How to Build and Use a Vacation Rental Comp Set

A competitive analysis is as fundamental to a solid vacation-rental business plan as what you’re bringing to market. The better you know your competition, the better your strategy for beating them (or at least keeping up).

Hotels, in particular, obsess over what their competitors are doing and spend millions to make sure they earn the same consideration as others in their category — if not more. But since rate is the easiest lever to pull (and the one thing they’re all trying to protect), they usually hover around the average for their category, only adjusting rate for seasons and holidays.

Certainly, some large vacation rental (VR) companies do the same. But most property management companies don’t give the significant effort required to search, scrape pricing and property data, and transform it into meaningful insights manually. 

Fortunately, the industry now has some tools to help automate much of this process. Our channel management solution includes the industry’s only competitive set tool that compiles up-to-date pricing across channels. While this tool is free to our clients, there are other pay services available, including AirDNA’s market data services. 


What is a comp set?
A comp set, or competitive set, is a representative group of properties that align favorably with yours. Ideally, they are the ones that would be left in the mix once a vacation shopper has visited an OTA and narrowed down their options based on parameters like location, bed count, amenities, and price.

You probably have a vague idea of the competition already, but a comp set is more formal and data-centric. Much of the same data that automated systems draw upon to do competitive analyses are available to you right now — if you’re willing to put in a little work. Once your comp set is built, you can do your analysis in just a few minutes per week. After that, a regular audit to make sure your competitors are still your competitors will keep it relevant.


How to build your first comp set
Before you begin, you’ll need some kind of spreadsheet, like Microsoft Excel or Google Sheets. You’ll be doing a fair bit of copying and pasting. We recommend two tabs or sheets — one for your primary comp set and another for “aspirational” ones that you check in on from time to time. For now, though, let’s focus on your current comps.

Begin your research by visiting the OTAs that drive the most business for you right now. VR shoppers don’t necessarily have loyalty to particular OTAs, but they have their go-to's. Not every comp will list on multiple OTAs, but if they’re not on the ones that are driving customers your way then they might not be relevant — yet. So if Expedia, for example, is a good source of traffic for you, then start there. Just like shopping for a vacation rental, building a comp set is a process of elimination.

We recommend starting with a date range that represents “average” high-season, like mid-June or late July, assuming there are no major events in your area during that time. You want demand to be relatively high, but not so high that the pricing data is skewed.

1. Start filtering by searching available listings on the channel. Price, category, average star rating, guest review score, location, bedrooms, amenities, etc. Cast the net relatively wide at first to get a sense of how big your market really is (it may be sobering). Your goal is to whittle down the options to at least 5 comps. If your area is dense with vacation rentals, seek 10 to 12 comps.
2. Now dig deeper. Look at the individual listings and note their quality. Are the photos professional or amateurish? Is the description well-written? How do their ratings and reviews align with yours? If a property compares favorably but their listing is a notch or two above yours, that’s good! If they’re clearly a notch below, eliminate them. This should get you down to 4-6 properties in your primary comp set, which is the goal.
3. Copy the listing title and paste it into the first column of your spreadsheet. Do the same with the URL (web address) from the top bar of your browser, into column two (most programs will treat it as a hyperlink, which is what you want). Paste the price into a third column with the date range as the header. Repeat this for the other properties. When you’re done, you should have maybe half a dozen comps in your spreadsheet, along with links to their listings and pricing for a specific date range. If other OTAs and listing sites drive a meaningful portion of your business, consider a separate comp file for each. Either way, your spreadsheet should be specific to a particular channel.
4. Repeat this process several times throughout the year — preferably in seasons where you’re seeking more booking like shoulder- and low- seasons. This may reveal other properties that fit in your comp set but didn’t have availability for your high-season dates.
5. Add your own property data to the spreadsheet, either at the top or the bottom. Consider making it a different color so it stands out easily.

What to track, how, and how to analyze your data
The key data points to track manually are date range, price, and availability. All can be gathered by clicking the links to your comp listings and writing them down or pasting them into your spreadsheet, along with your own.

We recommend choosing a single night about 60 days out, such as a Saturday. You won’t know anything about stay length but it’ll give you a snapshot in time of price and availability. Consider also choosing a mid-week day to record rates as many have different non-weekend prices.

Tracking guest ratings and reviews for your comps is optional. They don’t change as significantly or as frequently as the other data points. However, they can underscore changes in ownership, amenities, or policy that could knock them out of your comp set.

We recommend checking your comps at least once per week. You can get away with less, but you might miss some of the trends and relationships that make it a worthwhile exercise.


What to look for
The ultimate goal of your comp set analysis is to maximize revenue and occupancy. Though you won’t have all the data you need to calculate ADR or RevPAR, you will be able to see pricing and occupancy trends over time. That alone will give you a leg up on your competition that can’t or won’t take the time.

Let’s say your comp set averages $177 per night for the date range you choose (Saturday nights are a safe bet) but only one is booked. If you’re charging $215, your chances of a booking are pretty slim. Whether you drop your rate right away or wait a few weeks is up to you, but at least your guess will be an educated one.


Learning from your data
If several comps are booked for the date you choose but you’re not, it may be an opportunity to bump your rate a bit, say 10 percent. If you get a booking, super. You didn’t leave money on the table because you were paying attention. And if you’re not booked after a few weeks, then you’ll have the headroom to lower your rate.

Low availability also might indicate an event nearby that isn’t on your radar yet, like a rodeo or a music festival. Check your community calendar and see if you might be missing out on an opportunity to cater to that audience. But you also don’t want to be accused of gouging, so don’t go overboard.

If you do this over several months, what you’ll probably see with your comps is a pretty straight line with a few notable spikes during holidays. You’re less likely to see the frequent peaks and valleys that would indicate a more responsive pricing strategy, and that presents an opportunity to either adjust rate more frequently (and intelligently) than the competition, or at least to help run more accurate revenue forecasts for the following year.


Summary
Forecasting demand and revenue is the job of a revenue manager, a common position at most hotel chains and resorts. It’s a complex practice that calls for real-time data analysis and deep experience in the industry. If you have the means and the interest, there are many options out there for automating and aggregating some of this process, including our own solutions. Naturally, we believe it pays for itself.

But if you run a small operation, even a weekly data pull will help you spot pricing trends in your area and opportunities to boost revenue. The average vacation rental outfit doesn’t have any pricing strategy to speak of, let alone a process to make their pricing more dynamic. That’s fine. Let them guess, then swoop in with your newfound competitive intelligence to capture more revenue.