Rethinking the Hotel Competitive Benchmark

In hotel boardrooms and daily revenue meetings, you can’t escape the mentions of RGI, the Revenue Generation Index. This RevPAR index has become the default scorecard of competitive success. A quick glance tells a Chief Commercial Officer whether their property is “beating the comp set” or not. Open an STR report and the first thing many owners check is that RGI figure, which literally ranks your hotel’s RevPAR against a (supposedly comparable) group of rivals. An RGI above 100 means you’re outperforming the comp set average; below 100, you’re trailing. Simple, right?

The simplicity, however, masks a growing problem. RGI’s usefulness hinges entirely on the quality of the competitive set it’s based on. And often those comp sets are outdated or just plain misaligned with reality. We’ve treated RGI as a proxy for market share, even as the ground beneath our comp sets has shifted. What if the map we’re using is faulty? If your comp set isn’t a fair reflection of your true competitors, then optimising for RGI is like navigating with a faulty map. You might feel confident, but you could be way off course.

The Problem with Static Comp Sets

Many hotels still rely on static competitive sets chosen years ago. Often a list of 5 or 6 nearby hotels in the same STR market. But markets evolve, and static compset logic has serious flaws. All too often, comp sets include properties that aren’t actually comparable in product or target guest, leading to misleading conclusions about performance. We all know the traps:

• Mismatched Service Levels: A limited-service hotel might proudly benchmark against a full-service spa resort down the street. The resort’s higher rates reflect amenities (spa, banquets, concierge services) that the limited-service property doesn’t offer. Of course the limited-service hotel’s RevPAR lags. They’re apples and oranges. On the flip side, beating such a comp set in RevPAR wouldn’t necessarily indicate real outperformance. It may just indicate different business models.

• Wrong Segment or Profile: Imagine a cozy independent boutique hotel using a compset of big-brand corporate hotels. The boutique’s data might say “we’re lagging in occupancy,” prompting panic. In reality, that boutique offers a unique experience for high-end leisure travellers, not volume corporate business like the chain hotels. Comparing its occupancy to large chains leads to unrealistic expectations and even undercutting of rates or value to “keep up”.

• Stale Compset Trap: Perhaps your comp set was defined five years ago and never updated. Since then, new competitors opened, others closed or shifted strategy, and your own hotel’s offerings evolved, but the benchmark set stayed the same. You might think your pricing is “competitive,” but if it’s based on outdated rivals, you could be leaving money on the table or mis-pricing because the market context changed.

  
  

In each case, RGI can paint a false picture. Your team might celebrate beating the compset, not realising the compset itself is flawed.

Playing to the Comp Set, Not the Market

When “winning vs. the comp set” becomes the goal, hotels can fall into the trap of optimising for the index rather than for actual guests or profit. It’s an easy habit to form. After all, owners and asset managers often treat beating the comp set as the ultimate yardstick of success. Unsurprisingly, many revenue teams obsess over RGI, tweaking rates just to inch their RGI a point higher. But this comp-set tunnel vision carries real risks:

• Chasing the Wrong Target: Focusing solely on outperforming your chosen competitors can distract from the bigger market picture. You might be beating those five hotels, yet all of you together could be missing out on demand or losing to another segment. (A classic STR teaching scenario notes that a hotel can be “comfortably beating the comp set, but losing to the broader market around it”.) By fixating on your comp set, you risk ignoring emerging competition and true customer preferences. Which is why we would always advise front-end rate alignment checks alongside RGI tracking.

• Copycat Tactics: RGI competition can also create a herd mentality. If your compset drops rates 20% in the low season, you feel pressure to do the same to maintain index, even if there is still solid demand for your product. Hotels may sacrifice strategy (and margin) to follow the comp set down a rabbit hole. The result is often a race to the bottom, which we have seen in multiple markets across Europe since the end of 2023. Which begs the question, you may be winning the index but at what cost?

• Neglecting the Guest: Perhaps most importantly, an obsession with comp set metrics can pull focus away from what truly drives revenue; guest behaviour and value. Hotels exist in dynamic markets where guest choices don’t neatly align with our predefined compsets. A traveler doesn’t care who you chose in your STR report; they care about the best option for their needs. If all your internal reporting cheers an RGI victory, you might miss signals that guests valued something you’re not delivering, or that your real competitive set (in the guest’s eyes) includes alternatives you hadn’t considered.

And don’t get me wrong; the goal isn’t to throw out benchmarking altogether, but to ensure we’re benchmarking the right things and against the right peers. As the industry emerges from upheaval (think new travel patterns, alternative accommodations, post-pandemic shifts), it’s clear that “beating the comp set” alone is an inadequate strategy.

New Approaches to Benchmarking Performance

So what’s the alternative? If we move RGI off its pedestal, what do we replace it with? The future of hotel benchmarking will be more dynamic, data-driven, and multi-dimensional.

