Question: What Is RevPAR Used For?

How is occupancy calculated?

Occupancy rate is the percentage of occupied rooms in your property at a given time.

It is one of the most high-level indicators of success and is calculated by dividing the total number of rooms occupied, by the total number of rooms available, times 100, creating a percentage such as 75% occupancy..

What are the limitations of RevPar?

Here are three reasons you can’t put all your eggs in the RevPAR basket:RevPAR does not measure a hotel’s ability to generate revenue. RevPAR only encompasses revenue derived from the operation of rooms. … RevPAR is not a measure of financial health. … RevPAR is just one step in the evolution of hotel analytics.

How is RGI calculated in hotels?

RGI = Your Hotel’s REVPAR / Hotel Market REVPAR….How to calculate RGI:RGI = 1 The hotel RevPar is equal to the average RevPar of their comp set.RGI > 1 The hotel RevPar is higher than the average RevPar of their comp set.RGI < 1 The hotel RevPar is less than the average RevPar of their comp set.

What is RevPAR explain with examples?

RevPAR = Average Income per night ÷ Total number of Rooms. As an example; if you have 10 rooms in your hotel and $1000 average income per night, then your revenue per available room would be $100. This means that for every available room you on average make $1000 ÷ 10 = $100.

Which is more important ADR or RevPAR?

RevPAR is generally considered the more important metric because it takes into consideration both daily rates and daily occupancy. … For example, if ADR is rising but occupancy is falling, hotels may earn a lot from each room but make fewer profits overall.

How do you increase RevPAR?

Top Techniques to Increase Hotel RevPAR Primary Strategies: Apply revenue management. Implement different pricing strategies….Secondary Strategies:Save your side expenses.Plan room rate as per average length of stay (ALOS)Manage your online reviews.Increase digital marketing efforts.Run and promote loyalty programs.

What does RevPAR tell you?

Revenue per available room (RevPAR) is a metric used in the hospitality industry to measure hotel performance. The measurement is calculated by multiplying a hotel’s average daily room rate (ADR) by its occupancy rate. … An increase in a property’s RevPAR most likely indicates an improvement in occupancy rate.

How is RevPAR calculated?

Simply multiply your average daily rate (ADR) by your occupancy rate. For example if your hotel is occupied at 70% with an ADR of $100, your RevPAR will be $70. The other way to calculate it is by dividing the total number of rooms available in your hotel with the total revenue from the night.

Should RevPAR be high or low?

Owners can use RevPAR to adjust room rates in order to maximise revenue, making it a highly effective KPI for revenue management. If the occupancy rate is low, it may be a sign to reduce rates, while if occupancy is very high, there may be scope to increase rates.

What is the STR Report for hotels?

Developed by the hotel management analytics firm Smith Travel Research, the STR report is a benchmarking tool that compares your hotel’s performance against a set of similar hotels.

Why is RevPAR so important?

RevPAR is used to assess a hotel’s ability to fill its available rooms at an average rate. If a property’s RevPAR increases, that means the average room rate or occupancy rate is increasing. RevPAR is important because it helps hoteliers measure the overall success of their hotel.

What is the difference between RevPAR and ADR?

Although ADR measures the effectiveness of rooms rate management, RevPAR reflects how rate and inventory interact to generate rooms revenue. … Both RevPAR and ADR reflect only top-line results and are circumscribed to the rooms department.