Within the hotel industry, revenue management is the practice of selling the right room, to the right customer, for the time being, for the right
Within the hotel industry, revenue management is the practice of selling the right room, to the right customer, for the time being, for the right price, through the right distribution channel, with the best cost-effectiveness. You can read more about revenue management in the “Revenue Management” section where it explains exactly.
Essentially, revenue management KPIs can be described as performance metrics, which help business owners assess the current state of their business and make up-to-date adjustments to things like pricing and strategy. As a result, these KPIs can enable hotel owners to optimize their business practices and maximize their revenue.
The most used Revenue Management Indicators (KPIs):
The occupancy rate refers to the number of available rooms in a hotel that are occupied at any given time. It can be used to assess how efficient a hotel is using the available space and can be used in conjunction with other metrics to maximize revenue. The occupancy rate is expressed as a percentage and is calculated by dividing the number of occupied rooms by the total number of rooms.
The average daily rate or ADR is a KPI that indicates the average rental income per occupied room at the hotel address. It does not refer to revenue from other sources, such as room service, and is calculated by dividing the revenue of the rooms by the number of rooms sold. It is one of the most useful revenue management KPIs, allowing comparisons with other nearby hotels or similar features.
Revenue per room or RevPAR is the average amount of revenue generated per room available at the hotel, whether occupied or not. It can be calculated either on the basis of room revenue depending on the number of rooms available or by multiplying the average daily rate by the occupancy rate. This KPI is especially useful for measuring the overall revenue generated revenue of all a hotel room.
Like the average daily rate, revenue per occupied room or RevPOR is only revenue generated from the space actually used. However, it differs from this KPI in that RevPOR takes into account all revenue from an occupied room to include room items and laundry service, etc. It can be calculated by dividing the total revenue generated by occupied rooms with the number of occupied rooms.
Gross operating profit per available room or GOPPAR, as it is often known, is one of the most important indicators of revenue management performance because it looks at gross operating profit across all areas, whether occupied or not. It can be calculated by dividing gross operating profit by the total number of rooms available and is a constant indicator of overall business performance in all revenue streams.
Total revenue per available room, or TRevPAR, is a KPI that, like RevPAR, focuses on the amount of revenue generated per available room, regardless of whether those rooms are actually sold. Unlike RevPAR, however, it includes all revenue from rooms, including money spent on restaurant, bar or room service. It can be calculated by dividing the total revenue by the number of rooms available in the hotel.
Net revenue per available room, or NRevPAR, is another revenue management KPI that looks at the amount of revenue generated based on an available room. However, NRevPAR focuses on net revenue, which means that the distribution costs associated with selling a room are deducted from the room revenue before that number is divided by the number of rooms available in the hotel. It can present a more accurate picture of the actual revenue received from the rooms sold.
Average revenue per account or ARPA is a performance indicator of key revenue management data used to display the average amount of revenue generated per customer account for a given period. It is usually calculated on a monthly or annual basis and the selected time period can easily show hotel owners the average value of existing customers or the value of new customers. ARPA is calculated by dividing the recurring monthly revenue by the total number
