How to implement a market share indicator for your hotel

How to calculate hotel market share

This article presents the methods of calculating market share for a hotel establishment, reviews the possible options for building a monthly market share indicator, and explains concretely how to obtain reliable data allowing for easy implementation of a market share indicator for your hotel based on confirmed-stays data from online travel agencies.


When we approach the subject of commercial performance and price positioning two worlds are opposed: the blue ocean and the red ocean.

The blue ocean, as theorized by the excellent book « Blue Ocean Strategy » by W. Chan Kim and Renée Mauborgne, is a perfect parallel universe where innovative and highly differentiated products are marketed without real competition. This is the Shangri-La of revenue managers who can test pricing elasticity without risk of losing customers to the competition.

It still exists in the world and some business travel companies evolve in a blue ocean: hotels isolated in high tourist demand sectors, airline monopoly routes, rail links privatized and unavoidable.

We estimate that once a travel company captures more than 75% of a market's demand, it is not necessary for it to regularly monitor its market share because any commercial and pricing action targeted to regain a few points of market share would dilute the overall revenue.

Unfortunately, the daily life of the vast majority of tourism companies and hotels is rather like the red ocean: fierce competition struggling to share a demand that is not growing enough. When commercial and financial performance is struggling, when occupancy rates are below expectations, the question of the benchmark of Key Performance Indicators (KPIs) becomes crucial to understand if the performance of a hotel is better or worse than competing establishments. There is always the shadow of a doubt: are there market opportunities you are missing?

To meet this need, several companies aggregate data from hotel establishments at the local level to deliver estimates of Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), Average Length Of Stay (ALOS), Occupancy rate, Market penetration index (MPI), etc., but rarely is there estimates of market shares.

This is explained by the statistical shortcuts that these data providers take to calculate their indicators at the scale of a city or a region and which do not withstand the statistical rigor of the calculation formula of the market share. We will further discuss in this article the limitations of these datasets and what are the alternative solutions that exist in the market to calculate reliable market shares at the local level.

But let's start from the beginning, what is hotel market share and how do you calculate it?

What is a market share indicator used for?

In the hotel industry, calculating the market share of a hotel every month allows us to know its commercial performance compared to its direct and indirect competitors. Knowing market shares of hotels in a geographical area is essential to precisely target competitors and execute strategies for pricing, revenue management, and distribution that are truly making a difference.

It is estimated that the simple fact of having visibility on the market shares of competitors makes it possible to increase turnover by at least 5%. Conversely, not using market share indicators in an environment where your competitors use them can represent a 10% shortfall in revenue.

Using detailed market share indicators by type of establishment, number of stars, length of stay, traveler segment, and country of residence, is fundamental to implement targeted and non-dilutive pricing strategies. It can allow you to build tariff offers that can defend the market segments where you are attacked or conquer underutilized traveler typologies without diluting your main income.

How to calculate a hotel's market share

Calculating a hotel's overall market share is like calculating the percentage of sales it makes relative to the total market size.

There are two methods of calculating market share :

1) In relation to the total size of the market expressed in turnover (Revenue)

The Revenue Market Share is a percentage that corresponds to your sales business divided by revenues of all the hotels in your geographical area.

Revenue Market Share = Hotel total sales (Rooms) / Market total sales (Rooms)

2) In relation to the total size of the market in number of overnight stays (Volume)

The overnight market share (commonly referred to as Actual Market Share) is the total number of nights sold by a hotel divided by the total nights sold in the market.

Actual Market Share = Hotel total night stays / Market total nights stays

For reasons of data availability, which we will explain later, the second method is most commonly applied at the local level.

Considerations to take into account when implementing a market share indicator

From this theoretical definition we can glimpse two challenges to be resolved before having a ready-to-use market share indicator:

How to define and delimit the market

In order for a market share indicator to make sense from a business point of view and lead to actionable insights commercially it is necessary that the size of the market be neither too big nor too small.

If the market size is too large, the percentage market share will be too small for the variations to properly reflect the trends and it will not be commercially exploitable.

