Market Share Analysis / Market Penetration Toolkit

Tags: #MarketShare, #MarketPenetration, #RGI, #MPI, #ARI, #FairMarketShare, #Quadrants, #RevenueManagement, #HospitalityCode

When we look at tools to measure the performance of our hotel, it's all starting with Occupancy %, ADR and RevPAR as base measurements.

Once you understand your hotel’s performance you need to be able to compare and measure it against your market and competition. This is where Market Share and Penetration Analysis becomes an important tool to gauge our hotel’s marketing success.

I have created downloadable free Excel file on our "Resource Hub" which called “Market Share Workbook” with Sample Hotel report which you will find screenshots on this article and exercises for your use. Please feel free to visit to download.

Let’s look start reviewing them accordingly:

Fair Market Share:

Fair Market Share is an indication that a hotel’s overall performance stacks up against its immediate competitors.

A hotel within a competitive set can work out if it’s getting its Fair Market Share through a simple calculation:

Fair Market Share = Total number of rooms at the hotel / Total number of rooms in the comp set

As an example, if you have 100 rooms and total comp set number of rooms including yours are 1,000; you fair market share is 1,000/100 = 10%. So, if your hotel achieves 10% of the total rooms nights within its market set in a given month, your actual share equals to Fair Market Share and your hotel’s occupancy index would be 100%.

However large or small the comp set, a hotel trying to make itself more competitive can use a Fair Market Share tool to compare its individual percentage to their comp set.

Market Penetration Index (MPI) or Occupancy Penetration Index

MPI is a calculation to measure your hotel´s occupancy compared to the average market occupancy levels (also referred to as market share) and MPI tool helps the hotel to see its position and performance in proportion to the competitors and the market in general.

It gives a guidance of understanding a hotel’s dominance and demand in the marketplace, however, it’s not the best index for measuring performance as a whole as it doesn’t account for revenue at all. Hotels that drop rates may boost their MPI but suffer from lower a reduced RevPAR and consequently, lower GOPPAR.

MPI = Hotel Occupancy % / Comp Set Occupancy %


MPI = 1 The hotel Occ% is equal to the average Occ% of their comp set

MPI > 1 The hotel Occ% is higher than the average Occ% of their comp set

MPI < 1 The hotel Occ% is less than the average Occ% of their comp set

Average Rate Index (ARI)