What is Hotel RevPAR?

RevPAR is a key metric in efficiently building your hotel’s revenue. It is one of the most significant metrics that build hotel business and should be monitored closely. The concept of RevPAR can help you plan your hotel room rates better and increase your revenue.

What is RevPAR in hotels? Hotel RevPAR stands for Revenue Per Available Room. It’s important for hoteliers to measure their success by tracking the number of rooms occupied each day. This is done through RevPAR. RevPAR is a useful metric because it helps hoteliers measure the overall success of their business.

RevPAR is a crucial metric for hotels, which can help you understand the current performance of your business. This allows you to charge accordingly for your services and get a clear idea about how much your potential clientele is willing to spend.

Key Statistics

1. For 2020, Indian hoteliers had a RevPAR of 1,675 INR. This was a drop from 2019 of about 60%.
2. RevPAR in hotels all over India was close to 4,000 INR before the COVID-19 pandemic.
3. By 2022 or 2023, they are expected to reach the pre-pandemic level.

How to Calculate Hotel RevPAR?

Looking for the hotel RevPAR formula? There is not just one RevPAR formula in hotels but two that you can use. RevPAR is calculated by:

· RevPAR = Rooms Revenue / Rooms Available
· RevPAR = Average Daily Rate X Occupancy Rate

How to calculate hotel RevPAR? Here’s an example to understand the formulas:
Suppose that you have a hotel with 100 rooms. The ADR of the hotel is $100. On any day, when the occupancy percentage is 80% (out of 100 rooms, 80 are occupied), then the total room revenue is $8,000. Now, the hotel RevPAR can be calculated as:

So, that day you earned $80 per room.

RevPAR is a metric that hotels can use to measure their performance in revenue generation. It helps them gauge the revenue they make for every room, whether it’s occupied or not. To have better profits, you need to have a higher RevPAR.

Read Now: Top 12 Strategies to Boost Hotel Occupancy Rates & Revenue

Importance of Hotel RevPAR

How to increase hotel revenue? In terms of hotel revenue, RevPAR is more than just a KPI. It also allows:

• Plan Better Room Rates: You can choose the amount of profit you wish to make from the rooms using the formula. You can set rates by calculating the predicted RevPAR using the profit percentage.
• Measure Hotel Performance: You can strategize profitable room prices using RevPAR to gauge the performance of your hotel. Similarly, if your occupancy and hotel RevPAR are higher, your hotel is performing well.
• Improve Profits: A high RevPAR is not a true indication of a hotel’s profits. It can only provide insight into accurate hotel room charges, expenses, comparisons with other hotels, and more to improve profits.

10 Effective Strategies to Increase Hotel RevPAR

Best strategies to improve RevPAR. Image credit – ezeeabsolute

RevPAR for hotels is the revenue per available room. It is a key performance indicator that measures the performance of a hotel. RevPAR can be increased by implementing strategies such as:

1. Apply Revenue Management

What is hotel revenue management? Revenue management is the process of adjusting prices as per demand and supply. It can also be described as a process of profit maximization in which you sell the right room at the right time to the right customer for a profitable price.

But, how you’d do that is not as complicated. Channel management and booking engines today can handle this occupancy-wise pricing on their own. All you have to do is define different occupancy slabs and set different rates for each slab. The hotel revenue management software keeps track of occupancy levels.

When the occupancy percentage of your rooms changes, the price will automatically be re-calculated based on the new occupancy rate for hotels. You’ll also get higher hotel RevPAR and revenue as a result of revenue management tools. The benefits of revenue management are more than you think.

Read Now: Ultimate Guide for Strategy Management Plan with RevSeed

2. Implement Dynamic Pricing Strategies

Image credit – Zen Hospitality

Hotels are looking for creative and cost-effective ways to provide guests with the most affordable option, even in high-demand areas. With an RMS system, it’s easy to respond to changing room demand as well as offer a price that best matches the current situation.

A five-star hotel called Indana Palace is located in Jaipur, Rajasthan. The hotel attracts both business and leisure travelers because it provides conference spaces and facilities, a spa and health club, restaurants, and a swimming pool.

