What is a competitive set? Everything a hotelier needs to know

Key takeaways

• A competitive set defines your true competition: It groups similar nearby hotels targeting the same guests, giving you a realistic benchmark for performance.
• Your comp set directly impacts pricing and strategy: Tracking competitor rates and positioning helps you adjust pricing, improve offers and stay competitive.
• Regular updates keep your strategy accurate: As markets shift, revisiting your competitive set ensures your decisions reflect current demand and evolving competitors.

The hotels you think you’re competing with aren’t always the ones guests are choosing between.

Getting this wrong can lead to mispriced rooms, missed revenue and a strategy that doesn’t reflect real market demand. Getting it right gives you a clearer view of where you stand and how to win more bookings.

So what is a competitive set for your hotel? How do you identify the right competitors and how does it impact how you run your hotel? We'll explore these questions and other factors further in this article.

What is a competitive set?

​​A competitive set (or “comp set”) is the group of hotels that guests actively compare when deciding where to book.

It typically includes a small number of properties with similar characteristics - such as location, price range, amenities and target audience. These are the hotels that directly influence your performance, from pricing expectations to booking decisions.

By identifying your competitive set, you gain a clearer view of your position in the market and the context needed to make smarter strategic decisions.

Why is a competitive set important?

A well-defined competitive set gives you a clearer understanding of where your hotel stands in the market and how to position it more effectively.

It helps you shape your value proposition by showing how your offering compares to similar properties. From there, you can make more confident decisions around pricing, promotions and overall strategy based on real market context, not assumptions.

It also brings consistency to your decision-making. Instead of reacting to broad market trends, you’re focused on the hotels that actually influence your bookings - leading to more targeted, effective actions.

Ultimately, the right competitive set helps you stay competitive, uncover opportunities and make smarter decisions that drive long-term revenue growth.

Key metrics to track against your competitive set

Once your competitive set is defined, you can measure performance using a few key benchmarks:

• Market penetration index (MPI): Compares your occupancy to the market average.
• Average rate index (ARI): Measures how your average daily rate compares to competitors.
• Revenue generation index (RGI): Evaluates your RevPAR against the market, combining both occupancy and rate for a full performance view.

Together, these metrics help you understand how you’re performing relative to your competition and where to adjust your strategy.

6 things to consider while defining your hotel’s competitive set

There are many factors to consider when defining your hotel’s competitive set, some of which have been mentioned previously, so let’s take a look in further detail. Without a doubt, it should be noted that by choosing a powerful property management system like Mews, you can unlock the key to amazing partners who can help your property set up a proper competitor set.

1. Location

Location plays a major role in defining your competitive set, as guests typically compare hotels within the same area. Focus on nearby properties with similar offerings, while also considering those with slightly different positioning that may still compete for the same guests.

However, proximity alone isn’t enough. Your comp set should reflect comparable properties - an independent hotel, for example, shouldn’t be benchmarked against a large chain with stronger brand recognition, loyalty programs and marketing resources.

2. Online reputation and perceived value

A competitor’s online reputation reveals how guests perceive their value. Reviews, ratings and rankings on platforms like OTAs and metasearch engines show what guests care about - and which hotels are outperforming you.

By analyzing higher-ranking properties, you can identify gaps in your own offering and better understand what drives booking decisions.

Including strong performers in your comp set helps you benchmark against guest expectations, improve your service and refine your pricing - ultimately strengthening both your reputation and competitiveness.

3. Number of competitors

There’s no fixed number for a competitive set, but quality matters more than quantity. Aim for around five to six direct competitors - adding more doesn’t always provide additional insight.

Focus on your closest competitors by segmenting the market based on key factors like positioning, pricing and target audience. You can also create secondary sets for broader context, but your core comp set should stay focused and relevant.

4. Brand positioning

Your competitive set should reflect hotels with similar positioning - those offering comparable amenities, facilities, accommodation types and price points.

Category plays a key role here. An economy hotel shouldn’t be benchmarked against a luxury property, as pricing and guest expectations differ significantly. Focus on competitors that align with your brand to ensure accurate and meaningful comparisons.

5. Pricing

Price is one of the most important factors to take into consideration when defining your set because it is also the factor that most affects guest booking decisions. Nearby properties with similar characteristics will often have comparable pricing if their pricing strategies are effective.

6. Product offering

Your product isn’t just the room - it’s the full guest experience, from design and atmosphere to facilities and services.

Because your offering shapes both positioning and price, your competitive set should include hotels with a similar level of quality and experience. This ensures you’re comparing like-for-like properties and making more meaningful strategic decisions.

Turn competitive insights into smarter strategy

Understanding your competitive set is what turns guesswork into strategy. When you know exactly who you’re up against, it becomes easier to position your hotel, refine your pricing and stand out in a crowded market.

But insight alone isn’t enough. With Mews, you can turn competitive data into action - using real-time insights, automated pricing tools and centralized data to stay ahead of the market and maximize revenue.

Ready to outperform your competition? Get a demo.