The Proper Use of RevPAG (Revenue Per Available Guest)

Any specialty, and hospitality is no exclusion, comes with its own set of technical jargon and acronyms. We hoteliers are bombarded daily with ADR and Revenue Per Available Room (RevPAR) as well as, to a lesser extent, the latter’s two smaller siblings, RevPOR and RevPAG. Even though they are less common, they are still quite handy in certain situations, and today our focus will be on RevPAG.

Let’s get the acronyms out of the way so there’s no confusion:

  • RevPAR = Revenue Per Available Room
  • RevPOR = Revenue Per Occupied Room
  • RevPAG = Revenue Per Available Guest

The first term, RevPAR, is the most commonly used these days, but as I’ve advocated before, it may not be the best overall indicator of a property’s financial or business health. Hence, I vouched for using the second term, RevPOR, as it incorporated occupancy percentages to better forecast actualized revenues instead of projecting a figure based on 100% rooms booked. It’s a subtle change, but one that can nonetheless have a tremendous impact when evaluating quarter-over-quarter or year-over-year.

Even though most diligent managers will throw RevPAR through an average or ‘per capita’ occupancy grinder for a more accurate calculation of earnings, it is still hard to account for seasonal disruptions. That’s where RevPOR shines through; by factoring occupancy into the equation from the start, it can act as a better barometer for shifts in consumer spending habits, indicating whether or not some of your ‘upselling’ efforts have actually paid off.

RevPAR still has the advantage of being the ‘quick snapshot’, but the purpose of RevPOR is to measure the total capture per occupied room, thus allowing for quality inferences about individual spending habits over time. RevPAG goes a step further as it takes into account the total number of guests, regardless of how many are staying in each room.

Read rest of the article at: HotelOnline