What is Your Hotel’s Market Share and
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 of success.
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?
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.
We are a full-service, 200-room Holiday
Inn. Our Market Set is other full-service hotels that we are in direct
competition with–i.e., Ramada Inn, Hilton Inn, etc. Not included in the
market set would be high-end–Hyatt and Marriott–or the lower end of the
market segment of limited-service, such as Super 8 or Motel 6.
A survey of the area reveals the total
rooms of our competitive Market Set is 1,000.
Our Holiday Inn (200 rooms) divided by
Total Market Set (1,000) equals our Market Share of 20%.
As upper mid-priced, full-service hotels are
added or leave our Market Set, or our room count is adjusted, our Market Share
percentage will change. The larger the Market Share percentage, the bigger
player we are in the market.
What is Market Penetration?
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.
- Research of our competitive Market Set of
1,000 rooms revealed an average aggregate Market Occupancy of 70%.
- Our Holiday Inn is experiencing an
occupancy of 65%.
Total Market Set of rooms = 1,000
Market Occupancy = 70%
365 days = Total Rooms Occupied
of the Market Set 255,500 our Market Share =
= our goal of Rooms Occupied we should be
Convert our actual occupancy of 65% into 47,450
Rooms Occupied. Divide our actual number of 47,450 Rooms Occupied by our goal of
51,000 Room Occupied, thus our Market Penetration is 93%.
Not good. We must strive to be equal to or
better than our competi-tors. Market Penetration must be at least 100%, and to
be the leader in the Market Set, well over 100%. What is wrong?
- Location, fixed – no solution, signage may
- Wrong franchise–possible.
- Wrong data in determining the primary
- Lack of marketing dollars to reach that
- Lack of management sales effort.
- Lack of sales tools.
- Wrong room mix.
- Old decor.
- Wrong amenity mix.
- Unfortunate reputation.
The list can go on. However, when certain key
wrongs are corrected and the property achieves an occupancy of 82%, the Market Penetration will be 117.4%, and possibly the
leader of the pack!
There are hotel management com-panies 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:
1. Our list of competitive hotels in our
Market Set (STR will obtain the occupancy of these
competitive hotels from their parent chains); and
2. Our Total Rooms Available for Rent and
Total Rooms Occupied.
Star Travel Research will only report the
aggregate occupancy of our Market Set. They never release or divulge information
on an individual property or chain.
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 CLEAN HOTEL WILL LEAD TO MORE
is the Curb
to your potential
"If 1995 and 1996 have been so good in the
hotel industry, why can't I get more rooms sold?" We hear this question every
day when managers and owners get together. Possibly they are only looking at the
rooms occupied and not at the vacant rooms, or why they are vacant.
Each month high occupancies are reported in all
regions of the United States and in all hotel segments. Now is the time for you
to maximize your occupancy by filling these vacant rooms without spending
Target Marketing, Yield Management, and Use of
Franchise Marketing Programs are all subjects that must be addressed to top off
at 100% each day. But none of these strategies will work effectively if the
hotel is not clean and does not have good services.
Through the Guests' Eyes
Stop and look at your hotel through your
guests' eyes. Is the hotel clean, and do you provide good services? Are the
billboards painted and are all the lights working? The same goes for the
property signage. That may be highway or city land at your entrance and their
road crews will clean it up once or twice a year, but it is your entrance, your
image of your hotel. Mow the grass, edge the sidewalks, pick up the daily trash.
Is the parking lot clean? Is it restriped once
a year and are pot holes filled? An unkempt exterior means dirty rooms to a
customer. What is your curb appeal to your potential guest? Are the light
fixtures at the front door filled with dead bugs? Is the entrance door handle
worn out and are the windows filled with credit card decals? Every hotel accepts
credit cards; why advertise for them? You don't see the decals on Hilton and
Is the lobby warm and inviting? Remember, this
is where you welcome guests into your hotel. Use sofas, easy chairs, and table
lamps (warm white fluorescent light bulbs instead of cool white for a softer
Is the front desk uncluttered, with only the
hotel logo or an appropriate picture on the back wall of the desk? Only four
signs should be posted, and all tastefully done.
1. Ownership License Agreement.
2. Manager on Duty.
3. Checkout time.
4. Credit cards accepted.
Don't Tell the Guest "NO"
An owner will spend thousands of dollars in
franchise fees, marketing, and advertising, and will furnish great rooms--all to
have the guest come to his hotel so that he can tell the guest "NO."
