Market Penetration

Braidwood Hospitality Management helps small & medium sized hotels & resorts analyse why they are under-performing in any of these 4 key indicators. This is not always an easy task as many factors may be influencing the underlying cause i.e. rates, product, location, services, mix etc. We help determine these underlying causes, working with our clients to develop and implement an action plan to increase both fair market share and market penetration.

There are 4 key indicators of Market Penetration, these are Revenue; RevPar, Average Rate and Occupancy. 100% is equal to fair market share; anything less is not! Let’s assume that a hotel with 70 rooms operates with 4 hotels within its identified competitive set. Hotel (1) has 50 rooms, Hotel (2) has 100 rooms, hotel (3) has 80 rooms and hotel (4) has 150 rooms. This would mean that on any given night that there are a total of 450 rooms available in the market for sale.

Within this “market? in a 30-day month there would be 13,500 rooms available to sell. At month’s end, the hotels in our example market sold 8,100 rooms or an average market occupancy of 60 percent.

Using Occupancy as one example, our sample hotel only sold 945 rooms during the month achieving occupancy of 45 percent. Dividing the 945 rooms sold into the 8,100 rooms sold in the market shows that our sample hotel finished the month with an 11.6 percent market share vs. its Fare Share of 15.6 percent. Therefore its market penetration would be 74.4 percent or 25.6 percent below its fair market penetration assuming 100% is fair market share.

This is an indicator that our hotel is under-performing in the market and losing business to its competitors.

Market Segmentation

Braidwood Hospitality Management assists small & medium sized hotels & resorts with maximizing their hotel’s potential from each market segment. Understanding your hotel’s potential from any given segment; coupled with a strategic yield management strategy; will improve occupancy, rate and revenue ensuring your hotel will attain its maximum performance.

Braidwood understand how to apply the economics of Pareto’s Principle (20% of customers produce 80% of the profits) to the business of hospitality sales, marketing, advertising and promotion ensuring our clients achieve their maximum potential. We quickly identify which segments have the potential to produce 80 percent of your hotel’s revenue and develop these segments to ensure your hotel is achieving fair market share.

This starts with understanding the market in which any given hotel operates. A fundamental understanding of the competitive environment, key economic drivers and historical trends are essential to understanding which market segments are relevant. The two main market segments are Transient and Group. However, these can be further segmented depending on each hotel’s individual trading area and feeder markets. Examples of these are as follow:

Transient Segments: Rack, Corporate, Government and Seniors etc
Group Segments: Corporate, Association and Sports etc

Braidwood understands the “Pareto’s Principle” discovered back in 1906 by an economist named Vilfredo Federico Damaso Pareto who discovered that 20% of customers produce 80% of the profits! We understand how to apply the economics of Pareto’s Principle to the business of sales, marketing, advertising and promotion (Price, Product, Positioning and Promotion) ensuring our clients achieve their maximum potential.

Market Segmentiation Tracking

Braidwood Hospitality Management analyses our client’s historical business trends and guestroom room sales and segment them into areas that make sense and establish seasonal rates for each segment. This will help identify those segments that are historically strong performers for your hotel as well as those that are weak but should be stronger. From this we assist our clients with the development of their Hotel Sales & Marketing Plan, Advertising Strategy, and other activities that help grow each market segment and improve their fair market share.

More often than not, we hear “I have never tracked my market segments, why is this important and how can I get started?? Knowing which market segments contribute to your overall occupancy, ADR, revenue and RevPar is important for many reasons not least of which is identifying your best customers and “building fences? around them. This allows a hotel to be better prepared to anticipate and minimize predatory competitive practices. In addition, tracking will quickly identify emerging segments that have been historically marginal and alert you when there is a softening in those segments that have been historically strong.

Braidwood can help with the selection, installation and training for both PMS and CRM solutions. Why is this important?

Most hotel Property Management Systems (PMS) are set up for market segment tracking however in small and medium sized hotels & resorts it is an underutilized management tool. In today’s competitive marketplace Customer Relationship Management software (CRM) can provide Hotels and other hospitality related businesses with an added advantage when it comes to tracking as well as helping to create, maintain, and retain satisfied and profitable customer relations.

The installation of a CRM solution will allow your business to compete better by providing you with the ability to track all aspects of sales, identify factors important to your clients, handle customer complaints, and improve your tracking and analysis of customer information thus developing proactive customer friendly tactics.

Competitive Market Analysis

Braidwood Hospitality Management is experienced at conducting competitive market analysis identifying those elements of a hotel’s competitiveness that in turn make our clients and their hotels successful within their individual markets.

A hotel’s competitive market analysis can include data gathered from the local, regional, national and international arena but most often the initial market analysis will begin locally and will focus on the hotel’s competitive set. This can then be enlarged to include other areas as necessary.

Firstly, it is important to establish the initial scope of the analysis by defining the market. The market is then analysed to determine the main customer groups, their needs and how well the hotel and its competitors serve these needs. The process identifies market performance gaps against which a hotel can position itself and develop relevant hotel marketing and sales strategies targeted at these gaps so it may out-perform competitors by meeting the market’s expectations in a sustainable manner. This is the essence of any competitive analysis.

Braidwood Hospitality Management helps identify these elements of competitiveness that in turn make our clients and their hotels successful within their individual markets.