Revenue Managers around the World have varied opinions on the best and most accurate way to manage and drive their revenue.
Occupancy is one preference, showing how full the hotel is on any given night. However, looking at occupancy alone doesn’t provide an accurate picture or the revenue earned on each room, which are key factors when deciding on pricing.
ADR (Average Daily Rate) is another metric that can be used to show how much money is being made for each room. However, ADR is only a good measure if all of your rooms are full!
REVPAR (Revenue per available room) is probably the most commonly used measure, as this is a metric that gives you an overall picture of how well you are doing, taking in to consideration all of your property’s rooms on any given day.
In addition to these the latest concepts for measuring performance are GOPAR (Gross operating profit per available room) which looks at all of the costs associated with running the business, and NREVPAR (Net rooms revenue per available room) which takes in to consideration the distribution costs, transaction fees and travel agent commissions when looking at revenue performance.
No matter which method you chose, the key thing to ensure is the importance of comparing “apples with apples”, building up your historical data for true and accurate comparisons that can give you a genuine grasp on your performance at one point in time versus another, and provide insight in to how you can improve moving forward.