Revenue per available room (RevPAR) is a performance metric that assesses both the room revenue and the occupancy rate of a hotel. It is often used to help hotels measure themselves against competing properties and is an important part of any hotel’s revenue management strategy.
The two most common formulas for calculating RevPAR are:
- Rooms Revenue / Rooms Available
- Average Daily Rate (ADR) x Occupancy Rate
This ratio is important because it provides a snapshot of how well you are filling rooms, and how much you are able to charge. There are several ways to increase your hotel’s RevPAR:
Incorporating a length of stay requirement
Some revenue management strategies are created solely around having a length of stay requirement. The idea is to control costs by limiting guest turnover. This is something that can be implemented by controlling specific booking channels or incorporating it into a promotional package. During high season, you can opt to only accept long-term bookings in order to drive profit.
Packages
Combine accommodation together with additional amenities or add-ons. You can offer a promotion that includes shuttle services, bike rentals or even tickets to a local attraction.
Packages are an added expenditure that guests typically determine during the booking process. By capitalizing on nearby events or holidays, you can provide a more satisfying experience for your guests. This is better than simply charging less because it increases the value of your room with additional services.
Emphasize Referrals
As we’ve talked about in previous posts, customer reviews can make or break you. If your guests DO have a positive experience, encourage them to review. Consider setting them up with a discount that incentivizes providing public feedback.
Don’t Solely Rely on OTAs
Online travel agencies are great for filling up your occupancy rate, but terrible for increasing your hotel’s overall revenue. If you are relying on OTAs to fill out your room, you’re going to be losing money due to their highly discounted prices. As mentioned before, offering packages is a better alternative that will allow you to charge at a higher rate.
Understand the demand
Possibly the most important tip is to understand the demand patterns of your hotel. In order to achieve this, you need to analyze when guests are more likely to visit. Understand which occasion guests are visiting the most and plan your pricing accordingly.
Is your hotel’s RevPAR low? If you’re needing to find talent to improve your hotel’s RevPAR metrics, reach out to one of our recruiters at JDI. As one of the top hotel recruiters in the country, we work with the top talent in the industry and work hard to ensure the ideal match between candidate and property. For more information about our hospitality recruiting services, please click here.
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