Hotelier’s Life : Let’s Talk about Revenue and the technical words to use….
This time I have thought to write something about the specific words and terms to use everytime that you need to express and calculate the Revenue at your Property…
In fact, we take into account other evaluation indexes such as the occupancy rate (OR – Occupancy Rate) and the average price per room sold (ARR – Average Room Rate). However, these data could mislead the actual performance of the hotel. For example, you may wish to consider positively a Hotel with a very high percentage of occupancy, but if you have to reduce the sales price to get occupancy, the profit that you will achieve will be less satisfactory .
The RevPAR takes into account the totality of the available rooms, even those not sold. This factor opens new horizons of interest in the politics of the sale of a hotel room, considering that a room not sold is simply lost forever. Also for this reason the hotel pricing policies (or at least the majority) focus on the absolute flexibility of selling prices, adapting to market trends and creating scissors tariff increasingly large, segmented by type of market.
As you know –> the Business Traveller is insensitive to the price since much of the expenses are paid by the business he works for, travels for specific reasons such as meetings, congresses, exhibitions, business events, incentive travel and corporate hospitality, makes short stays (out of the weekends) and when he/she comes back to the Hotel requests some services you should be able to offer (eg Fitness Center, Bar/Restaurant etc), whereas the Leasure Traveller is sensitive to the Hotel Price but the primary motivation is to take a vacation from everyday life. Leisure travel is often characterized by staying in nice hotels or resorts, relaxing on beaches or in a room, or going on guided tours and experiencing local tourist attractions. Most meals are eaten out when traveling for pleasure, and often more expensive modes of transportation, such as taxis, are used to get around. In some cases, leisure travel might be used to refer to any trip that lasts more than a week, regardless of the primary focus.
So, We have to consider this target everytime we think about Revenue and flexible tariffs…Business/Leisure/Groups…
3. In business administration, the break-even point (BEP) is a value that indicates the amount, expressed in volume production and sales, product sales needed to cover the costs previously incurred in order to close the period with no profits or losses.
A fundamental distinction is the type of company you want to make the analysis of the break-even point.
4. The break even analysis is a method that allows us to know how to change output levels to reach the break-even point between costs and revenues. But this is not a popular method because it takes into account the constant prices is valid only in the short term, does not take account of seasonality, is not easily handled by the companies and multi finally takes no account of the stocks.I think that I could close this article and I’m already thinking about something else to publish the next time. I hope you appreciate my impressions…
Cheers !! See you the nex time.