NO CHECKS ACCEPTED. Why? Use Telecheck
Inc. (800/835-3243). It costs you the same as a credit card, uses the same
verification machine, and not all guests use a credit card.
NO PETS. Why? You have rooms designated
for guests who smoke; why not two or three rooms for guests with small pets?
Thousands of AARP members have pets with them when they travel. You solicit AARP
business--keep it all.
NO FREE LOCAL CALLS. Why? If you want
commercial business guests, then make it cost effective to them. It normally
costs you nothing to give free local and 800/888 access calls.
The Clean Room
Every guest expects a clean room. In fact, it
is a hotel owner's requirement by state law to provide a clean room. Guest room
decor may be old or new, contemporary or traditional, bright or subdued, but it
must be clean and comfortable.
The comfortable part is the beds. Regardless of
the number of chairs, guests will sit on the edge of the bed, thus requiring the
turning and flipping of mattresses on a regular basis. Most chains require that
this be done four times a year. Also, be sure to rotate the box springs once a
year. These simple procedures will:
1. Extend the life of your bedding,
saving you money.
2. Provide your guests with a more
comfortable bed, and thus increase your repeat business,
making you money.
How often do you clean the carpets? Possibly
only when required by an accident or according to your general cleaning
schedule. An owner once stated that the room carpets were fine, as he had the
same carpet in his apartment. However, after he was requested to walk in guest
rooms with clean white socks, he had visible evidence of the dirt in the
carpets, validating guest complaints. In high-occupancy hotels, try to clean a
room carpet every six weeks.
The "sanitized" paper band placed on commodes
is a waste of time and money. That is why the most noted chains do not require
them. What they do require is a sparkling, shining clean commode, and that is
accomplished only by using bowl cleaner and a commode brush. Clean the bathtub,
shine the chrome, and don't forget the paper trash under the bed and behind the
$10 for a Housekeeper
All chains provide instructional video tapes
and printed materials on how to clean a guest room for housekeeping personnel.
Independent hotels can obtain the same information from the American Hotel Motel
Association Educational Institute at 800/752-4567. After the training sessions
have been held, follow up the classes with individual testing.
This testing of the housekeeping training and
in effect a determination of a clean guest room, should be done on a random day
and room. The housekeeper who cleaned the vacant room, along with the
supervisor, is asked to observe the inspection.
Ten one-dollar bills are placed on the bed. The
owner or general manager then inspects the room, picking up one dollar for each
defect found. The inspection should follow the instructions from the class. At
the end, the housekeeper corrects all defects and is awarded the balance of the
remaining money. This procedure has been proven extremely effective, if done on
a consistent weekly basis, in training, employee morale, and having clean rooms
in everyone's eyes, especially your guests'.
"I need more business; I must fill the vacant
rooms." You will get more business and fill the vacant rooms if your hotel and
the vacant rooms are CLEAN.
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"A WORD ABOUT BREAKFAST"
free food is sometimes
a game of one-upsmanship —
I can do better
I stayed at a hotel recently where the owner
was commenting that he was having trouble building repeat business in a highly
competitive market. He had an 80-room national limited-service franchise with a
$57 ADR at 53% in 1995. Above-average decor in the guest rooms greeted the
guest. His occupancy should have been much higher.
However, at the complimentary continental
breakfast, the owner demanded that the manager cut all costs.
Purchased from a local grocery store were instant coffee and a powdered
orange drink. The
night auditor reconstituted the products by 6:00 a.m., but there was no hot
plate for the
coffee, or ice for the orange drink--all was served warm.
Donuts and other baked goods were purchased at a bakery thrift shop and
served cold--two to
three days old.
The owner stated that he did not eat breakfast
and that the franchise requirements were satisfied. There was only one free
USA Today provided, along with a sign: "Do not take the paper from the
lobby." At 9:00 a.m. a maid saved the leftover food for the next day, and
cleaned the lobby. Chairs were inverted onto table tops until the night auditor
reset them the next day. And the owner wondered why his occupancy was
We trust your hotel breakfast is served fresh,
at the appropriate temperature, meeting and/or exceeding all franchise
requirements to meet the competition while building repeat room business.
How Much to Offer
Offering free food to your hotel guests began
as, and sometimes remains, a game of one-upsmanship--I can do better than you. I
can take care of my guests, and keep them coming back, because I give them free
coffee in the Lobby 24 hours a day!
