Step 3: Analyze Market Share
Leverage the Market Share Reports
available for your property to evaluate your performance in terms of RevPAR
(Revenue per Available Room), ADR (Average Daily Rate), and Occupancy, both
against your competition and compared to the previous year. For domestic
properties, utilize Smith Travel Research’s Weekday/Weekend STAR and daySTAR
reports, if accessible.
This analysis helps determine
whether your property is priced appropriately or if adjustments to benchmark
rates are necessary. Regular monthly reviews of these reports are crucial to
assess performance, track trends, and identify rate or occupancy opportunities.
Steps
to Follow:
- Review Your Weekday/Weekend Market Share Report
Focus on the three-month figures. Use weekday data to assess Tier 1 weekday benchmark rates, weekend data for Tier 1 weekend rates (if applicable), and total data for Tier 2, 3, and 4 benchmark rates. - Assess Changes in Occupancy and ADR
- Compare your property's occupancy and average rate for
the past three months with those of the competition.
- Determine if market trends mirror your property's
changes. If not, investigate potential causes like changes in customer
mix or turndown data.
- Analyze Changes in RevPAR
- For example, if your occupancy is falling but market
share remains steady, this might signal a market downturn, in which case
lowering rates may not be necessary.
- Review the STAR TREND Report
- Does your property have a RevPAR premium (Index >
100) or a discount (Index < 100) compared to competitors?
- Evaluate whether your RevPAR Index has increased or
decreased, noting the percentage change and its duration using
Year-To-Date and 12-Month data.
- Determine whether the change is driven by Occupancy
Index, ADR Index, or both. Consider factors like:
- Recent rate or strategy
changes at your property or competitors
- Promotions, redos, or
out-of-order rooms in your comp set
- Market changes, such as new
demand generators or changes in competitor ownership
- If negative RevPAR trends are tied to an increasing
ADR and declining Occupancy Index, your hotel may be overpriced.
Conversely, if the reverse is true, your hotel might be underpriced.
- Compare Data to Previous Years
- Review changes in your RevPAR, Occupancy, and ADR
Indexes for the past two years.
- Similar trends across years may indicate seasonality,
requiring focus on Year-To-Date or 12-Month data instead.
- Analyze daySTAR Reports
- Identify specific days of the week contributing to
performance trends.
- Investigate if certain days consistently outperform or
underperform relative to the market and explore potential reasons.
- Summarize Your Findings
After completing this analysis, avoid making immediate changes to benchmark rates. Proceed with the remainder of the process before deciding on rate adjustments.