How many hotel owners understand and use RevPar and ARR? What do you mean and how can you benefit from a hotel in decision making for future revenue growth and profitability?
ARR = Average room rate
RevPar = Revenue per room available
Let’s take an example of a hotel consisting of 50 bedrooms sold 30 bedrooms at a price of 100 per room, and contains 20 unsold rooms.
The error rate for the calculation is 100 x 30 = 3000 divided by 30 = 100 for the room
RevPar 100 x 30 = 3000 divided by 50 = 60 per room
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Quite different characters. ARR only takes the average of the rooms sold. RevPar takes on average from the sold and unsold rooms.
When searching for a reliable measure of how a hotel is performing at rates and revenues, ARR results in an amplified impression of real numbers, while RevPar gives a real picture of revenue from available accommodations. Total capacity.
How do hotels use this to their advantage? There are a number of ways to consider generating revenue for example.
(1) Lower the price and sell 50 rooms in 80 = 4000 with RevPar from 80
(2) Sell 30 rooms at a price of 100 per room, then reduce the price to sell more rooms, which increases the total trading volume and RevPar
The decision of hoteliers is how to use demand in their area, to review prices, to match demand and rates to improve occupancy and revenue, and to aspire to achieve the best RevPar they can.
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