Business targetgroup
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Size of the market
There is overcapacity in the hotel market, which makes it hard to reach occupancy rates above 80% during weekdays. But for any individual hotel there is enough demand in the market to get the hotel profitably occupied during both weekdays and weekends.
Sales prices
Revenues comprises 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 * 100 rooms. Also, check the page for information on the leisure targetgroup which will mainly be the guests on 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 no discounts, no special deals or commissions.
The business target group will be of importance during the weekdays: so Monday to Thursday night (4 nights per week). Thus, the weekdays make up 4/7 of the total days, so around 57% of all days.
During weekdays the rooms will be occupied by 1 person only. The total number of available nights during the weekdays is 100 rooms during 365 days and with 4/7 part weekdays, so about 57% is a maximum of 20,748 room nights are maximum 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 are additional revenues from food & beverage and other revenues linked to the room's occupancy.
As you take over in Year 0 and there is a total of 10 hotels in your city, all together the demand for weekdays rooms was 10 hotels 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 target group
The maximum number of hotel nights to be sold during the weekdays would be: 4 out of 7 nights so 57%:
364 days x 100 rooms x 57% so 20,748. At an average price of € 120 and 100% occupancy this means a maximum of € 2,489,760 revenues on renting out the weekdays, mainly aiming at the business target group. The occupancy rate was 50% so the revenues from the weekdays, as you take over are € 1,244,880.
As shown by (experiences in the market) 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 on the weekends. The hotel has always in the first place been aiming at the business target groups and in the second place on the leisure guests. The type of customers attracted so far is an average of the business target groups. The average room occupation during the weekdays (due to the business guests) is 1.0 per room. Business guests tend to have a single use of rooms.
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