Compare Your ADR and RevPAR With Ease - RoomKeyPMS

ADR: Calculating Average Daily Rate provides you with the average room rate on any given day. · RevPAR: The Revenue Per Available Room is ... SupportPortal 800.234.5695 RevenueManagement CompareYourADRandRevPARWithEase WilliamTam TrainingManager June3,2019 Thankstomoderndatacollectioncapabilities,hotelscannowtrackperformanceindicatorsin-depthandinreal-time,givinghoteliersunparalleledinsightsintotheirownstrengthsandweaknesses.Theproblemisthatwithsomuchdataavailable,itcanbeeasytogetlostinthenumbers.Inordertoleveragedataintelligently,it’simportanttoknowwhichnumberstotrack,when.   TwometricsthatareessentialtoamodernrevenuemanagementstrategyareADRandRevPAR.Bothspeaktothecoreperformanceofahotelmakingthemvaluabletoolsfordecision-making.Butknowingthatthesemetricsshouldbeanalyzedandcomparediseasierthanknowinghowtoputthemtouse.   WepreviouslysharedanADRcheatsheetandacomprehensivehotelmetricscomparisontoclearupsomeoftheconfusion.Now,wewanttoprovideeasywaystointerpretperformancebasedonADRandRevPAR. QuickDefinitions First,it’simportanttounderstandwhatdistinguishesthesetwometrics,whichbothinvolvehowmuchrevenueyourhotelgenerates. ADR:CalculatingAverageDailyRateprovidesyouwiththeaverageroomrateonanygivenday.It’sdeterminedbydividingthetotalrevenuemadefromroomfeesonthatdaybythenumberofroomssold.Thismetricindicateshowsuccessfulahotelhasbeenatmaximizingroomrates. RevPAR:TheRevenuePerAvailableRoomiscalculatedbydividingyourtotaldailyroomrevenuebythenumberofroomsavailable.YoucouldalsomultiplytheADRbytheoccupancyratetoarriveatthesamefigure.Thisillustrateshowsuccessfulahotelhasbeenatachievingahighoccupancyrate. ATaleofTwoMetrics ADRandRevPARarecomplementarymetrics:ADRtellsthetoplinestoryandRevPARfleshesitout.Insteadofcomparingoneagainsttheother,hoteliersneedtounderstandhowtheyworktogethertoilluminateperformance.   RevPARisgenerallyconsideredthemoreimportantmetricbecauseittakesintoconsiderationbothdailyratesanddailyoccupancy.Obviously,sellingmoreroomsathigherratesisbeneficialtoanyhotel.Ifoccupancyisincreasingitmeansthatroomsarebeingpricedtosell,andthat’sagreatmetricofsuccess.   However,occupancyisonlyhalfthebattle.Pricingroomsfor100%occupancydoesn’ttellyouifratescouldbehigherandoccupancylowertogeneratethesamerevenuewhiledecreasingoperatingcostssuchashousekeeping.Comparingthetworatescanshownuancedchangesthatinformhotelrate-settingstrategies.Forexample,ifADRisrisingbutoccupancyisfalling,hotelsmayearnalotfromeachroombutmakefewerprofitsoverall.Similarly,risingRevPARdoesn’tnecessarilypointtorisingfortunesbecauseitdoesn’ttakeallcostsintoaccount. MaximizingRevenue,notMetrics Ahotel’sultimategoalshouldn’tbetomaximizeeithermetric,butrathertoimprovefinancialperformanceoverall.Thatmeanstakingintoconsiderationacomplexlandscapethatconsiderscostsalongsiderevenue.InvestinginextravagantamenitiestoattractmoreguestsmayboostyourRevPAR,butatacost.   Everynightaguestusesaroom,itcoststhehotelintheformofutilities,cleaning,complimentarybreakfastsandmore.Thefullvalueofabookingdependsonhowmuchguestsspendontheirroomandthroughoutthehotel,versushowmuchitcoststokeepthemhappy.Thehardpartforhotelrevenuemanagersisfiguringouthowtominimizecostswithoutcompromisingtheguestexperience.   Intheend,theresponsibilityfallsoneveryoneinthehotel,notjusttherevenuemanager.Closelytrackingandmanagingfinancialmetricsisessential,butdrivingthemupwardstakesinputfromeveryonefrommarketingtofrontdeskstafftohousekeeping.Acoordinatedapproachleadstomorebookings,higherroomratesandhappierguestsaswellasefficientoperationswithlesswasteandredundancy.Revenuemanagersarethestewardsoffinancialmetrics,buteveryoneonstaffisastakeholder.   Hotelsrelyonmodernpropertymanagementsystemstokeeptheteamengagedandinformed.Revenuemanagershaveinstantaccesstoaccuratefinancialdata,includingmetricsthatarecalculatedautomatically,butknowinghowtoactionthosemetricsisthetruechallenge.Armedwithabetterunderstandingofwhatthosemetricsmeanandhowtoreadthem,hotelierscanstarttakingactiontowardsrealimprovementsthatwillincreaserevenue,attractcustomers,andhelptheirhotelgrow.   RoomKeyPMSincludesapowerfulrevenuemanagementmodulethatintegratesadvancedfeatureswithintuitiveinterfaces.Whenyou’rereadytoreplaceconfusionwithclarity,contactourteam. PhotoCredits:Shutterstock/JacobLund RevPAR,GOPPAR, ARPAR FindOutAllThereistoKnowAboutTheseKeyHotelMetrics DownloadCheatSheet Abouttheauthor WilliamTam TrainingManager Williamjoinedthecompanyin2014andhasover10yearsofexperienceinthehospitalityindustryworkingforsomeoftheleadingluxuryhotelchainsincludingFourSeasonsHotels&ResortsandRosewoodHotels&Resorts.HegraduatedfromRoyalRoadsUniversitywithaBachelorofArtsDegreeinInternationalHotelManagement.Withapassionfortravel,Williamenjoystravelingoverseastoexperiencenewculturesandhassuccessfullyon-boardedover100hotelsworldwide.Duringhisdowntime,heenjoysstayingactivebybeingoutdoors,hiking,andhasaninterestinhealthandfitness. FollowMeOn:Website,LinkedIn Youmightalsolike... HotelInternetMarketing 9OperationalTacticstoBeatSeasonalLulls ByWilliamTamonMarch20,2018 Readmore HotelManagement 4RevenueStrategiesthatHoteliersCanApply ByTimMajoronMarch6,2018 Readmore GuestEngagement Year-EndRoundup–OurTop12Postsof2017 ByTimMajoronDecember19,2017 Readmore Bycontinuingtobrowseorbyclicking“AcceptAllCookies,”youagreetothestoringoffirst-andthird-partycookiesonyourdevicetoenhancesitenavigation,analyzesiteusage,andassistinourmarketingefforts. 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