The hotel next door said, "I will give them
coffee and a donut," and at the next corner, the hotel's management added orange
juice; and the beat goes on--and on to a full hot breakfast to order (Embassy
Suites, among others).
Bradbury Inns of Atlanta offers a hot breakfast
of scrambled eggs, sausage, toast, oatmeal/grits, pancakes/Eggo waffles,
cereals, Danish, fruit, juice, coffee--all
without a full production kitchen.
Now Homewood Suites is offering two soups (a
clear and a cream) each evening, along with serve-yourself draft beer and wine
(where permitted by law).
Cookies--we've got hot, fresh-from-the-oven
cookies. Not only can Doubletree Hotels offer free cookies at the front desk
from 3 p.m. to 9 p.m., now you can too. Bake your own in your equipment, using
your grandmother's favorite recipe, or call Otis Spunkmeyer (800/938-1900 in San
Leandro, CA) for the oven (about the size of a large microwave) and the
ready-to-use cookie dough. In theory, this dough helps you make more dough
through repeat business, and it works!
I know of a hotel at an interstate interchange,
visible from the highway, only once you get off the interstate you cannot see
the hotel, and by zoning no signs are permitted to direct you to the property.
As a way of building business, the property markets large, fresh, hot, morning
muffins in orange, blueberry, bran, and chocolate, and cookies in the evening of
chocolate chip and raisin oatmeal. They use billboards, AAA Tour Books, AARP
magazines, local radio and television (remember, they could not buy or rent the
expensive signs). Their reputation and occupancy are excellent; the manager and
sales personnel take muffins along on morning sales calls, and cookies in the
afternoon. Recently, a competitive hotel on the corner added free half pints of
cold milk to their cookie program--and the one-upsmanship beat goes on.
Whether you offer cold continental
breakfast/full hot breakfast; beer and wine/cocktails to order; fresh hot
muffins/soup du jour--first meet the requirements of your franchise, and then
exceed your competition through the best products and service that are cost
Remember--whatever you offer, you are offering
it to increase occupancy and happy guests.
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owner and hotel general manager wishes to say thank
you to his guests for using the hotel. However,
the majority of the time he is too busy with the
daily routine. The Business Appreciation Day is
one method for professional hoteliers to say thank
A Business Appreciation Day is a concentrated
sales effort designed not only to demonstrate
appreciation to past clientele, but also to
generate new sources of business.
organize, and follow up such a day, the following
12 points should be followed.
1. Establish a client list from sales
history files of individuals and firms that have
generated business for the hotel in the past year.
The list should also include names of local elected
officials and members of the local newspaper and
television media. Take particular care not to
duplicate more than two names from any one firm.
The maximum number should be 500 names typed on
labels that are easily duplicated, by photocopying
machines, for future use.
2. Select a date: either Tuesday,
Wednesday or Thursday. Also consider the time
of the year to avoid the hotel's peak season or
the December holiday season.
3. Print engraved invitations, inviting
the mailing list to a reception. Mail the invitations
approximately 2 to 3 weeks before the Business
Appreciation Day. On the invitation, there should
be a "regrets only" telephone number
(possibly to the sales or general manager's office).
4. A list of sales calls should be developed
by the sales department from the mailed invitations.
Care should be taken to group businesses together,
with no more than 15 on one particular list, from
the same geographic region.
5. The general manager should ask department
managers, supervisors and key employees to represent
the hotel on Business Appreciation Day. He should
try to make two-person teams of male/female. Care
should be taken to team an extroverted personality
with an introverted personality. No care should
be taken as to matching specific departments.
It has proven very beneficial to have a representative
of the sales department teamed with the executive
chef, or a representative from the accounting
office teamed with the executive housekeeper.
This is a fun and innovative part of the Business
Appreciation Day having department managers and
employees represent the hotel as sales ambassadors.
Business Appreciation Day, a key department manager
should be left at the hotel as the Manager on
6. The sales department should assimilate
20 sales packets per team. The packet should include
banquet menus, meeting room diagrams, guest room
rates, sales brochures and any other information
on the Food and Beverage Department or general
information concerning the hotel. The packets
will be distributed by the sales teams and be
available to guests at the Business Appreciation
7. The day itself has arrived. Kick off
the day with a breakfast in the hotel for the
sales teams. Give each team 15 to 20 calls that
they are to make. Also include 20 sales call report
forms. Be sure to reimburse those employees driving
their own automobiles for their mileage.
a.m. the sales teams should be making their calls.
