|First there was Occupancy Percentage (Total Rooms Occupied divided
by Total Rooms Available for Rent) and Average Daily Rate (Total Rooms
Revenue divided by Total Rooms Occupied) as the hotel’s base measurements
Then along came RevPar (Total Rooms Revenue divided by Total Rooms Available for Rent). Now that we have grasped the importance of this measurement, we have Market Share and Market Penetration also as a tool to gauge our hotel’s Marketing success.
What is Market Share?
Market Share is the number of rooms in our hotel as a percentage of the rooms in our hotel’s competitive market set. Market Set is the total number of rooms we are in direct competition with, within our area’s market and/or segment.
Market Penetration is the percentage of demand for rooms actually accruing to our Holiday Inn. It is calculated as the ratio between the Total Rooms Occupied in our hotel against the Total Rooms Occupied collectively attributed to our hotel’s Market Set.
There are hotel management companies requiring a Market Penetration
percentage each week from their hotels as a measurement of the hotel’s
total marketing success. However, month-end monitoring seems reasonable,
and we can even enroll in the Smith Travel Accommodations Report (STAR
program), which will calculate and track our hotel’s Market Share and Market
Penetration each month. To enroll in the STAR program, contact Smith Travel
Research, 615/824-8664, who will need from you:
If we wish to calculate Market Penetration for ourselves, the key is obtaining our Market Set competitors’ occupancy. In certain cities, the Convention and Visitors Bureau collects the individual property data and disseminates the occupancy in requested Market Sets (not by individual hotels). In other locations, hotels share their occupancy percentages on a nightly and weekly basis. And in other areas, the hotels are fierce competitors and share nothing.
If that is our case, then count our competitors’ cars within our Market Set. We used to count closed windows draperies, but with room energy savings techniques, this is no longer accurate. Fellow AAHOA member Tek Chand of Augusta, Georgia, has car-counting down to a science within his portfolio of hotels.
He has either the Night Auditor count the competitors’ cars at 10:30 p.m. or the Evening Desk Clerk at the end of the previous shift. Then the car count (bus = 20 rooms) along with weather and special events, is recorded in his computer. His accuracy and confidence is well documented in that he will retain retired persons to count cars at hotels in various locations for up to a year prior to the building a new hotel and lenders have inquired to him as to hotel market conditions in specific locations.
After we have obtained the occupancy data of our competitive Market Set, then we can complete the calculations. Market Penetration graphically tells us how we measure up to our competition regardless of market conditions.
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A Word About Breakfast
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