How can hotels penetrate their market better?

Here we take a look at some of the areas that hotels can take from reviewing their market penetration index (MPI) to improve their performance.

1. Understanding MPI: First off, it’s crucial for a hotel to thoroughly understand its MPI, which essentially compares the hotel’s market share to the share available in the market (that is, among its competitive set). A higher MPI indicates better performance in capturing market share.

2. Comprehensive Analysis: After pinpointing their MPI, hotels should conduct a holistic analysis to identify factors that influence their current positioning. This includes comparing their performance against competitors, looking into customer demographics, preferences, and trends, as well as evaluating their pricing strategies.

3. Identify Strengths and Weaknesses: Through the analysis, strengths that contribute to high market penetration should be identified and leveraged, while weaknesses that hold the hotel back need to be addressed. This could involve improving service quality, revisiting pricing, or enhancing marketing strategies.

4. Targeted Marketing Strategies: Based on the insights gathered, developing targeted marketing strategies can be quite effective. This might mean focusing on digital marketing to reach a broader audience, creating packages tailored to the identified customer demographics, or improving loyalty programs.

5. Optimising Pricing Strategies: Competitive and dynamic pricing strategies are key. This involves not just matching or underpricing competitors, but also understanding the value the hotel offers and pricing accordingly. Utilising revenue management software can aid in making informed decisions.

6. Enhancing Product and Service: Continuous improvement in product and service quality cannot be overstated. Whether it’s renovating rooms, adding amenities, or training staff to provide exceptional service, these improvements can significantly impact guest satisfaction and, in turn, market penetration.

7. Soliciting and Acting on Feedback: Regularly collecting feedback from guests and acting on it is vital. It’s an opportunity to understand guests’ perceptions and make necessary adjustments. This not only helps in retaining customers but also attracts new ones through positive reviews and word-of-mouth.

8. Monitoring and Adjusting: Finally, the process of improving market penetration is ongoing. Hotels should regularly monitor their performance, keeping an eye on changing market trends and adjusting their strategies accordingly.

By following these steps, hotels can leverage their MPI as a foundational tool to identify areas for improvement, strategize effectively, and enhance overall performance in conjunction with other key revenue and market metrics.

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