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RevPar in the Hotel Industry Essay Sample

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RevPar in the Hotel Industry Essay Sample

RevPAR, or revenue per available room, is a performance metric in the hotel industry, which is calculated by multiplying a hotel’saverage daily room rate (ADR) by its occupancy rate. It may also be calculated by dividing a hotel’s total guestroom revenue by the room count and the number of days in the period being measured.[1] Since it is only a measurement for a point in time (say a day, or month or year) it is most often compared to the same time frame. It is often used in comparison to competitors within a custom defined market, trading area, or DMA or a self-selected competitive set as defined the hotel’s owner or manager. Also, comparisons are usually best considered between hotels of the same type, or with target customers. (e.g. full service, luxury, extended stay, economy) A few syndicated data companies compile RevPAR information across markets via voluntary survey, and provide compiled blinded information back to the industry. Other Caveats:

* Successful RevPAR numbers differ from market to market based on demand and other factors. * Best compared across like time periods. For example, it is proper to compare RevPAR on a Friday only versus other Fridays. * Best compared across similar seasonal time periods. For example, comparing results from the Christmas week with the same a year previous is more credible than with a non-holiday week.

Calculation

* RevPAR is revenue per available room,
* Rooms Revenue is the revenue generated by room sales
* Rooms Available is the number of rooms available for sale in the time period An often used short cut to estimate RevPAR is to multiply Occupancy % times Average Daily Rate (ADR) * So, Revpar (estimated) = Occ% * ADR[2]

This topic is closely described on http://meetingsnet.com/negotiating/vendor/meetings_understanding_revpar/

References

1. ^ Mauri, A. G. (2013), Hotel Revenue Management: Principles and Practices, Pearson, ISBN 978-88-6518-146-1, pp. 27-38. 2. ^ Smith Travel Research, Glossary: http://www.strglobal.com/Resources/Glossary.aspx#R

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