Overcapacity

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Overcapacity in the market

Due to the fact that there is an oversupply in the market there is an overcapacity. All the hotels active in your city together offer more room capacity then there is demand in year. The starting situation in your city is that there is for instance 10 hotels offering all 100 rooms during 364 days (the rounded up number of days) in a year. So the total number of possible nights to book offered in the market is 10 hotel x 100 rooms x 364 days in a year = 364.000 available room nights per year. This is the supply offered.
The basic occupancy rate as you take over is 50%, so there is a demand for 182.000 room nights and a overcapacity of 182.000 nigh. So in the beginning for exactly ten the same hotels each has 18.200 nights overcapacity. Divided by 364 this means there in a year basically 50 rooms permanently not occupied.

Weekdays and weekends

The numbers mentioned above are an average: of course there are some weekends which will be totally booked and some weekdays which show very few guests. So you can not just shut down this overcapacity: it is spread all over the year and over the two markets. In the game you get no further information on this other then the average occupancy during a year.

By changing the last-minute prices, the rack rates and all other decisions you take for your hotel, you can influence the occupancy rate. It is impossible to tell which decision has exactly which effect: in the the total package which will show results. The consistency of your strategy has proven to be very important to the customers in the market.

The weekdays account for 43% of the total of the number of room nights which are available, the weekends account for 57% of the total of all room nights in a year.
For both markets the average over a year is 50% occupancy on taking over.

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