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