The question that every hotelier is concerned all the time about is: “How can I get more bookings and increase RevPAR?” But least do they understand, that selling rooms at low rates to increase occupancy does not mean profitability for the hotel.
You’ll never know how your hotel is doing until you don’t have accurate records of your hotel’s revenue and expenses. By analyzing certain key numbers like Revenue Per Available Room (RevPAR), Average Daily Room Rate (ADR) and Occupancy Rate, you can get a better idea of how your hotel is performing in the current year as compared to the past year. Among these numbers, Revenue Per Available Room (RevPAR) is the keyword you need to focus on. And that’s exactly what I’ll be talking about in this blog.
Getting 100% occupancy with the compromise in Average Daily Room Rate (ADR) is not a great achievement. Let’s say you have 150 rooms at your hotel. Now either you can fill 130 rooms by charging 100 USD OR you can fill 100 rooms by charging 150 USD per night. Think about this: Do you want more money by charging higher room rate with fewer guests? Or you’re willing to compromise your ADR and increase your occupancy? The choice is yours!
Let’s dig into what is RevPAR?
Revenue per available room, or RevPAR as it is usually shortened to, is a buzzword used within the hotel industry in order to gauge financial and business performance. As a metric, it is concerned with both room revenue and occupancy rate, which makes it an important indicator of the overall performance of a hotel, as well as a useful component of a hotel’s revenue management strategy.
Majorly, RevPAR is a measurement of both average daily rate and the ability to fill the rooms. This is really important because it gives you a clear idea of the current performance and will let you charge accordingly. If RevPAR increases then, that will increase the occupancy or revenue or in some cases may be both.
Why RevPAR matters?
RevPAR is the most irrefutable term used in the hotel industry. The information, which can be gathered by studying RevPAR is very helpful in trying to price your rooms properly. There is a certain point where the price and occupancy meet that will maximize the revenue for your hotel.
Hotels have fixed and variable expenses and they need to ensure that their ADRs can cover both the fixed and variable expenses.