Revnomix Solutions reduced the rates using dynamic pricing strategies and rival price benchmarking. This helped to better reflect the hotel’s positioning and increase its appeal to potential guests. We were able to raise the prices to cater to the increased demand as the booking rate improved. Want to hire the best revenue management company to implement dynamic pricing strategies? Look no further!

3. Focus On Hotel Direct Bookings

Image credit – Hotelrez

OTAs are important because they provide bookings that otherwise would not be possible. There is always a trade-off in business and it is no different with OTAs. Specifically, in the case of OTA hotel booking and commissions, there will be less revenue if you choose to sign up with one.

To overcome this, you need to focus on getting more direct bookings. You only have to do this by having an engine for generating booking forms integrated into your hotel website. You can also increase your efforts for booking more direct bookings on your website. When you are starting to make a profit, it is appropriate to work on scaling back your dependence on OTA.

A true masterpiece is the Relais Christine Hotel in Paris. Although it was already extremely well-liked, the management chose to attempt to boost hotel RevPAR even further. They made the decision to boost direct bookings while reducing the number of nights booked through OTAs.

To do this, they used a wide strategy: they developed a new website, improved their pricing policy, and put in place a new reservation system to encourage direct booking. The results were evident right away: direct bookings went up by about 30%, while OTA reservations dropped by 63%.

Know More About Revnomix Business Intelligence (BI)

4. Reduce the Cancellation Rate

Hotel cancellations can be a costly headache for your business. And if guests start messing with your cancellation policies, hotel RevPAR will suffer. To save your revenue per available room, you can reserve more non-refundable dates.

Your hotel’s profit margin is massively improved when you implement these strategies. They will have a direct impact on your hotel’s revenue by boosting average occupancy and RevPAR, as well.

5. Introduce Average Length of Stay (ALOS) Packages

Image credit – ezeeabsolute

Hotel managers should consider experimenting with different hotel packages and offers around the average length of stay during the high season. Offering minimum-length stay packages during the high season can help you increase profits.

A good way to optimize the occupancy rate of hotels is by offering discounts for a set number of nights or making reservations non-refundable. The goal of these tactics is to gain maximum room revenue and customer retention.

On the Mumbai-Pune Old Highway, in Khandala, stands the opulent Zara’s Resort. The Resort is a full-service family resort with meeting spaces, lawns, restaurants, a swimming pool, and more in Khandala and Lonavala.

Revnomix Solutions improved exposure on OTAs as a result of the resort’s repositioning and dynamic pricing strategies. It led to a steady increase in Average Daily Revenue (ADR) and Length of Stay (LOS) which increased hotel RevPAR. It helped them to enhance their booking pace as well.

6. Manage Your Online Reviews

Importance of reviews on hotel bookings.

 Image credit – idigmarketing

In this lucrative industry, avoiding hotel reviews and social media influencers is not a wise move. In fact, it’s estimated that nearly half of all travelers book a hotel by just reading reviews online (they also write hotel reviews). so it’s important to pay attention to your company’s online reputation.

A negative review can provide insight into the type of customer service that your competition is providing. It’s important not to miss out on this crucial opportunity and review these reviews where appropriate. When you respond to reviews in a timely manner, your guests feel confident in the quality of your hotel. This leads to you being more likely to get selected by them for future bookings.

7. Implement Effective Digital Marketing Strategies (Online Booking For Hotels)

Image credit – educba

Online digital presence is becoming more crucial because your potential audience now searches for you on digital platforms. That’s why it is vital to have a strong online profile. You can increase your direct revenue with effective digital marketing.

Digital marketing is a fast-growing industry. But, by using the right digital marketing strategies for hotels, you can make more money from online booking of hotels. Hotel marketers need to identify which digital channels work best for them, execute a strategy and then measure its results.

There are many ways in which hotels can use digital marketing to reach guests. Some of them are email marketing, social media advertising, website design, and SEO. What is SEO? Search engine optimization is the process of getting pages to rank higher in search engines such as Google. Hotels should make sure that when using these marketing strategies in hotels, they are maintaining the integrity of their brand and making sure that the customer receives a personalized experience. Wondering about the cost of social media advertising? Also, searching for social media advertising advantages and disadvantages?

