Market Share is the proportion of total market business captured by a hotel compared with a defined group of competing hotels or the wider market. In hotel revenue management, it is commonly evaluated using occupancy, average daily rate (ADR), or revenue per available room (RevPAR).
How It Works
Hotels often compare their performance with a selected group of competitors, known as a competitive set or comp set. Market share analysis helps revenue managers understand whether a hotel is capturing more or less business than its competitors.
Market share can be measured using different indicators. The calculation must specify the performance metric and the market or competitive set being compared.
Practical Example
Suppose a hotel’s competitive set sells 10,000 room nights during a particular period. The hotel sells 2,000 room nights during the same period.
Room-Night Market Share = (Hotel Room Nights Sold ÷ Competitive Set Room Nights Sold) × 100
Room-Night Market Share = (2,000 ÷ 10,000) × 100 = 20%
The hotel captures 20% of the room nights sold by the defined competitive set.
How to Interpret Market Share
Market share provides context for evaluating a hotel’s performance relative to its competitors. However, a larger market share does not automatically mean stronger profitability.
A hotel may increase its occupancy by lowering rates, while another may achieve stronger revenue performance with fewer rooms sold but higher rates. Revenue managers should therefore examine market share alongside ADR, RevPAR, occupancy, and profitability.
Related Terms
Competitive Set (Comp Set) · Occupancy Rate · ADR · RevPAR · Revenue Management · Market Segmentation · Demand Forecast