Who are my “true” competitors? This million-dollar question is often a central discussion point in boardrooms, during the development of annual sales and marketing plans, in the creation of promotional campaigns and during weekly revenue strategy meetings. From quiet philosophical conversations to heated debates, this question remains a point of contention. However, I believe it’s simply a matter of perspective. Let’s assume for a moment that our friend “Tom” has been tasked with the challenge of securing funding for a new development project or acquisition of an existing property. Given the cyclical nature of the economic state during the past several decades and the corresponding demand oscillations that are the bane of our industry, it is understandable that lenders may look for increased assurances prior to underwriting a project. Yes, there are probably still investors out there looking for “trophy” properties and who will spare no expense in acquiring them; however, for obvious reasons, those would be the exception and not the norm. Tom’s job then, is to relay a story—a story that will support the investment objectives of a given lender. One element of Tom’s story is the competitive environment in which the target property will operate. It would stand to reason, then, that Tom would select a competitive set that would demonstrate the upside potential for his property. In some cases, this means he would probably pick properties that are likely to realize a high average daily rate since this would help demonstrate that high-end demand exists in the market. Presumably, Tom’s property would become an attractive alternative for potential guests over what had previously existed. Often, upon realizing that the ramp-up is taking longer than anticipated, this original set used for underwriting soon becomes known as the “aspirational” set, and a second “operational” or “peer” set is then selected for tactical benchmarking purposes. Of course, this doesn’t change the pro forma, so pressures on management companies and others to meet the original (and possibly contrived) expectation still exists. Get the full story at HSMAI