Check Out: The Role of Social Media in Driving Revenue and Sales in the Hospitality Sector

Both direct booking and booking via OTAs were on the decline in 2013, as per a Scatter Plot study of ADR and occupancy rates at hotels in Zhejiang Province. The East Hotel in Hangzhou, China exceeded all KPIs (Average Occupancy and RevPAR) by 10%.

By using an SEO approach and hotel data analytics, The East Hotel increased hotel RevPAR. They used the keyword “West Lake Hangzhou,” which was relevant to their target market. Their hotel RevPAR was $69.63 in 2013; it climbed to $91.22 in 2014.

8. Offer Loyalty Programs

Why are loyalty programs important? Offering a loyalty program is an effective way to increase revenue while growing your customer base to new customers too. A loyalty program also helps attract and retain loyal customers. It can be safe to say that most loyalty programs don’t work as intended. Their key problem is that they’re often lacking reward options and you need to provide your guests with a substantial and effective value in return.

Another great tip is that you should always reward them on the same visit, rather than after a certain number of points are calculated. If you don’t already have a hotel loyalty program that offers your guests a wide variety of rewards, now is definitely the time to implement one in order to reap the benefits it provides.

9. Balance Your KPIs

Image credit – ezee hospitality

ADR in hotels and occupancy are two key metrics that affect RevPAR. All three of these operate in sync with each other. Many hotel owners continue to prioritize high occupancy over all other aspects of revenue management.

It’s crucial to think beyond maintaining a consistent ADR and 100% occupancy. You can play with your ADR in hotel industry in order to raise your hotel RevPAR. In fact, when the increase in rental units doesn’t make up for the decline in the average rate, an increase in occupancy results in lower profits.

10. Save Extra Overheads

You can browse through your arrival list and then hire workers to handle the housekeeping instead of retaining a dedicated workforce on hand 24 hours a day. Therefore, you can outsource workers when there are more arrivals, and you can do the same when there are fewer arrivals. Your room expenses can be simply optimized, which can raise hotel RevPAR. Also, you can use IoT devices to reduce energy costs.

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Things to Avoid If You Want to Increase Hotel RevPAR

Image credit – axisrooms

You may do several things that will decrease your hotel RevPAR. To help you identify the mistakes to avoid, let’s quickly go over them:

• Neglecting internet reviews
• Not using digital marketing
• Operating a hotel without a loyalty program
• Ignoring the problem of high cancellation rates
• Despite the length of stay, keeping the same room pricing schedule

You can increase RevPAR to increase your profit. As you can see, there are various methods to accomplish this. The points we’ve provided will make it clear to you what steps were taken to increase RevPAR. Each hotel is unique, so you should conduct a thorough analysis of your hotel to take the best course of action for boosting RevPAR.

Increase Hotel RevPAR with Revnomix

One of the most crucial components of a hotel business model is it’s RevPAR or Revenue Per Available Room. Hotel RevPAR can be difficult to calculate and maintain in an ever-changing industry. But there are many ways that hotels can maintain their RevPAR all year round, such as by providing new experiences for guests and adding new amenities.

With an increased number of tourists coming through their doors, hotels need to make sure they are able to provide top-quality services and facilities that satisfy both their guests and their owners. Follow the above tips to keep your RevPAR up all year round. Looking for the best hotel revenue management company? Work with the best hotel revenue management companies in India like Revnomix Solutions.

Revnomix Solutions provides proven services for hotels to process large amounts of data and make informed decisions. Our analytics and revenue management are designed to be hassle-free with our expert skill sets, the latest technology, and customer service – making it easy for clients.

We constantly monitor metrics like RevPAR to see what’s working best for your hotel. We can then recommend ways for you to boost them. It is one of the leading providers of hotel revenue management strategies. These techniques can help reduce costs and maximize revenue, so you have more time to focus on other areas of your hotel. Connect with us today!