Revenue

MPI

Market Penetration Index

MPI (Market Penetration Index) compares a hotel’s occupancy rate with the average occupancy of its competitive set. An MPI of 100 means the hotel is filling its fair share of rooms; above 100 it is taking more than its share of demand.

Formula

MPI = (Hotel occupancy rate ÷ Comp set occupancy rate) × 100

MPI is the occupancy index — the part of RGI that measures volume rather than price. It answers whether the hotel is winning guests against its competitors, independent of what it charged them.

A high MPI is not automatically good. A hotel can push MPI well above 100 by pricing below the market, which shows up as an ARI below 100 and often a flat or falling RGI. Read together, MPI and ARI show whether a hotel’s share was earned on value or bought on price.

Worked example

A hotel runs at 82% occupancy while its comp set averages 75%. Its MPI is 109.3.

Frequently asked questions

What is MPI in the hotel industry?

MPI, the Market Penetration Index, compares a hotel’s occupancy with the average occupancy of its competitive set. An MPI of 100 means the hotel fills its fair share of rooms; above 100 it captures more than its share of the demand those competitors attract.

How do you calculate MPI in hotels?

Divide the hotel’s occupancy rate by the comp set’s average occupancy rate and multiply by 100. A hotel at 82% occupancy against a comp set averaging 75% has an MPI of 109.3. Read it alongside ARI to see whether that share came at a lower rate.

Related terms

  • RGI — RGI (Revenue Generation Index) compares a hotel’s RevPAR with the average RevPAR of its competitive set. An RGI of 100 means the hotel is earning exactly its fair share of room revenue; above 100 it is outperforming the set, and below 100 it is losing share.
  • ARI — ARI (Average Rate Index) compares a hotel’s ADR with the average ADR of its competitive set. An ARI of 100 means the hotel is achieving the market rate; above 100 it is selling at a premium to its competitors.
  • Occupancy Rate — Occupancy rate is the percentage of a hotel’s available rooms that were actually sold in a given period. It measures how much of the inventory the hotel managed to fill, independent of what it charged.
  • Comp Set — A comp set is the group of comparable, competing hotels a property benchmarks itself against — chosen to match on location, segment, quality and the demand they draw from.