Hotel RevPAR is considered the most important metric in the hotel industry. The Revenue Per Available Room is established as the index that values the financial performance of a chain or establishment.
This indicator measures the profitability generated by the rooms, in other words, it shows us the number of rooms that were occupied and how much was received by each of them. Below we will look at the appropriate strategies to increase our hotel’s RevPAR and, consequently, increase our profits.
As a professional performance indicator, RevPAR is critical in the hospitality industry. This ratio allows us to know with precision the financial reality of the establishment we manage.
RevPAR can be used by hotel owners to adjust hotel rates in order to maximize revenue or even as a tourism promotion formula.
It is essential to know what is the minimum RevPAR that must be achieved to obtain benefits in your accommodation in order to establish a revenue management strategy suited to your needs according to the characteristics of the establishment.
WHAT IS REVPAR AND WHAT DOES IT MEAN?
As with other hotel occupancy metrics parameters that we have had the opportunity to discuss in previous articles on hotel management, RevPAR may not even sound familiar to you if you are not closely related to the accommodation industry.
In terms of hotel accounting, this index is calculated taking into account the number of rooms and will evaluate the financial performance of a hotel, calibrating the benefits obtained per room and always referring to a certain period of time, such as a week, a month or per year.
The RevPAR calculation is simple: RevPAR, or revenue per available room, is a performance metric in the hotel industry that is calculated by dividing a hotel’s total guest-room revenue by the room count and the number of days in the period being measured.
How to determine if this result is correct? There are mechanisms to improve it and you can certainly do that.
But the interpretation of these indexes is not always straightforward. In an environment of such complexity as the hotelier, owners and managers perceive the need for an advisory service to solve several problems that affect the results of hotel management. At IHCS we have the necessary tools to identify the needs, the technological mechanisms we have and the right strategies within the scope of the concept of hotel revenue management to obtain the best accounting results.
WHY IS IT IMPORTANT TO KNOW MY HOTEL’S REVPAR?
Some of the fundamental axes are:
• Control of results in our hotel management. Thanks to this metric we can determine if the commercial strategy used for a season is giving the desired results or if changes are necessary.
• Revenue indicator. RevPAR gives the team responsible for managing the tourism company’s finances an estimate of the income that the establishment will have in the coming months.
• Thanks to RevPAR, it is possible to know how far or near a hotel is reaching the ideal conditions of profitability.
HOW CAN WE IMPROVE REVPAR HOTELS?
The RevPAR Hotels index is part of the Revenue Management strategies, which aim to optimize the revenue of our hotel and obtain the highest possible profitability. Well, to improve the results we must consider two fundamental keys, such as the combination of our human resources and the exhaustive knowledge and satisfaction of our target client.
Let’s see in detail.
Knowledge of the client’s profile
In order to implement Revenue Management market strategies, it is necessary to have knowledge of your client. You can use tools like Google Analytics and other Big Data tools to discover everything about your potential customers and act accordingly.
A satisfied customer will always be the best ambassador for your accommodation. He himself will attract others, and so on; increasing revenue and, consequently, profits.
Customers’ interests have changed and so have their preferences and habits. Customers don’t mind paying more if they know that they will receive good service in all aspects of their stay: from the staff’s attention to the state of the facilities. It is about valuing a global experience. The customer notices all the details such as bad Wi-Fi or air conditioning. In that case, he will negatively evaluate the room and his entire stay.
The presence of trained professionals in all departments will be a guarantee for the client.
Today there are all kinds of tools that can help you with hotel management. These strategies will serve not only to optimize rates, but also to improve the overall customer experience.
To implement all these improvement strategies, it is not always enough to raise prices. Before making decisions like this, carefully study what your guests are looking for. Get some advice for better results. At IHCS, as a hotel consultant, we provide you with the necessary mechanisms to optimize your results and obtain financial performance. You will get the results you desire.