3 Minute Read
Do this to track and outperform your competition every time.
To GROW the market share it is important To KNOW the potential of the market. Market potential is determined by the RGI index - which is a good indicator but the game gets interesting when you put a REVENUE figure adjacent to it.
Average daily rate is the average revenue per occupied room in a given time period. It is used alongside RevPAR (revenue per available room) and occupancy rate as a key success metric. With optimal application of yield management strategies a hotel’s average daily rate (ADR) and revenue per available room (RevPAR) can be improved significantly over a period of time.
In a competitive market, Hotels can only be bench-marked through their relative RevPAR positioning derived from bench-marking indices such as the STR reports. Hence, it is important to know the scope of the market before dwelling deeper into the hotel performance.
- Performance parameter: Traditionally, true commercial success metric of a hotel is determined by its gains in market share from the overall market pie – Revenue Market Share Index (RMSI).
- Ascertaining the objective:
Market share gains can be benchmarked in two key parameters –
1) Achieving and exceeding 100 (or 1 if you prefer decimals) i.e. the “fair share” and
2) Y-O-Y growth v/s the competition set in volatile markets.
This can be achieved through a number of strategic decisions applied with precision. Such key instances are mentioned in the Strategy Cues Process implementations.
- Determining the value:
The headroom to achieve fair share or to ascertain a consistent growth rate, it is critical to attribute the difference in value in terms of actual “Revenue”. Index will tell us a relative position. While the value of the index variance can measure actual revenue variance in $ terms.
The attached sheet is formulated to derive the revenue variance v/s the competition set
Input the data for the ‘Last Month’ or ‘Same Month Last Year’ to track the variance per night.
- Commercial Strategy:
The month in the hindsight or the ‘last year same time’ can be a good guiding light for formulating the HIGH IMPACT STRATEGIES. For instance:
o ADR on Weekdays is weaker v/s competition
o Holiday week was the biggest drop in market share index
o City wide events impact the occupancy index positively for the hotel
o Trend continuation for the following month
Then these figures can be used for developing comprehensive strategies for the following month.
- Financial Impact:
If the desired market share index and market growth rate are aligned then the next step would be to check the coherence with the budget and forecast for the month – i.e. check the variance in actual RevPAR v/s the budgeted RevPAR and the forecasted RevPAR.
STR: This Company sets the standard for data intelligence and global bench-marking of hotel commercials predominantly pertaining to room’s revenue. It empowers hotels to compete strategically, plan for the future and understand your true potential and a local / regional / global level. https://str.com/
Hotstats: This Company sets the standard for data intelligence and global bench-marking of hotel commercials at a line by line level on the P&L. https://www.hotstats.com/hotel-industry-trends
Tip from my Mentors: The bench-marking analytics are not applicable till they can by implemented as a guiding light for the future. Your strategy should be able - analyze the trend and develop the forward looking framework which is reflective in daily decision making.
Strategy Cues: Strategy Cues has a detailed framework and understanding developed through rigorous modelling of true competitive sets, high intensity strategies and market share gains of over 320 competing hotels. We customize our strategies based on the hotel positioning with almost a 100% track record of gaining market share in volatile market conditions.
Founder, Strategy Cues
May 16, 2022
3 Minute Read