A hotel benchmark can help investors understand performance, but the comparison is only fair when the selected properties and metrics are genuinely comparable. Different location, asset type, service mix, ownership model and accounting definitions can make a ranking misleading. A disciplined set explains why each comparator belongs, what differs and how much confidence the investor should place in the result. This topic connects the decisions of hotel owners; hotel operations; the Feathers Hospitality approach.
Benchmarking supports analysis; it does not replace judgement about this asset and its market.
At a glance
- Choose peers for a defined investment question.
- Align metric definitions and property characteristics.
- Show exclusions, limits and sensitivity.
Define the decision the benchmark should inform
State whether the review concerns operating cost, revenue, occupancy, staffing, asset condition or investment return. The right peer set depends on the question. A property suitable for comparing energy intensity may not be suitable for assessing management fees or guest experience.
Write down inclusion criteria before looking for a favourable ranking. Define location, size, segment, service scope, age and measurement period. If the available sample cannot meet the criteria, explain the compromise rather than presenting a loose set as a direct peer group.
Check property and operating-model differences
Compare room count, facilities, restaurant and event activity, service hours, staffing model and major renovation status. An independent hotel and a full-service resort may face different cost structures even if both report a similar room rate. Identify differences that could materially affect the metric.
Record whether the comparator is owner-operated, managed, franchised or part of a group. Management fees, shared services and central costs may be booked differently. A benchmark should not imply operational inefficiency when the underlying scope is different.
Align definitions and accounting boundaries
Confirm what each measure includes and the currency, tax basis, period and denominator. Revenue per available room, payroll ratio and energy per occupied room can use different definitions across sources. Reconcile or label the variation before calculating an average.
Check whether central overhead, owner costs, property improvement spending or one-off events are included. If the data is not comparable, present a range or qualitative observation rather than a precise league table. Ask a finance professional to review material accounting differences.
Assess source quality and sample limits
Identify who collected the data, how recent it is, whether it is audited and what properties are missing. Published studies may use a different market or period than the investor’s asset. A larger dataset is not automatically better if its definitions are unclear.
Show the number of properties and any exclusions. Consider whether unusually strong or weak comparators drive the result. Test the conclusion with and without outliers where appropriate, documenting the rule rather than removing a property because it challenges a preferred narrative.
Present adjustment and uncertainty transparently
If you adjust for size, season, mix or location, explain the method and show the unadjusted value as well. Avoid presenting a complex model as objective if inputs are uncertain. A benchmark can indicate a question to investigate without identifying the cause of a performance gap.
Use confidence language that matches the evidence. Say that a result is “above the selected peer range” rather than asserting that a manager is underperforming if operational context has not been tested. Cornell hospitality research may inform revenue concepts, while RICS asset guidance provides broader context for investment review.
Turn comparisons into decisions carefully
Use a gap to form questions: Is a process different? Is the building more complex? Does the service promise explain higher cost? Collect property-level evidence before setting a target or changing staffing. A peer average is not automatically the right objective for a unique asset.
Record what further evidence is needed, who will obtain it and when the owner will review the finding. Keep the peer set and definitions with the report so future reviews can reproduce or update the comparison. Change the benchmark when the asset or decision changes.
Frequently asked questions
How many peer hotels are enough?
There is no universal number. Consider the decision, data quality and property differences; a small transparent set can be more useful than a large opaque one.
Should an investor use the highest-performing hotel as a target?
Not without understanding its market, scope and conditions. Use strong examples to ask what is transferable, then test feasibility for the asset.