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.

Spotting hotel revenue opportunities

Diving into the dynamic world of the hospitality industry means constantly being on the lookout for ways to improve hotel performance. It’s easy to find yourself caught up in the day-to-day operations and miss out on spots where you could actually be boosting revenue. Taking a moment to pause, reflect, and analyse can open doors to opportunities you might not have seen before.

The power of audits

Picture audits not as a daunting task, but as a treasure hunt. Except, in this case, the treasure map is your hotel’s current performance, and the treasure is the myriad of untapped revenue opportunities lying just beneath the surface. Implementing a series of focused audits can be one of the most powerful tools at your disposal. It’s like having a flashlight that illuminates the gaps that need addressing, and the shiny prospects for growth.

Finding Your Starting Point

Before you can chart a course to improved performance, you need to know where you’re starting from. This means asking some critical questions about your current benchmarks for measuring performance. Are these benchmarks centred around revenue? Do they focus on customer satisfaction, profitability, or perhaps operational costs? Understanding these metrics is crucial because they shape the pathway to leveraging your hotel’s potential.

Tailoring Audits for Success

The first step is to dissect your current benchmarks. The insights gathered from this can point you in the right direction, helping you make informed decisions to enhance your hotel’s performance. Here are a few examples of areas you might consider auditing:

1. Digital Presence: In an era where almost everything is online, how does your hotel stand out? Evaluating your website’s user experience, your social media engagement, and your online booking process can reveal a lot. An audit of hotel advertising return on investment (ROI) can provide some clear indicators on effectiveness.

2. Customer Feedback: The voice of customers is incredibly powerful. Regularly reviewing feedback can highlight what you’re doing right and what areas might need a little extra love.

3. Revenue Streams: Besides room bookings, are there other revenue streams you’re perhaps overlooking? Things like events, dining, spa services, or even partnerships with local attractions can provide opportunities.

4. Operational Efficiency: Sometimes, the leak in revenue isn’t due to a lack of opportunities but rather inefficiencies in operations. For example this could be in reservations or group conversion. An audit here might reveal ways to streamline processes and reduce costs.

5. Market Trends: Understanding the latest trends in the hospitality industry can help you align your services with what customers are seeking, potentially opening new revenue channels.

6. Revenue Metrics: Probably the most critical of all the areas. This will need to cover Occupancy, Average Daily rates (ADR), Revenue per Available Room (RevPAR), Market Penetration Index (MPI), Average Rate Index (ARI), Revenue Generation Index (RGI)

Putting It All Together

After completing these audits, the next step is to put together a plan of action. This is where you prioritize the gaps and opportunities you’ve identified. It’s not just about fixing what’s wrong but also about harnessing what’s right and making it even better.

For instance, if you realize there’s a high demand for wellness tourism and your hotel has an underutilized spa area, voilà, there’s an opportunity right there. Similarly, if operational costs are high due to outdated technology, investing in modern solutions could save money in the long run, freeing up funds for other revenue-boosting activities.

Next steps

Embarking on this journey requires a mindset that’s open to change and ready to innovate. The hospitality landscape is ever-evolving, and staying ahead often means being willing to adapt. While it might seem overwhelming at first, the key is to take it one step at a time.

The goal is not just to spot revenue opportunities but to create a sustainable model for growth. This means looking at the big picture, not just immediate gains. With the right approach, your hotel can thrive, providing exceptional experiences for your guests while securing your bottom line.