and Market Penetration by jze12270


									                   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 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,
or chain.
                                                                                      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

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