Benchmark Rates

Benchmark Rates What is a and Why?

Benchmark Rate is a room-only, non-discounted rate that is always available whenever standard sleeping room availability exists at the property. If restrictions are used on this rate, they are no more severe than the restrictions on any other transient rate available for sale.
Benchmark Rates

Is the rate in a property’s pricing structure that is market-based and reflects an excellent price/value to the customer.

Should be positioned to capture the majority of your property’s non-qualified demand.

Benchmark Rate

Is used as the basis for positioning premium and discounted rates.

A properly positioned benchmark rate maximizes hotel revenue and profit.

Configure Hotel’s Benchmark Rates settings.

This is a quick introduction how international Hotel Chain setting up and establishing room rate, this is exactly one-to-one as in Hotel Revenue Management Certificate by Cornell, and managing front Office Operations by American Hotel and Lodging Association (AHLA) later on we will explore together a real room rate establishing

Setting your Hotel’s Benchmark Rates is a Five-Step Process:

Step 1: Analyze the Competition
Step 2: Assess Property Performance
Step 3: Analyze Market Share
Step 4: Project Future Demand and Supply
Step 5: Summarize, Validate and Recommend

Benchmark Rates / Step 1: Analyze the Competitors

You need to create excel workbook call it HOTEL COMPETITIVE ASSESSMENT TOOL with 8 worksheets

The worksheets in this tool are:

Input Sheet .
Competitor Property Visit Checklist .
Total Hotel Competitive Value Assessment .
Total Hotel Competitive Rate Assessment .
Competitive Discounting by Segment Chart (automated – no input necessary)
Rate Value Matrix (automated worksheet – no input necessary)

Rename Tabs As Below

We will start with First sheet, which is Called Input Sheet

Input Sheet

First of all you need to complete the yellow-shaded input fields below. This information is required before you complete the other worksheets.

I’ve pulled out the yellow-shaded input fields as below with explanation.

Here we go,

General Information Section.

Easy and self-explained as below.

Today’s Date, Property Name “your Hotel Property” , Season “Low, Shoulder, or Peak Seasons, Season Dates for instance if Low season starting 1^st of May till 15^th of June, then 1^st of November ends 15^th of December and so,

Competitive Set Information Section

List all lodging and catering hall competitors in all segments. Including Number of rooms, Square ft/m Meeting Space, Brand Affiliation.

Segment Information Section.

The Group segments used in this tool are Corporate, Association and Social. If you have additional Group segments, define these below (up to 3). If you have more than one (generic) Catering segment, define each of these below as well.

Property Rate Information & Typical Group / Catering Section.

Use the fields below to define your typical/average group and catering business for the season you are analysing. For transient & group segments, enter your property’s typical room rate for the season in the last row.

Segments Section.

I’ve pulled out each cell and explained below.

Business Transient:

The appropriate unqualified benchmark rate (Corporate or Rack) from sell strategy for the respective brand.

Leisure

Use the typical room-only leisure rate for a Friday – Saturday stay during the targeted season.

Number of RN / Covers

Enter # of rooms for rooms segments and # covers for catering segments.

F&B ($)

Include food and AV spending of the typical program.

Lead Time

How far in advance does the typical piece of business in this segment contract the program?

Typical Room Rate

Enter the room rate that is typical for a program according to the variables above.

Catering segments are blank here because competitor prices are going to be expressed on future pages as percentages above or below the Your Hotel Property prices.

And Below the snapshot of the Input sheet how its looks like

On Same Workbook, sheet No# 2 name tab

Competitor Property Visit Checklist

Its’s optional you can pay a visit to your Hotel Property Competitors, Very easy and self-explained

Total Hotel Competitive Value Assessment .

This table by scoring your competitors in the segment(s) in which they compete with you:

– When the product/service feature is equal in quality to your hotel, enter a score of 0 (zero).

– Use 1, 2, or 3 to express degrees by which the competitor outperforms your hotel in quality.

– Use -1, -2, or -3 to express degrees by which the competitor underperforms versus you.

Leave blank any product/service feature that is not important in your market or leave blank any competitor that does not compete with you in the given segment.

Competitive Features that are repeated from segment to segment may be given different scores, as the assessments are to be done from the perspective of customers in each segment, who may view the competitive features differently from customers in other segments.

Overall Physical Quality

Even though “Overall Physical Quality” appears as a competitive feature in every segment, the value may be different from segment to segment based on the perspective of the customer.

Level of Service

Consider the services that most business travellers value: business centre, dry cleaning, room service, health club, etc.

Quality of Guest Rooms

Consider cleanliness, security, lighting and desk space.

Other

You can add other product / service categories that you feel warrant their own category, or you can leave this blank.

Final Sheet looks like this below one

Sheet 5 Rate Assessment

Entering seasonal rate information for your competitors in the segment(s) in which they compete with you: – For the Transient and Group segments, enter the room rate that is representative of what each customer segment typically pays for sleeping rooms. – For the Catering segments, enter the percentage representing how much higher or lower the catering programs are.

– Enter a Business Transient (benchmark) rate for each room’s competitor, even for those hotels that do not compete in the Business Travel segment.

Sheet 6 Discount Data

Competitive Discounting by Segment Chart (automated update)

Rate Value Matrix (automated update sheet)

This sheet

Proceed to the next worksheet. When you have viewed (and printed) each of the RVMs for the segments you are evaluating,

Quick recap, in order to establish room rate Is a MUST to follow below steps

Setting your Hotel’s Transient Benchmark Rates is a Five-Step Process:

Step 1: Analyse the Competition
Step 2: Assess Property Performance
Step 3: Analyse Market Share
Step 4: Project Future Demand and Supply

Step 5: Summarize, Validate and Recommend

We have done Step No.# one: Analyse the Competition

Competitor Property Visits, and have used COMPETITOR Assessment Tool which is 6 sheets

The worksheets in this tool are:

Input Sheet (required).

Competitor Property Visit Checklist (optional)

Total Hotel Competitive Value Assessment (required)

TH Competitive Rate Assessment (required)

Competitive Discounting by Segment Chart (automated – no input necessary).

Rate Value Matrix (automated worksheet – no input necessary) .

Determine who your direct competitors are.
You should draw heavily on your STR or other market share reporting competitive sets for the list of your competitors. If your market share reporting comp set includes both group and transient competitors, use only your transient competitors for the purpose of this analysis.
Be sure to include only your true competitors, not “ego” competitors. The best way to find your true (not “ego”) competitors is to:

Ask 50-100 customers at check-in, “If you didn’t stay here tonight, where would you stay?”
Determine which hotels, if they took a pricing action, would prompt your team to evaluate your property’s price positioning.
Determine to which non-Marriott hotels you “walk” your guests most often.

Make arrangements to physically tour the property of each direct competitor.
Record your overall impressions by filling in the checklist.
Click on the second tab in the spreadsheet marked “Features”. Fill in the service/amenity table to record the features of each property visited. Then list your own property’s features in the far right-hand column. This allows you to easily review the service/amenity differences between you and your competition.
You will use these findings when you complete the Competitive Value Assessment

Note that Competitor Checklists should be updated routinely, preferably on a quarterly basis.

Step Two – Assess Property Performance.

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