The most useful metric for success in the hospitality industry is the revenue per available room (RevPAR). This performance metric is calculated by multiplying your hotel's occupancy rate by your average daily room rate (ADR).
While knowing your average daily room rate alone is important, it's necessary to calculate RevPAR so you're able to gain a clear picture of how well your hotel is doing at any point in time. Looking at RevPAR can also help you to determine if you need to change your rates.
RevPAR is an incredibly useful metric and it should be a part of your revenue management system. Once you calculate your results, you can begin strategizing to raise your RevPAR.
Here are just six ways that NextGen Hotel Consultants can help you raise your RevPAR.
1. Local Events and Holiday Packages:While it can be tempting to drastically lower your room prices just to raise occupancy, doing so too frequently can be damaging to your finances. That being said, every traveler wants a good deal, especially since traveling itself can be so expensive. Take advantage of when lots of travelers are coming to your city and offer packages and special deals to encourage them to choose your hotel. These sorts of packages can be offered during both holidays and special events. As an example, if you're based in a city with a large parade every year, build a package around that!
2. Pricing by Room Type: Not all rooms are created equal. To raise your RevPAR, it's important to offer a wide variety of room types that can accommodate guests of all tastes and budgets. You can completely justify a higher charge per room by adding more luxurious beds or larger televisions. RevPAR is necessary to calculate in this case as you'll be able to use it to see if the price differences of these rooms are creating any measurable shifts in occupancy and revenue.
3. Prioritize Online Reputation: A considerable amount of travelers use online reviews to determine which hotels to use. If your hotel has low scores on websites like Trip Advisor and Expedia then your RevPAR will absolutely suffer. Having a bad online reputation is unacceptable for any thriving business in the digital age, so be sure to prioritize your hotel's online reputation! You can do this by reading your own reviews, contacting and trying to help those who weren't satisfied, and expanding your social media presence. Our consultants are highly trained in enacting these changes and would be happy to help.
4. Alter Cancellation Rates: Needless to say, high cancellation rates are both inconvenient and financially damaging. Enacting non-refundable reservations will help reduce your cancellation rates and raise your RevPAR.
5. Incentivize: All that being said, it's not exactly fair to guests if they feel they're being pressured into these non-refundable reservations. This means you need to give them an incentive so they can choose the non-refundable option for themselves. This incentive could be anything between a slight reduction in room pricing to a free drink at your hotel bar.
6. Access to Amenities:Another way to raise your RevPAR is by offering your guests amenities that go beyond their rooms. Allowing guests to purchase access to nicer pools and lounges by purchasing nicer rooms will have a positive effect on your revenue stream. Sometimes access to amenities can be even more tempting to guests than room type, so be sure to include these sorts of options to boost your RevPAR.
For more information about how NextGen Hotel Consultants can help you with your revenue management system to boost your RevPAR, contact us through our online request form!
