What is the meaning / definition of Hotel Market Share in the hospitality industry?
In the Hospitality Industry, all hotels should strive to capture maximum revenue at all times. And, sometimes, comparing revenue levels with other hotels can provide a valuable insight. This can help to establish a hotel’s Market Share: the percentage of business it is getting within the hotel market overall.
A hotel should try to discover how it is performing in comparison to other neighbouring hotels, and even to several hotels within a competitive set (or ‘comp set’), to gain a wider perspective. Based on this knowledge, they can consider how to perhaps adjust their business strategy, to improve performance and work towards maximising revenue more efficiently.
The key question a hotel’s revenue management team should ask, after studying and analysing the findings collated and compiled into a comp set research report, is: “Are we really satisfied with our market share?”. The share can be established quickly by performing a simple calculation:
The actual percentage of the room nights sold or revenue captured during a particular timeframe, for example: Easter, Christmas, the summer season, or the peak skiing season, e.g. divided by the total room nights or revenue sold within the competitive set (inclusive of the subject hotel).
Market Share = revenue sold at the hotel / revenue sold within competitive set
Market Share = 5000 / 14500= 34%
- Market Penetration Index
- Revenue Generation Index
- Hotel Market Share