MThatis Your Hotel's Market Share
and Market Penetration?
Edward L. Xanders. CHA. President. Interim Hospitality Consultants
there was Occupancy 3. Our Holiday Inn (200 rooms) Slep Two:
Percentage (Total Rooms Occupied divided by Total Market Set (1.000)
divided by Total Rooms Available for equals our !\-1arketShare of 20%. Convert our actual occupancy of
Rent) and Average Daily Rate (Total 65% into 47,450 Rooms Occupied.
Rooms Revenue divided by Total As upper mid-priced.. full-service Divide our actual number of .p ..+50
Rooms Occupied) as the hotel's base hotels are added or leave our Market Rooms Occupied by our goaJ of 5] .OiJO
measurements of success. Set. or our room count is adjusted. our Room Occupied, thus our Market
Market Share percentage ""ill change. Penetration is 93%.
Then along came RcvPar (Total The larger tbe Market Share
Rooms Revenue divided by Total percentage. tbe bigger player we are Not good. We must strive to be
Rooms Available for Rem). Now that in the market. equal to or bener than our competi-
we have grasped the importance of this tors. Market Penetration must be at
measurement. we have Market Share What is Market Penetration? least 100%. and to be the leader in the
and Market Penetration also as a tool Market Set. well over 100%. \Vhat is
to gauge our hotel' s Marketing .Harker Penetrarion is the wrong?
success. percentage of demand for rooms
actually accruing to our Holiday Inn. Location, fixed - no solution.
What is Market Share? It is calculated as the ratio beTween the signage may help.
Total Rooms Occupied in our hotel Wrong franchise-possible.
.\Iarket Share is the number of against the Total Rooms Occupied Wrong data in determining the
rooms in our hotel as a percentage of coUectively attributed to our. hotel's primary guest market.
the rooms in our hotel's competitive Market Set. Lack of marketing dollars to reach
market set. .Harker Set is the total that primary market.
number of rooms we are in direct Assume: Ulck of management sales effort.
competition with. ""ithin our area' s Ulck of sales tools.
market and/or segment. 1. Research of our competitive Market Wrong room mix:.
Set of 1.000 rooms revealed an • Old decor.
Assume: average aggregate Market Wrong amenity mix.
Occupancy of 70%. Unfortunate reputation,
1. We are a full-service, 200-room
Holiday Inn. Our Market Set is 2. Our Holiday Inn is experiencing an The list can go on. However. when
other full-service hotels that we are occupancy of 65%, certain key ""Tongs are corrected and
in direct competition with-i.e .. the property achieves an occupancy of
Ramada Inn.. Hilton Inn.. etc. Not Srep One: 82%, the Market Penetration will be
included in the market set would be 117.4%, and possibly tbe leader of
high-end-Hyan and Marrion-or Total Market Set of rooms 1.000 tbe pack!
the lower end of the market x Market Occupancy ..... 70%
segment of limited-service, such as x 365 days - There are hotel management com-
Super 8 or Motel 6. = Total Rooms Occupied panies requiring a Market Penetration
of the Market Set 255.500 percentage each week from their hotels
2. A survey of the area reveals the x our Market Share 20% as a measurement of the hotel's total
total rooms of our competitive = our goal of Rooms marketing success. However. month-
Market Set is 1.000. Occupied we should end monitoring seems reasonable, and
be achieving 51,000 we can even enroll in the Smith Travel
Accommodations Report (STAR occupancy. In ceI1ain cities, the count (bus = 20 rooms) along "i:.h
program), \vhich wil! calculate and Convention and Visnors Bureau weailier and special CVCnlS.is recw':kd
track our hotel's Market Share and collects the individual property data in hIS computer. His accura0 dnd
Market Penetration each month. To and dissemmates the occupancy in confIdence is well documented In that
enroll in the STAR program, contact requested Market Sets (not by he WIll retain retired persons to count
Smiili Travel Research, 615/824-866 .. individual hotels). In other locations, cars at hotels in various locations for
\vho wij] need from you: hotels share their occupancy up to a year prior to the building a new
percentages on a nightly and weekly hotel and lenders have inquired to him
I. Our list of competitive hotels in our basis. And In other areas, the hotels as to hotel market conditions in
Market Set (STR will obtain the are fierce competitors and share specific locations.
occupancy of these competitive nothing.
hotels from their parent chajns)~ After we have obtained the
and If that is our case, then count our occupan0' data of our competitive
compeutors' cars within our !Y1arket Market Set. then we can complete the
2. Our Total Rooms Available for Set We used to count closed windows calculations. Market Penetration
Rem and Total Rooms Occupied draperies, but with room energy graphically tells us how we measure up
savings techniques. this is no longer to our competition regardless of market
Star Travel Research ",ill only report accurate. Fellow AAHOA member conditions. III
the aggregate occupancy of our Market Tek Chand of Augusta.. Georgia. has
Set They never release or divulge car--counting do\\'11to a science within Edward L Xanders, CHA. is President
informatien on an individual property hIS portfolio of hotels. of Interim Hospitality Consultants,
R50'R93-60 I 0, providing feasibilzrv
He has either the Night Auditor srudies, pre-opening. and operatIons
If we wish to calculate Market count the competitors' cars at 10:30 analvses of hotels.
Penetration for ourselves, the key is p.m. or the Evening Desk Clerk at ilie
obtaining our Market Set competitors' end of the previous shift. Then the car