Benchmarking
Benchmarking is the practice of comparing your vacation rental or hotel performance to peers and industry standards to identify best practices, spot gaps, and prioritize improvements across pricing, operations, and guest experience.
Definition
In hospitality, benchmarking means tracking key performance indicators (KPIs) and comparing them to competitive sets, market averages, or top performers. Typical KPIs include occupancy rate, ADR, RevPAR, booking conversion, and guest satisfaction scores.
Types of Benchmarking in Hospitality
- Performance benchmarking: Compare KPIs like ADR, occupancy, and RevPAR against your comp set.
- Process benchmarking: Study best-in-class workflows (e.g., self check-in, housekeeping turns) to improve efficiency.
- Competitive benchmarking: Analyze local rivals’ pricing, fees, policies, and distribution tactics.
- Functional benchmarking: Borrow service ideas from adjacent sectors (e.g., airlines’ disruption comms, luxury retail personalization).
- Technical benchmarking: Evaluate tools such as property management systems, channel managers, and dynamic pricing software.
How to Benchmark
Start by selecting metrics, building a clean data set, and defining a relevant comparison group (same location, season, and property class).
Common metrics to include:
- RevPAR: Revenue per available night; blends price and occupancy.
- ADR: Average revenue per night sold.
- Guest satisfaction: Star ratings, review sentiment, response times.
- Booking conversion: Share of sessions or inquiries that become reservations.
- Cancellation rate: Useful to compare policy impact across the market.
Gather internal data (PMS, channel reports) and external data (market dashboards, STR-style reports, OTA comps) for a like-for-like view.
Origin of the Term
“Benchmark” originally referred to a surveyor’s fixed reference mark. In business, it evolved to mean a standard of comparison used to evaluate performance and set targets.
Using Benchmarking in Vacation Rentals
- Define KPIs: Select metrics aligned to goals (e.g., occupancy, ADR, cancellation rate).
- Collect data: Pull clean, time-aligned data from your PMS and market sources.
- Compare: Measure against comp sets by season and property type.
- Find gaps: Identify underperformance drivers (price, fees, photos, policies).
- Act: Adjust pricing rules, minimum-stay policies, fees, and merchandising.
- Monitor: Review monthly; recalibrate targets by season and demand pattern.
Host tip: Pair benchmarking with experiments. For example, test a 7-night discount, then compare ADR, RevPAR, and review scores to your comp set before and after.
Examples
Optimizing Pricing
A waterfront cabin trails the comp set on ADR but leads on occupancy. The host introduces length-of-stay discounts and raises weekend rates, lifting RevPAR above the market.
Improving Guest Experience
A lodge benchmarks top-rated peers’ reviews and adopts self check-in, pre-arrival guides, and mid-stay check-ins, increasing ratings and conversion.
Reducing Cancellations
A manager compares cancellation rates to market norms and adds a moderate policy with flexible rebooking, reducing cancellations while maintaining conversion.
Related Terms
Key Takeaway
Benchmarking is a continuous loop: measure, compare, improve, and monitor. Done well, it sharpens pricing, streamlines operations, and elevates guest satisfaction—keeping your property competitive in every season.
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