ARTICLE
How to Choose the Right Competitive Set for Your STR Report
By Thomas So, CHA, CHIA, CAHTA
September 27, 2026
Choosing a competitive set is one of the most important decisions in hotel benchmarking, yet it is often treated as an administrative task. A poorly selected comp set can make a strong hotel appear weak, or a weak hotel appear stronger than it really is. The purpose of STR benchmarking is not to create a favorable score. It is to understand how your hotel performs against the properties that genuinely compete for the same demand.
Many hotel owners know that STR reports provide occupancy, ADR, RevPAR, and index measurements, but fewer owners are confident that the hotels inside their competitive set are the right ones. If the comp set is wrong, the benchmark itself becomes less useful. Before interpreting any index, a hotel should first ask whether the comparison is fair and commercially meaningful.
1. Start With the Guest, Not the Map
The closest hotel is not automatically your strongest competitor. Geography matters, but guest behavior matters more.
Ask a simple question: if a guest does not book my hotel, which other hotels are they realistically considering? A true competitor should be competing for many of the same travelers, on many of the same nights, for many of the same reasons. For example, two hotels may sit across the street from one another but serve very different customers. One may rely heavily on corporate negotiated business while the other depends on leisure and OTA demand. Proximity alone does not make them equal competitors.
2. Consider Hotel Class and Product Positioning
A comp set should generally include hotels that are reasonably similar in market position. Brand family alone is not enough. Consider service level, room quality, breakfast, parking, meeting space, fitness facilities, renovation level, loyalty strength, and overall guest perception. A limited-service midscale property may learn very little by comparing itself primarily with a newer upper-upscale hotel. The two hotels can share geography while operating in different pricing and demand environments. The goal is not to find hotels that are identical. That is rarely possible. The goal is to build a group that represents realistic alternatives for your customers.
3. Review ADR Positioning
Rate position is one of the clearest clues about whether two hotels actually compete. If one property regularly sells at $95 while another consistently sells at $185, they may occasionally compete for the same guest, but they probably do not compete equally across the year.
Look at typical weekday and weekend pricing, not just one high-demand night. A hotel can temporarily move above or below its usual position because of an event, sellout, or promotion.
The important question is whether the hotels normally occupy a similar price band and whether guests view them as substitutes.
4. Understand the Demand Generators
Hotels compete because of demand, not simply because of distance. Identify the major generators that produce room nights in your market: airports, hospitals, manufacturing plants, construction projects, universities, military installations, sports complexes, government offices, corporate campuses, convention facilities, and tourist attractions.
Then ask which hotels pursue the same business. A property near an airport may compete strongly with another airport hotel several miles away while competing less directly with a nearby boutique hotel focused on leisure travelers. Likewise, a hotel that depends on hospital business may have a different true comp set from a neighboring hotel that relies on weekend sports groups.
5. Compare Business Mix
A useful comp set should reflect the types of guests each hotel attracts. Consider the balance of retail transient, negotiated corporate, government, group, crew, OTA, extended stay, and other segments. Two hotels with similar rates and room counts can perform very differently if their business mix is different. A hotel with substantial contracted crew business may maintain high base occupancy but lower ADR. Another hotel may run lower occupancy during the week but capture higher-rated event demand on weekends.
Understanding business mix helps explain the numbers rather than simply reacting to them.
6. Do Not Build an Aspirational Comp Set
One of the biggest mistakes owners can make is choosing competitors based on where they want the hotel to be rather than where the hotel competes today.
There is nothing wrong with studying a stronger hotel. In fact, aspirational properties can be valuable for strategic planning. But an aspirational hotel and an STR benchmarking competitor are not necessarily the same thing. If a newly renovated upper-midscale hotel with stronger amenities, higher guest scores, and a much higher ADR is included mainly because ownership wants to reach that level someday, the resulting indexes may not fairly measure the current hotel’s performance.
Benchmark against the market you actually compete in. Study aspirational hotels separately.
7. Be Careful With Hotels That Distort the Benchmark
Some properties can distort the comp set because their operating model is unusual. Examples might include hotels with large amounts of airline crew, long-term government contracts, extended-stay business, emergency housing, or a major renovation that temporarily removes rooms from inventory. That does not automatically mean such a hotel should be excluded. It means you should understand what is driving its performance before assuming its numbers represent normal market behavior. A good comp set should help management make decisions, not create confusion.
8. Review the Comp Set as the Market Changes
A competitive set should not be treated as permanent. Markets evolve. Hotels renovate. Brands change. New properties open. Old properties close. Management companies change strategy. A hotel that competed directly with you five years ago may no longer be the most relevant benchmark today. Review the competitive set periodically and especially after major market changes, renovations, rebrandings, openings, or shifts in demand generators. The question should always be the same: are these still the hotels fighting for the same customer?
9. Read the STR Report in Context
Once the comp set is credible, the STR report becomes far more valuable. Occupancy Index shows how your occupancy compares with the competitive set. ADR Index compares your average rate. RevPAR Index combines both occupancy and rate performance and is often the broadest indicator of relative revenue performance. But an index by itself does not tell you why something happened. If ADR Index is strong while Occupancy Index is weak, the hotel may be protecting rate but losing share. If occupancy is strong while ADR Index is weak, the hotel may be buying occupancy through lower pricing. If both improve, the hotel may be strengthening its overall market position. The numbers should lead to questions, not automatic conclusions.
10. Use the Comp Set as a Decision Tool, Not a Scorecard
Owners sometimes look at STR results as if they were grades. An index above 100 feels good; an index below 100 feels bad. That approach misses the real value of benchmarking.
The purpose of the report is to improve decisions. A properly selected comp set can help a hotel identify whether it is gaining or losing share, whether pricing is aligned with the market, whether a strategy is working, and where management should investigate further. A hotel should never choose competitors simply to make its indexes look stronger. A favorable benchmark against the wrong hotels provides very little strategic value.
The Bottom Line
The right competitive set is not simply the five hotels closest to your property, the hotels with the same brand tier, or the hotels ownership wishes to outperform.
A strong comp set reflects real competition: similar guests, similar demand generators, comparable product positioning, overlapping rate ranges, and meaningful business mix.
When the comp set is well chosen, STR benchmarking becomes much more than a monthly report. It becomes a practical management tool that can help ownership and hotel leadership make better decisions about pricing, sales, distribution, operations, and long-term positioning. The goal is not to make the hotel look good on paper. The goal is to understand the market accurately enough to improve performance.
Thomas So, CHA, CHIA, CAHTA
Pure Hospitality
Hotel Revenue Strategy | Operations | Performance Analysis