Does Brand and Star Rating make a difference to Revenue Share?

Typically in our statistics, the % share of the revenue is quite often equal to the % share of the space, which is fairly logical. So if the hotel has 30% of the space in the comp set, it very often captures 30% of the total revenue from the comp set, and the same goes for the market share as well.

However we have seen that the above theory is not applicable to everyone so we decided to do a study on the top performing hotels in each of our destinations, to try and find out what it is that is driving such strong performance. Taking the top performing hotel in 7 of our cities the first thing we noticed very quickly is that they where nearly all branded, and where all 5 star rated. Looking a bit closer we also found that they all share very similar prime locations in their destinations as well. 

Furthermore we can see that capturing more revenue than their fair share of space is a common occurrence for these hotels. In fact they are capturing a lot more than expected. Most of them are achieving 50% more revenue than their share (i.e.: when their Share of the space is at 20%, regularly taking 30% of the market revenue). In fact some even reach 3 times their share in some locations (i.e.: share of 5% of the space taking 15% of the market revenue).

For the 7 hotels we looked at, on average they have 12.58% of the space in their respective markets, and take 20.54% of the revenue!  This is an increase over their fair share of the space of 63% or 7.96 percentage points!

So is this a case of the Brand Beats all?  Well out of the top 7 performing hotels we looked at, it is an independent 5* property that beats them all. How do they do it?  From an outsiders point of view there are seem to be several reasons: the location, loyal customer base of repeat business, the type of rooms, the availability, and the overall strategy. Those factors combined make it especially hard to beat this hotel in its market place, especially as it beats out the closet performing hotel in the rest of the top 7 by 130%!

Can you guess which of our hotels is winning the global battle for The Conference Bench Revenue Share Crown in 2010 YTD?  Comment below!

Article written by Gabriel Felissent.