Revenue Management
MPI — Market Penetration Index
Your occupancy share against the competitive set — how well you fill rooms relative to peers.
Academic definition
The Market Penetration Index (MPI) measures a hotel's occupancy relative to that of its competitive set, indexed to 100 for fair share. It is calculated by dividing the subject hotel's occupancy percentage by the competitive set's occupancy percentage and multiplying by one hundred. An MPI above 100 means the hotel is capturing more than its proportional share of occupied rooms; below 100 means it is filling fewer. MPI isolates the volume dimension of performance, complementing the Average Rate Index, which addresses rate, and the Revenue Generation Index, which combines the two. It is a standard component of third-party benchmarking reports. As an occupancy-based relative measure, MPI reveals nothing about the rate or profitability of the business captured: a hotel can achieve a high MPI by discounting aggressively to fill rooms, winning volume share while sacrificing rate and contribution.
Your Occupancy = subject hotel occupancy % · Compset Occupancy = aggregate occupancy % of the compset
Worked example
Your occupancy of 75% against a compset 70% gives MPI = 75 ÷ 70 × 100 ≈ 107 — winning volume share, possibly by discounting.
The ProfitPAR™ lens
MPI is the index of how many heads you won, and it is the easiest of the three to game — just drop your rate and watch it climb. A hotel chasing a high MPI is often a hotel quietly buying occupancy with margin, filling rooms its competitors wisely declined. Volume share is the cheapest share to buy and the least worth having if it arrives discounted and commissioned. ProfitPAR™ reads a soaring MPI with suspicion: if penetration is up while retained profit per room is flat or falling, the property is winning the wrong race. Fair share of rooms is only worth pursuing when each of those rooms still keeps its profit.
Winning the occupancy race is easy if you are willing to give the rate away.
Measure what each room actually keeps.
ProfitPAR is offered as a private revenue practice, by invitation. Tell us about your hotel to begin.
Request an InvitationWorked examples use illustrative figures in Indian Rupee (₹) with lakh/crore conventions. They are composite and representative, not drawn from any single property. ProfitPAR™ is a trademark of Sibasish Misra.