It sounds so simple, doesn’t it? You want to make more money? Just increase your rates. However, finding ways to maximize and continually grow rates while maintaining high occupancy is, and will always be, the biggest challenge any property faces.
NB: This is an article from Sojern
Occupancy levels, OTA commissions, room rates, and more—hotel revenue managers juggle an incredible amount of constantly fluctuating data in an attempt to maximize revenue per available
room.
Strategic revenue management is combining creative techniques with a data-driven strategy in order to increase profitability. Our guide understands that balance and gives you the tools, techniques, and inspiration to take your revenue management to the next level.
RevPAR combines two of the most widely-used metrics in hospitality—occupancy and room revenue—to create a more insightful snapshot of a property’s financial performance over a defined period of time.
The Dos & Don’ts of RevPAR
While calculating RevPAR is an important step in your understanding of revenue management, it doesn’t reveal everything about your property’s viability. Instead:
Do use RevPAR to determine the net revenue your property keeps after taxes, commissions, and fees. If you include these other stats, you’ll have artificially inflated stats that may look impressive, but aren’t particularly useful. RevPAR only accounts for the revenue hotels can rely on after taxes and third party expenses are paid out.
Do use RevPAR to show your property’s performance compared to budget. A more informative insight than ADR, RevPAR may not have a column in your annual budget, but as we’ve come to see, it may deserve one. And since your budget already includes all of the components, it’s basically already calculated for you.
Don’t use RevPAR to show you the efficiency of your room-related expenses or profitability. The cost of operating your rooms is not factored into your property’s RevPAR number. These expenses can eat directly into your property’s net revenue, negatively impacting your profitability.
Don’t use RevPAR to speculate how well your property could have done. RevPAR is truly a measurement of what a property has done, not how well it could have done.
Our eBook helps independent hoteliers strategize to boost RevPAR, put more guests in your rooms, and drive additional profit into your property. You’ll learn:
- What is RevPar?
- Real-life calculations of RevPar, ADR, and more
- Industry-leading tactics for increasing your RevPAR
- Expert advice on preparing for the future of revenue management
Get a free copy of Sojern’s Hotel Management eBook Guide here
