The Metric Hotel Leaders Keep Misreading — And It Could Be Costing Them Market Share 

By Pierre Marechal, Vice President, Strategic Advisory & Asset Management at JLL

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Few topics in hotel commercial strategy generate as much debate as the competitive set, or compset.

In monthly revenue meetings and performance reviews, the conversation often circles back to the same questions:

• Is this still the right compset for us?
• Should we remove that hotel?
• Should we add the new opening down the road?

More often than not, these discussions are triggered by market changes—a competitor closes for renovation, reopens with a new positioning, changes brands, or a new hotel enters the market.

While compsets should evolve alongside the market, effective compset management requires both discipline and objectivity. Some situations clearly justify a review. Others simply require a better understanding of what your performance metrics are actually telling you.

When Market Changes Truly Justify a Compset Review

1. A Competitor Closes for Renovation

This is one of the few situations that rarely sparks complaints.

With one less competitor in the market, your RevPAR Index (RPI) often improves naturally as demand is redistributed. While the impact may be positive, the reality is that your compset is now measuring against a market that no longer exists in its original form.

2. A Hotel Reopens After a Major Transformation

A hotel that returns to the market after a significant renovation is not necessarily the same competitor it was before.

If the property’s positioning, guest experience, pricing strategy, segmentation mix, or perceived value have materially changed, its place within the compset should be reassessed rather than automatically reinstated.

3. A Property Rebrands into a Different Chain Scale

Brand conversions are among the clearest reasons to revisit a compset.

A shift from midscale to upper-upscale—or vice versa—can dramatically alter:

• Target customer segments
• ADR potential
• Distribution strategy
• Loyalty program influence
• Competitive positioning

If the rebrand changes the type of guest who would realistically consider your property, a compset adjustment may be warranted.

4. A New Hotel Opens and Competes Directly With You

This is perhaps the most straightforward scenario.

A newly opened property with a similar:

• Product offering
• Pricing structure
• Target segmentation
• Geographic location

is likely to become a legitimate competitor once it has moved beyond its initial ramp-up period, typically after two to three years of operation.

When You Shouldn’t Change Your Compset

This is where the conversation becomes more challenging.

Many teams begin questioning their compset when performance isn’t meeting expectations:

• “We’re underperforming against these hotels.”
• “They’re not really like us anymore.”
• “Our numbers would look better with a different group.”

However, unless a competitor has undergone a meaningful change in product, positioning, brand, or operations, the issue is often not the compset itself.

It’s the performance.

In some cases, changing the compset may not even be possible. Many Hotel Management Agreements (HMAs) include formal compset definitions as part of the governance framework between owners and operators. Revising them may require mutual agreement, making adjustments far more complex than a simple operational decision.

The Real Question: What Problem Are You Trying to Solve?

When teams feel a compset no longer “fits,” it is often because the numbers are highlighting an uncomfortable reality:

The hotel is not capturing its fair share of the market.

Changing the compset doesn’t change performance. It only changes the lens through which performance is viewed.

That’s why the focus should not be on the absolute RPI score alone. It should be on whether your RPI is improving over time.

Why RPI Improvement Matters More Than the Absolute Number

RPI is calculated as:

Your RevPAR ÷ Compset RevPAR

The metric measures how effectively your hotel captures revenue relative to its competitive market.

Yet the absolute value can be misleading.

A hotel’s RPI can rise or fall due to factors outside its control, including:

• Competitor closures
• Major renovations
• Market-wide ADR shifts
• New market entrants
• Changes in demand segmentation
• Repositioning by competing properties

Looking at a single RPI number rarely tells the full story.

The trend, however, does.

• RPI increasing: Your hotel is outperforming competitors and gaining market share.
• RPI declining: Competitors are growing faster than you are.

Regardless of whether competitors have reopened, renovated, rebranded, or entered the market, sustained RPI growth is one of the clearest indicators of commercial momentum.

This is why sophisticated asset managers pay close attention to:

• Year-on-year RPI improvement
• Competitive ranking movement
• Market share gains over time

These metrics provide a far more accurate picture of performance than a static index score.

If pricing becomes more precise, distribution improves, segmentation strengthens, and conversion rates increase, your RPI should trend upward.

If it doesn’t, the issue is unlikely to be the compset.

It’s the commercial engine driving the business.

Too often, operators and asset managers attempt to change the mirror instead of improving the reflection.

What to Do When Your Compset No Longer Feels Right

Before initiating a compset review, take a step back and diagnose the underlying issue.

1. Identify the Real Performance Gaps

Review:

• Channel mix and acquisition costs
• ADR positioning
• Booking pace and pickup trends
• Displacement strategy
• Revenue optimization processes
• Potential renovation or repositioning requirements

The challenge may not be competition—it may be execution.

2. Focus on Trends, Not Snapshots

A compset provides market context.

Your trajectory within that market is what truly matters.

Tracking RPI movement over time often reveals far more than a single monthly score.

3. Build a Shadow Compset

If contractual obligations prevent formal changes to your compset, consider maintaining an internal “shadow compset” for:

• Strategic benchmarking
• Pricing decisions
• Long-term planning
• Forecast calibration

This provides additional insight without creating governance complications.

4. Change the Compset Only When Objectively Justified

A compset should evolve only when there has been a genuine shift in:

• Product offering
• Brand positioning
• Market segmentation
• Competitive supply

Not simply because the numbers are uncomfortable.

Final Thoughts: The Best Operators Improve Performance — Not the Benchmark

A compset is not designed to make performance look better.

Its purpose is to reflect the reality of the market in which a hotel competes.

Markets evolve, competitors change, and new supply enters the landscape. Compsets should adapt accordingly—but only when the changes are real and meaningful.

Ultimately, the metric that matters most is not the RPI score itself.

It’s whether that score is improving.

Sustained RPI growth is one of the clearest indicators of stronger market share, better execution, and a more effective commercial strategy.

Read the Chinese article here.