They are thanking your clients for their business
at your hotel, reinviting them to that evening's
reception and inquiring about immediate or future
needs that the hotel could provide.
calls are being made, two additional points can
to obtain two business cards from the meeting
planner of the firm you are calling on, for
the correct name and title of the individual
who books your hotel's guest rooms for out-of-town
visitors. These names will eventually be used
to develop a list for membership in a club that
promotes their sense of belonging and special
relationship to your hotel.
noon the sales teams must not return to the hotel,
or they will become involved in the day-to-day
business of the hotel. Have them meet at a special
restaurant or your competitor's hotel for lunch.
each team should give a verbal report of how the
morning sales calls progressed. It is quite interesting
to see that those teams that were extremely apprehensive
at breakfast, now display the confidence of veteran
the teams should continue making the balance of
their calls, while encouraging those who are more
adept to make the cold calls and invite the cold-call
people to that evening's reception.
of the teams have completed their calls, they
should return to the hotel by 4:00 p.m. Guest
rooms should be set aside for the team members
to use for changing clothes and freshening themselves
for the evening's reception.
9. At 5:00 p.m. the Business Appreciation
Day Reception begins. The Reception can be held
in the Ballrooms, Meeting Rooms, Poolside or a
tent in the Parking Lot It should be as elaborate
as the hotel can conduct and the budget will allow.
If your hotel does not have a Food and Beverage
Department, then have the Reception catered by
a very professional firm. This is the hotel's
day to thank the business community for the support
they have given the hotel. The sales team members
should attend this function and circulate throughout
the room thanking the people for their business.
You will receive many comments from your clients
stating that they have had hotel sales people
call upon them for years; but have never had any
one thank them for business. It is very important
that the service department managers know the
need for sales.
guest book at the reception, along with name tags
for all attending guests, and continue to collect
business cards from those clientele missed earlier
in the day.
to have meeting rooms set up in such a manner
that tours of the hotel can be given by the sales
team members. How many times has a person booked
rooms at the hotel, but has never seen one? Have
guest rooms of various styles set aside for tours.
This is the time to show off the hotel. Even if
it was done at the grand opening party, do it
again to reinforce their awareness of the hotel.
10. By the end of the week following the
Business Appreciation Day, the sales department
should have reviewed the sales report forms. The
calls should be listed as to:
calls should be made by the sales staff within
11. Two additional benefits of this day
the collected business cards as a thank you
gift. Purchase a luggage-tag machine and make
the business cards into luggage tags. Mail them
out within 7-10 days after the Business Appreciation
Day, again thanking your clients for their business
and giving them a personal token they can keep
on a year-round basis, reminding them of your
your list of names of personnel who make reservations
for out-of-town guests, establish a special
club which recognizes and encourages their continuing
recommendations and referrals for your hotel.
Such clubs can have many names, but their mission
is a necessary function of every hotel's marketing
of mine has suggested that club names be selected
which enhance the member's image of himself/herself
as a respected member of your informal sales team.
With that rule of thumb in mind, she rejects the
generalization of a "Secretaries Club,"
the double-entendre of "Executive Sweets,"
and the chauvinism of "Ramada Girls"
or Sheraton's "Selective Service." "If
you can't pay commissions," she reasons,
"you can at least pay compliments."
Why not call them "Encore Clubs," she
suggests, "for encouraging repeat reservations?"
12. How much does it take to invest in thanking
your clientele? Your basic costs will include
printing and postage for the invitations, hourly
wages of the sales team members, transportation
costs for those who drove their personal cars
and their breakfast and lunch, along with the
total wholesale cost of the food, liquor, flowers
and decorations for the reception. An extra cost
would be for the luggage tags or other suitable
souvenirs and their mailing.
two months after the Business Appreciation Day,
the sales department should total, on a definite
and tentative basis, that business sold that can
be directly attributed to this sales effort. When
the cost of the Business Appreciation Day is divided
against its booked sales, an Acquisition of Sales
cost should be 15 to 20 percent.
many times we wish to say thank you to our clients
who are using the hotel. The Business Appreciation
Day is but one method, a proven method that works
extremely well on a one-time basis, or as an annual
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