Evaluating Hotel

Performance
Measuring hotel performance is a prerequisite for all the stake holders of the hotel.
Each stake holders evaluates it from his
perspective.
Investors look at profits, Management is
focused on Policies and SOPs , Employees at
salaries and incentives, career growth, and
complaint free shifts, guests look forward for
a comfortable stay and best services at a
best price.

Methods/ Tools to measure Hotel

Performance
Hotels evaluate their performance in
terms of Revenue.
The tools or methods to evaluate
performance as follows
Occupancy Ratios
ADR/ARR
ARG
Rev-Par
Market share Index

1. Occupancy Ratios
Oldest and traditional way
Formula = _______________
Egs. A hotel has 350 Rooms ( all available for
sale) and manages to sell 245 rooms on a
certain day. What's the Occ%?
Ans : ____________
In the above case if 25 rooms were blocked
for Spring cleaning and another 25 rooms
for Renovation, Calculate the Occ.% to this
effect.

 Occupancy Percentage can be

calculated at any given point of time.
Weekly/Fortnightly/Monthly/Yearly
etc.
Usually this is the base yardstick to
measure the performance of the
hotel

2. ADR/ARR
There are two important indicators of Successful
Revenue management :
ADR or ARR (average daily rate or average room
rate)
Revpar (revenue per available room).
ADR or ARR:it is the average price of each room
sold per day. Average Rental income per occupied
room for a given time period
Total Revenue Generated in a specific period
Total No. of rooms Sold in that period
Egs: From the earlier Eg, the Total Revenue
Generated was Rs.49,000. The ADR will be ____

3. ARG
Total Rev. Generated in a Specific
period
Total No. of guests in the Hotel
In the above Ex. If the total No. of
Guests is 280 on that day ARG will be
_________

4. Rev-Par
__________
Used to measure & Compare the
performance of two or more hotels.
Any timeframe can be applied
weekly/ monthly/qtly.
Can be used to compare hotels of
different sizes
ADR X Occupancy Percentage

Example
Data Collected on a particular day from Three
Hotels
Hotel
Rooms
ADR
Percentage
X
300
Rs.250
Y
200
Rs.275
Z
600
Rs. 200

Occupancy
75
70
65

Lets Evaluate the performance of these hotels

with better analysis
Step 1 The Total number of Rooms sold by the
Hotel
Step 2 Total Revenue generated by the Hotels

Revpar
Is the average price of each available room per
day, per month or per year.
For instance, 100 capacity room hotel just sold
80 rooms per day and it produces 4820 Euros
per month.
So occupation percentage is 80%.
Revenue 4820
Average Room Rate 60
Revpar 48

 ADR or ARR = Room Revenue per Month

/ rooms sold per month( in this case:
4820/80)
Revpar = Room Revenue per Month /
available rooms(in this case: 4820/100)
However, it is a general formula for all fields
applicable to Revenue Theory, because in
factARR/ADR/Rev-Paris aRevenue Per
Available Time-based inventory Unit
(RevPATI):Airlines is Revenue per available
seat-mile; rent a car is revenue per available
car; restaurant is revenue per available seat;
golf course is revenue per available tee-time,
etc. Indeed REVPATI is average rate per