large city may have more.

You may also need different comp sets for different guest segments. A city hotel, for example, might compete with business hotels on weekdays and leisure properties at weekends.

Review your comp set regularly

Review your comp set periodically to make sure the hotels you track are still relevant. New properties may open, existing hotels may renovate, or their positioning may change.

Add hotels that have become direct competitors and remove those that no longer compete for the same guests.

How to compare competitor hotel rates correctly

Two hotels may offer rooms at different prices, but that doesn't necessarily mean one is cheaper. The difference may come from booking conditions, included services, or additional fees. To make a fair comparison, you need to look beyond the room rate.

Check stay dates and booking conditions

When you check competitor hotel rates, use the same search conditions wherever possible. Compare offers for the same stay dates and number of guests. Check cancellation policies, meal plans, taxes, fees, and any promotions or membership discounts.

For example, consider two offers for the same Saturday:

The competitor's room rate is €25 lower, but the difference falls to €13 once mandatory fees are included. Your offer also includes breakfast and more flexible cancellation, which may justify a higher price.

Compare room value, not just room names

Room types aren't standardised across hotels. A competitor's Superior room may be smaller than your Standard room, while another property may charge more for better views, newer furnishings, or additional facilities.

Use room descriptions, photographs, included services, and guest reviews to assess whether the rooms offer similar value. The closer the offers are in quality and conditions, the more useful the price comparison will be.

Check availability and restrictions

If a competitor doesn't display a rate for your selected dates, it doesn't necessarily mean the hotel is sold out. The property may have minimum-stay requirements, restrictions on arrivals, or no rooms available under the selected booking conditions.

Try changing the length of stay or search conditions to understand why the rate isn't available. Also check whether the rate is publicly available. Member-only discounts, mobile promotions, and other restricted offers may not reflect the hotel's standard public rate.

How to monitor competitor rates

You can monitor competitor rates manually or use specialized software. The choice depends on the size of your comp set, how many future dates you track, and how often you need updated prices.

Manual rate monitoring

For a hotel with a small comp set, a spreadsheet may be enough. Choose the competitors and stay dates you want to monitor. Record each rate, its booking conditions, the sales channel, and the date you checked it. Include weekdays, weekends, holidays, and local events so you can see how competitors price different demand periods. Regular checks will also show how their rates change as arrival approaches.

Manual monitoring takes time, especially when you need to compare many dates and room types. It also increases the risk of missing price changes or comparing offers with different conditions.

Hotel rate shoppers and rate intelligence tools

A hotel rate shopper automatically collects competitor prices for selected hotels and future stay dates. Depending on the tool, you can track rate changes, compare booking conditions, and monitor your position in the market.

For example, Exely Price Monitor helps hotels track competitor rates across future stay dates, compare offers, and monitor price changes.

Before choosing a tool, check which hotels and booking channels it covers, how often prices are updated, and whether taxes, fees, and booking conditions are included. A rate shopper may not capture every available offer, so the coverage and accuracy of its data matter as much as the features it provides.

How often should you check competitor rates?

The frequency depends on how quickly prices change in your market and how close the stay dates are. A weekend with a major event approaching may need daily checks, while an ordinary weekday several months away may need less frequent monitoring.

For manual monitoring, set a regular schedule and check important dates more often when demand or competitor prices change significantly. Automated tools can handle more frequent updates and alert you to changes worth reviewing.

How to analyze your position in the market

Once you have collected comparable rates, you can see how your hotel is priced relative to its competitors.

Start by comparing your rate with the average rate of your comp set for the same stay date. Suppose five competitors charge €140, €150, €155, €160, and €170. Their average is €155. If your rate is €175, you're pricing €20 above the average.

This difference doesn't necessarily mean your rate is too high. A better location, stronger reviews, or more valuable inclusions may justify a premium. The same applies when your rate is below the market average: the difference may reflect your hotel's positioning.

What competitor rate changes may tell you

Look at how your position changes across different dates and demand periods.

A single competitor changing its rate may reflect that hotel's own circumstances. Similar changes across several comparable properties are more likely to indicate a wider market trend.

How to use competitor pricing data

Suppose your standard room sells for €160 and several comparable hotels increase their rates to €185. Your bookings are also coming in faster than usual, and only a few rooms remain available. This may be a good time to review your rate. Strong demand and limited availability could mean guests are willing to pay more for the remaining rooms.

In another situation, a nearby competitor reduces its rate from €160 to €135, while your bookings continue at their usual pace. Matching the lower price could reduce your revenue without bringing in additional bookings.

Use competitor rates alongside your own occupancy, booking pace, and expected demand. A change in competitor pricing gives you a reason to review your rate, but not necessarily to change it.

To learn more about adjusting rates as demand changes, read our guide Hotel Dynamic Pricing: A Practical Guide to Smarter Room Rates.

FAQ about hotel competitor pricing

1. Should you always match a competitor's lower rate?
   No. A competitor may have different occupancy, booking conditions, or commercial goals. Check your own demand and market position before deciding whether to change your price.

2. Can competitor rates indicate future demand?
   They can provide clues. If several comparable hotels raise prices for the same dates, market demand may be strengthening. However, competitor rates alone cannot reliably predict future occupancy.

3. Should you compare prices on hotel websites or OTAs?
   Both can be useful. Prices may differ because of promotions, member discounts, or booking conditions. Use consistent search criteria and record the channel when comparing rates.

4. Can you use competitor pricing data for a new hotel?
   Yes. Before a new hotel has enough booking history, competitor rates can help establish an initial market position. Combine them with your property's location, facilities, positioning, and expected demand.