Question

What is a 250-room hotel’s actual market share if it has an average daily rate of $97.50 and a REVPAR of $72.25? It operates in the market place with a competitive set of four hotels providing a total of 1,325 rooms daily (excluding the subject hotel). The competitive set achieved an overall occupancy rate of 82.3%.

Answer 1

We know that RevPar = average daily rate * occupancy rate

Thus $72.25 = $97.50 * occupancy rate

Or occupancy rate of the 250 room hotel = 72.25/97.50 = 74.1026% (or 74.1% rounded off).

Now rooms occupied for the hotel = 250*74.1026% = 185.2564

For the market place rooms occupied (excluding the subject hotel) = 1,325*82.3% = 1,090.475

Thus actual market share of the hotel = its occupied number of rooms/total number of occupied rooms of the market (including the subject hotel)

= 185.2564/(185.2564+1090.475)

= 14.52%

Thus actual market share = 14.52%