In the example of the city of Singapore below, the market share is calculated for a market including all neighborhoods and all types of establishments. This results in extremely low and difficult to read market shares. Especially since if you operate a 4-star hotel, fluctuations in demand for 1- and 2-star categories (which have no impact on your market segment) will incorrectly impact the value of your market share and may lead you to make inappropriate business decisions.

Conversely, if the market size is too small the risk is not including the hotels of your competitors.

In the example below, the market is geographically limited to Singapore Airport which makes sense because a hotel located at the airport hub does not compete directly with downtown hotels. On the other hand, in this case limiting the selection to 4-star hotels results in a list of only 3 hotels, which is too low. Calculating market share on this basis will lead to the exclusion of a significant part of the demand staying in lower category hotels that have the potential to capture your customers.

To support this point, the Senior Consultants of Yield Tactics have observed all over the world extreme variations in market share between establishments in the same city during the COVID-19 pandemic, with hotels that have obviously continued working with frozen or too narrow compsets and which have missed large business opportunities in favor of unmonitored hotel establishments against which no pricing strategy was put in place.

For this example of a 4-star hotel near the Singapore airport, the recommendation would therefore be to include all the hotels in the area since the number of establishments is limited.

What we recommend in general is that the calculation of your market share is operated on a hotel selection wider than your compset. If the number of hotels in your area is very limited, it is better to include all of them. When the density of establishments is greater, it is preferable to limit selection to neighboring cities or districts and include only accommodations of the same category. While working on the data, always keep in mind the ability to carry out ad hoc analyzes on other parameters.

How to get hotel market share data

We saw previously that there are two methods of calculating the market share:

1) On turnover (Revenue Market Share)

2) On the number of overnight stays (Volume Market Share or Actual Market Share)

If the turnover or the number of overnight stays at your hotel is perfectly known to you then the total size of the market which is essential for calculating market share is the more difficult dataset to obtain.

Traditional providers of KPIs for hotels do not generally provide you with market share data because their statistical approach consists of anonymizing and averaging data sets obtained from all their customers over a geographical area. This is a community model and these data providers rarely have all of the hotels of a geographic area as a client, so they do not have access to the total overnights and revenue values which are essential for the correct calculation of market shares.

Their approach is, however, useful to produce KPIs such as the RevPar because a partial dataset allows you, in theory, to deliver averaged indicators of acceptable quality, as long as you do not focus on a too small geographical area or limit your analysis to a specific business segment.

Indeed the community model is, for 99% of cases, unusable for calculating market share data, unless all hotels in a city are served by the same global reservation system tool or the same financial audit firm.

The alternative is to source data from public statistical services which may have access to the total number of nights, even sometimes the total turnover of hotels. Public services publish these figures in raw form (generally in a structured way on an Open Data portal) or within annotated activity reports.

A good practice in terms of official statistics is to not deliver data in a way where it would be possible to accurately determine the volume of business of a particular establishment. So, if you succeed in building a market share indicator from public statistics, you will gain knowledge, for example, that your market share is declining without being able to identify which competing hotels have taken customers away from you.

Additionally, government statistics have the following flaws:

Public data statistics are therefore preferred to calculate the market share of a chain of hotels in large geographical areas (by region or country) but are rarely used on the scale of a city or district.

Today the best solution to obtain market share data at the local level is the online Hotel Market Share Data service from Yield Tactics which delivers precise estimates of market share at the local level (city, town, district) by month of arrival, but also by length of stay, country of residence of the traveler, and even customer profile (individual, couple, family, group of friends). This service aggregates a sample of confirmed bookings sold by the largest Online Travel Agencies (OTAs) such as, Expedia,,, Agoda, and others. The advantage of this data source is that market share can be calculated on the basis of all hotels, as far as they are distributed by OTAs. These market shares calculations are reliable and representative of the OTA distribution segment which is certainly the most dynamic and competitive.

The value propositions of this high Return on Investment service are as follows:

Currently we are offering a free, unconditional 30-day trial to all hotel establishments around the world. Request it now:

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If you want more information about this service, all the information can be found here (service coverage, pricing, Q&A):

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