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What is a hotel’s RevPor, and what does it mean?
RevPAR is not a play on words. To define Revenue Per Occupied Room, it is necessary to understand the characteristics provided by other hotel ratios and the revenue management strategies aimed at optimizing the financial management of our establishment. It differs from RevPAR in that it considers revenue per occupied room, allowing us to more accurately assess our profits.
Through a simple mathematical calculation, RevPOR allows us to determine the profit we earn from the total revenue generated by each occupied room. (Room revenue / Total number of occupied rooms).
In addition to lodging, this ratio must include all revenue related to breakfast and general services used by the guest in connection with their room.
When it comes to applying our metrics, this is the key difference from RevPAR, which takes unoccupied rooms into account by multiplying the total occupancy rate by the average daily rate (ADR), a calculation that yields revenue per available room.
In both cases, we are talking about metrics that measure our revenue per room. Many industry professionals believe that RevPOR is more important, since it provides a more direct assessment of a hotel’s management performance by not taking into account seasonality—a factor that is so common in the hotel industry.
Let’s take a closer look.
What does calculating RevPOR allow us to do?
Applying the various supporting metrics to assess a hotel’s financial status can be somewhat challenging. At Internacional Hotel Consulting Services (IHCS), we put our experience as an international consulting firm at your disposal to implement the necessary mechanisms that will help us apply our revenue indicators to optimize our results and achieve greater profitability.
RevPor is the best tool for directly managing a hotel and monitoring our property’s occupancy. Here are some of the main benefits it offers:
- Hotel management can generate more revenue from its guests and soften the blow of the all-too-common regional or seasonal decline in occupancy: A strong RevPOR during the off-season suggests that overall profitability will be even higher when the peak season arrives.
- The calculation takes into account services and other optional sales that a guest may purchase during their stay.
- With RevPOR, you can track revenue from other departments, such as food and beverage, spa treatments, etc.
How can we improve the RevPOR?
Customer satisfaction and the extent to which customers identify with what the hotel has to offer—in general, and their accommodations in particular—are also key factors in improving the metrics provided by RevPOR.
To improve results, we must also keep in mind three key factors in this case:
- Coordination and training of our human resources.
- In-depth knowledge of our target customer. We must understand their preferences, tastes, and trends in order to successfully meet all their needs with our offerings.
- Hotel personalization: This enhances thehotel’s positioning in the customer’s mind and better addresses their needs. If we can tailor the hotel’s service and image to their preferences, the resulting effect will lead to a stronger positioning and a more favorable perception of the hotel brand among our target customers.
Developing an appropriate metric to evaluate our profitability and improve guest service isn’t always an easy task. If you’re going to put your hotel ratios, at IHCS—as a hotel agency and consulting firm—we have the tools and a team of specialists to make your hotel management work easier. We have experience and want to share it with you to help you move your new project forward and find the support you need. Please contact us.