• Dynamic Competitive Sets: Instead of a static list of competitors, some hotels are adopting fluid compsets that adjust based on real-time market data. Modern revenue tools can analyse which hotels actually overlap with yours in customer search and booking behaviour, not just those in your immediate vicinity For example, if consumer search data shows that travellers considering your hotel also frequently view two properties outside your traditional compset, those can be dynamically added to your competitive radar. One market intelligence platform even automatically expands the comp set based on factors like similar amenities, price points, and online consumer searches. The idea is to capture your true competition on any given day. Even if it’s a hotel in another part of town or an upscale home rental, rather than being limited to a pre-set group. Dynamic compsets ensure you’re measuring against who you’re actually competing with right now, not who you assumed you compete with.

• AI-Driven Demand Clustering: Going a step further, AI and machine learning can crunch vast datasets (search queries, booking patterns, guest demographics) to find clusters of demand. These algorithms can identify which properties tend to attract the same type of guest or get included in the same trip consideration set. For instance, an AI analysis might reveal that your weekday corporate guests consider a different set of hotels than your weekend leisure travellers. With that insight, you could define a few segment-specific compsets or even personalise pricing strategies to target those clusters. It’s a more complex model, but it aligns your competitive strategy with actual market dynamics (and it’s exactly the kind of problem AI is well suited to solve).

• Multi-Metric Scorecards: One metric alone can’t capture performance in today’s complex hotel business. RGI by definition looks only at top-line rooms revenue relative to peers. But what about profits? What about total revenue from each guest? Leading hotel companies are now embracing a suite of metrics to get a more holistic view. Think, Net RevPAR (NRevPAR), GOPPAR (Gross Operating Profit per Available Room), TRevPAR (Total RevPAR), or even RevPAC or profit per guest. The key is using multiple benchmarks in tandem. RGI should still be one of them (it’s a useful indicator of rooms market share), but it should sit alongside metrics of cost efficiency, total revenue capture, and guest profitability. This multi-metric approach prevents the “tunnel vision” of only filling rooms at any cost. It forces a balanced strategy: one that values quality of revenue and long-term profit over just volume.

Hotels that supplement RGI with deeper metrics and dynamic market insight are less likely to be blindsided by shifts in demand or lulled into complacency by a comforting (but false) index. By embracing a richer data picture, you encourage your team to focus on real opportunities: capturing untapped demand, improving profit margins, and delighting guests in ways that lead to sustainable growth.

Recalibrating Your Competitive Strategy

I would like to reiterate; knowing where you stand is vital, but only if the reference point is valid. The takeaway for commercial strategists is to challenge the old assumptions. Don’t let a legacy metric like RGI become a crutch that obscures reality. Here are some more actions you can take to ensure you are benchmarking for the sake of results, not just to benchmark:

• Audit and Update Compsets Regularly: Treat your competitive set as a living hypothesis, not gospel. At least once a year (if not once a quarter), review whether each comp set member still makes sense. Has a new hotel opened that targets your guests? Add it. Is one of your comps now drifting into a different segment or struggling while others thrive? Consider replacing it. Regular refresh keeps your benchmarks relevant and fair.

• Challenge Internal KPIs: Don’t let your organisation fixate on a single metric like RGI or RevPAR index without context. Educate stakeholders (owners, GMs, your team) on the value of other metrics. For example, if your RGI slips because you refused to match a competitor’s heavy discounting, point out that your Net RevPAR and GOPPAR held strong, meaning you made a smarter long-term decision. Similarly, celebrate wins beyond RevPAR: an uptick in total revenue per guest, an improvement in guest satisfaction or loyalty, a successful upsell program that doesn’t show up in the RGI.

• Keep Guest-Centric Perspective: Finally, and most importantly, anchor your strategy in guest behaviour. Use competitive data as insight, not as the sole directive. The compset should inform, not dictate. Encourage your team to ask why a competitor is winning or losing. Is it due to something about the guest experience, the product, the marketing? Those are insights you can act on. And ask the reverse: Who are we not measuring that is stealing our guests? Are we considering the rise of alternatives like vacation rentals, or the hotel across town that’s capturing a new segment? By grounding competitive analysis in the reality of the guest’s choices, you ensure your strategies are outward-looking and opportunity-driven. Benchmarking should be the beginning of questions, not the end of thought.

So, when was the last time you rethought your comp set and metrics? If it’s been a while, now is the time. The future belongs to those ready to break out of the RGI rut and compete on a more intelligent, guest-focused playing field. Your next opportunity might be hiding in a data point you’re not even looking at yet. Don’t let an old index blind you to a new insight. The hotels that move beyond RGI as the definitive measure will be the ones defining the next era of competitive performance.