Business targetgroup
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Size of the market
There is a kind of overcapacity in the market which makes it hard to reach occupancy rates above 80%. But for any individual hotel there is enough demand in the market to get the hotel well-occupied.
Sales prices
Revenues consist of the average (sales) prices times the number of bookings. A maximum occupancy rate would mean that all 100 rooms are occupied during all of the weeks, so 52 weeks x 100 rooms. Also check the page for information on the leisure targetgroup which will mainly be the guests for the weekends.
Prices during weekdays (especially interesting for business guests) in the past were ranging from € 100 to € 140 maximum per room per night including breakfast.
- the € 100 price has been the last-minute price during the weekdays.
- the € 140 price has been the rack rate price during the weekdays. The (highest) published price with nu discounts, no special deals or commissions.
The business targetgroup will be the main number of guest during the weekdays: so Monday to Thursday night. The weekdays make up 3/7 of the total days when you take over the management, so rounded up to 57% of all days.
The business targetgroup will be occupied the rooms by one person only. The total available night during the weekdays is 100 rooms (calculating with) 364 days and then 4/7 considered weekdays, so rounded up 57% means a maximum of 20.748 nights a room is available on weekdays.
The occupancy rate has been 50% over the years so 10.374 weekdays are occupied as you take over, at an average price of ((€ 100 + € 140)/2) € 120 so € 1.244.880. This is the revenue from renting out the rooms only. There is additional revenues from food and beverage and other revenues linked to the rooms occupancy.
As you take over in year 0 there is a total of ten hotels in your city, so all together the demand for weekdays rooms was 10 x 10.374 = 107.740. After all of your decisions and the decisions of your competitors this demand will never be exactly the same in the years when you run the hotel. It depends on many of your decisions. But keep a close look at this benchmark!
Maximum in this targetgroup
The maximum number of hotel nights to be sold during the weekdays would be:
364 days x 100 rooms x 57% so 20.748. At an average price of € 120 and a 100% occupancy this means a maximum of € 2.489.760. revenues on renting out the weekdays, mainly aiming at the business targetgroup.
As shown by experiences in the market ([1]) even 50% is rather high on an average during a year. Keep that in mind! Of course the price is the other factor influencing the revenues.
This information gives an indication of the maximum growth. Of course, things change if you have a higher occupancy rate AND a higher sales price.
So making additional costs (next to the fixed ones and the variable ones you can't avoid) this just calculated maximum gives you an indication of what you could make on extra costs which still could be earned back. Or, even better, lead to more profit.
Type of customers
There is no specific information on the type of customers: we do know the business people mainly book in the weekends. The hotel has always in the first place been aiming at the business targetgroups and in the second place on the leisure guests. The type of customers attracted so far are an average of the business targetgroups. The average room occupation during the weekdays (due to the business guests) is 1,0 per room. Business guests tend to have single use of rooms.
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