Decoding RevPAR: A Metric for Hotel Success

What is RevPAR, and why is it so important to any hotel’s success? Data has many benefits for any hotel. Without it, you won’t be able to make decisions that are precise or informed for the benefit of your property.

As time goes on, more data becomes available and so do the methods for recording and measuring it. Because of this, it’s more crucial than ever to use data to evaluate and enhance the success of your hotel.

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Hotel owners need to understand the potential that this data offers. You can gain an in-depth knowledge of what aspects of your hotel are succeeding and what changes in strategy could improve. Use hotel metrics RevPAR to achieve this.

Hotel owners in India assumed a revenue per available room (RevPAR) of INR 1,675 for 2020. This was a decrease by nearly 60% compared to the previous year. They anticipate to reach the pre-pandemic level by 2022 or 2023.

In financial year 2022, the revenue per five-star hotel room in India that were available accounted to about US $35, an increase from the previous year.

What is RevPAR in Hotels?

Revenue per available room, or “RevPAR,” refers to one of the most often used important measures for the success of a hotel. It’s an easy way to find out how much money different market segments in your destination are bringing in.

Lastly, this statistic provides a sense of how many rooms a hotel sells and how much money it makes from those bookings. It provides you with the chance to evaluate a single aspect of your whole revenue management strategy.

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How to Calculate Hotel RevPAR?

What is the RevPAR formula in hotels? One indicator of the quality of hotel services is revenue per available room. It is simple to calculate RevPAR using this formula.

To calculate it, multiply the occupancy rate by the average daily rate (ADR) and divide the result by 100.

You can also calculate it by dividing your total revenue from rooms by the total number of rooms on the property.

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Hotel RevPAR 2023 Example

For example, your RevPAR will be $400 if your hotel has an ADR of $1000 and is 40% full.

You can also calculate it by dividing the entire number of rooms in your hotel by the total amount of money you make each night. If 80% of the rooms are occupied in a hotel with 100 rooms, it equals 80 rooms occupied.

Multiplying your total room income by 100 yields $8,000 in total revenue. Multiplying $8,000 by the entire number of rooms available (100) will give you your $80 RevPAR.

You may also calculate your property’s annual RevPAR by simply multiplying the number of available rooms by 365 days per year.

The 100-room property offers 36,500 room nights per year. That’s a big number of hotel nights to make money on!

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RevPAR Index Explained

One measure that comes from RevPAR is the RevPAR Index. It compares your hotel industry RevPAR with the RevPAR of your competition in the market.

This evaluation will let you know how well your profit and sales management strategies are working relative to those of your rivals.

The RevPAR Index can help you determine the relative value of the variation between your variance and that of your competitors.

Assume, for example, that the RevPAR Index score of your hotel is 15% less than that of the competitors.

It implies that by making investments in your goods or services, you could be able to close the gap and earn at least as much money as your competitor is currently making.

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If you are aware of this, you may justify spending money on your resources. If you regularly monitor the RevPAR Index of your competitors, you may assess the effectiveness of your price and vacancy initiatives.

So, how is the RevPar Index calculated?

RevPAR index is equal to your RevPAR / total RevPAR of the sample set.

The RevPar Index for your hotel will be displayed as a percentage.

How to Increase Hotel Occupancy with RevPAR?

The global hotel average occupancy rate was 66% in September 2022. A good hotel occupancy rate depends mostly on:
1. Type of hotel
2. The location
3. Satisfaction of guests

Although it may seem like a safe approach to increase hotel occupancy, special discounts made during off-seasons aren’t always effective. For instance, while offers and discounts could influence potential customers who are thinking about taking a trip, they don’t really change the demand for vacations.

You’ll use cutting-edge value-adding strategies to achieve this. These are a few tactics to think about.

1. Adapt your marketing for periods of low demand.

Upon disclosing a low occupancy rate, strategists recommend modifying your marketing approach. You need to be specific in your hotel promotion during periods of low occupancy.

2. Take part in staff development and customer service.

If you notice that your occupancy rate is far lower than that of your competitors, predictability and demand might not be as important as your reputation. No matter the season, the hotels with the best guest experiences will almost always win.

By funding staff training and guest service initiatives, you can wow guests and ensure that a sizable portion of local visitors choose to stay at your hotel.

3. Analyse how often you use different amenities and note any changes in demand over time.

High demands for hotel facilities vary, much like locations. In marketing and sales communications, emphasise on facilities that are in high demand while pushing amenities that are in low demand into premium packages.

If you see that certain facilities are often asked for at your hotel or other local hotels, you may want to modify your offerings. Become a family-friendly hotel and you can draw in new guests. By paying attention to your clients, you may increase demand and hotel occupancy.

[Suggested Read: Top 10 Strategies to Increase Hotel RevPAR All Year Round]

4. Consider your hotel as a location business rather than a physical asset.

Sometimes, altering courses could be the key to raising hotel occupancy. You can think of some creative ideas for expansion if you venture outside your own land and into the region around it.

Engage with your community to find out more about how they draw visitors and how you can work with them to promote particular events or services. Talk to local firms to see if you can collaborate for events, such as putting their products in guest welcome baskets or creating co-branded activities.

5. Events are a great way to draw people in and increase capacity and demand.

But events shouldn’t all be traditional. Think about your present marketing initiatives and your target market. Is there an event that fits the marketing plans of all involved parties?

For example, might you have a local blogger talk about retirement budgeting if you wanted to attract seniors for midweek travel? Think about working with a nearby real estate agent who can provide ideas for house hunting.

It is possible to evaluate the impact of specific events on group occupancy and guarantee a positive ROI. Offering value through personalised packages will help you gain the trust of a fresh stream of customers.

[Suggested Read: Unlocking Success with Total Revenue Management]

The Future of RevPAR for Hotels

RevPAR is an extremely powerful and useful indicator for evaluating the profits of your hotel. But other, less important metrics are still vital to evaluate your revenue and determine your hotel’s success and well-being.

We advise you to focus on selling every room in order to establish a profitable hotel business and raise RevPAR. A room that is vacant is far worse than one that is sold at a discount!

Want to know more about hotel RevPAR trends? Contact Revnomix Solutions, a leading revenue management company for the best revenue management service and the most effective revenue management software (Revseed) to increase your hotel’s RevPAR and performance.

Decoding RevPAR: A Metric for Hotel Success
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Decoding RevPAR: A Metric for Hotel Success
Dive into RevPAR (Revenue per Available Room) and understand its significance in evaluating hotel performance. Learn how to calculate and improve your RevPAR effectively
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Revnomix Solutions
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