A comp set, short for competitive set, is a group of businesses considered direct competitors because they target the same customers and offer similar products or services. The term is most widely used in the hotel industry, where a comp set typically includes properties in the same geographic area that share similar pricing, star rating, amenities, and guest experience. Hotels use their comp set to benchmark performance, set room rates, and spot opportunities they might be missing relative to the competition.
How a Comp Set Works
The core idea is simple: you pick a handful of competitors that a customer would realistically consider instead of you, then compare your numbers against theirs. A midrange hotel near an airport, for example, would build its comp set from other midrange hotels near that same airport, not from luxury resorts downtown or budget motels two towns over. The goal is an apples-to-apples comparison that reveals whether you’re winning or losing the customers you should be attracting.
Once you have your comp set defined, you can track how your occupancy rate, average nightly rate, and revenue per available room (RevPAR) stack up. If your occupancy is high but your rates are significantly lower than the comp set average, you may be underpricing. If your rates match the group but your rooms sit empty more often, your marketing, reviews, or guest experience may need work. Without a comp set, these numbers exist in a vacuum.
Criteria for Choosing Competitors
Building a useful comp set means selecting properties that genuinely compete for the same guest. The most common criteria include:
- Proximity: Hotels in the same neighborhood or immediate area, where guests would view the locations as interchangeable.
- Price range: Properties that typically price within a comparable rate band. A guest comparing $150-per-night hotels rarely cross-shops $400 boutique suites.
- Hotel category: Same star rating or market segment, since travelers filter search results by class.
- Type of accommodation: Similar scale and experience. A 200-room full-service hotel and a 12-room bed-and-breakfast attract fundamentally different guests.
- Guest feedback: Hotels with comparable review scores and online reputation, since ratings often become the tiebreaker when price and location are similar.
You don’t need every competitor to match on every criterion. The test is whether a potential guest would realistically weigh that property against yours before booking.
Industry Rules for Formal Comp Sets
When hotels subscribe to benchmarking services like CoStar’s STR reports, the comp set they submit has to follow specific guidelines designed to protect data privacy and ensure meaningful comparisons.
A formal comp set must include at least four participating properties beyond your own hotel. Of those four, at least three cannot share a parent company, operator, or owner with you, and at least two separate companies must be represented. These minimums prevent a hotel chain from building a comp set made up entirely of its own brands and reverse-engineering a single competitor’s data.
There are also concentration limits. No single property can represent more than 50% of the total room supply in the comp set (excluding your own rooms and those of affiliated properties). No single brand can exceed 50% of room supply either, and no single company can exceed 70%. These caps keep one large hotel or chain from dominating the averages and skewing the benchmark.
Key Performance Indexes
Once your comp set is established, benchmarking reports generate three index scores that tell you how you’re performing relative to the group average. Each is calculated by dividing your metric by the comp set average and multiplying by 100.
- Market Penetration Index (MPI): Measures your occupancy against the comp set. An MPI of 100 means you’re filling exactly your fair share of rooms. Above 100, you’re capturing more than your share. Below 100, competitors are pulling guests away from you.
- Average Rate Index (ARI): Compares your average daily rate (ADR) to the group. An ARI of 105 means your nightly rate runs about 5% higher than the comp set average.
- Revenue Generation Index (RGI): Compares your RevPAR, which combines occupancy and rate into a single revenue measure. An RGI of 112 means your hotel generates 12% more revenue per available room than the comp set average. An RGI of 88 means you’re underperforming by 12%.
RGI is generally the most telling number because it captures both how full your hotel is and how much you charge. A hotel can have high occupancy but low rates (high MPI, low ARI) or premium rates with lots of empty rooms (low MPI, high ARI). RGI shows the net result.
Primary, Secondary, and Aspirational Sets
Most hotels maintain more than one comp set. The primary comp set includes the four to eight properties that compete most directly for the same guest on any given night. This is the group you watch daily for pricing decisions.
A secondary comp set broadens the lens. It might include hotels slightly farther away, in a different price tier, or with a different mix of business (more group bookings versus leisure travelers, for example). Tracking a secondary set helps you spot emerging competitors or understand how a nearby market segment is performing.
An aspirational comp set includes properties you want to compete with in the future. If you’re a three-star hotel investing in renovations with plans to reposition as an upscale property, benchmarking against four-star hotels in the area shows you the performance targets you need to hit and the rate premiums that repositioning could unlock.
Comp Sets Beyond Hotels
While the term originated in hospitality, the concept applies anywhere businesses need to benchmark against direct competitors. Restaurants use comp sets to compare average check sizes and table turnover. Retail stores compare sales per square foot against similar locations. Real estate appraisers use comparable properties (often called “comps”) to value a home, which follows the same logic: find similar assets and measure against them.
Regardless of the industry, the principle stays the same. Pick competitors your customers would actually consider, track the metrics that matter most to your business, and use the comparison to find where you’re ahead and where you’re falling behind.