RevPAR, also known as revenue per available room, is a key performance metric in the hospitality industry to gauge a hotel’s financial and business performance. Calculated by dividing a hotel’s total room revenue by the number of available rooms, RevPAR is a measurement of both average daily room revenue and occupancy rate. Put simply, RevPAR represents the success your hotel is having at filling its rooms, and how much it is able to charge for them.
RevPAR is arguably one of the most important metrics for hotels, even more so than achieving 100% occupancy. This is because it gives you a clear idea of your hotel’s current performance, which in turn lets you charge accordingly for your services. While it is closely tied to occupancy, the key is to find the right balance between price and occupancy to ensure that your Average Daily Rate (ADR) covers both your hotel’s variable and fixed costs.
There are a few different strategies you can use to help increase your hotel’s RevPAR. With more than 15 years experience in the hospitality industry, we currently represent over 1,500 hotels in 100 countries. Helping hotels increase their RevPARs is a passion of ours.
Here are four strategies to help your hotel increase RevPAR:
1.) Analyse market trends
As a hotel, monitoring demand and supply market trends throughout the year is a must. Try to identify certain dates that guests are more likely to visit a destination – perhaps due to a popular local event (think Wimbledon in London, Oktoberfest in Munich or St. Patrick’s Day in Dublin). Ensuring you are pricing according to market demand for your property and local area will positively affect your RevPAR.
2.) Step up your marketing game
Another great strategy to increase RevPAR is to optimise your marketing efforts accordingly. Digital marketing is a great way to drive more traffic to your website and ultimately encourage direct online bookings. We recommend utilising social media platforms to raise brand awareness and share user generated content, such as hotel images (just ensure they are high quality images) to build up your brand image.
Monitoring, and responding to online reviews is also an extremely crucial (and often overlooked) part of digital marketing. According to a recent TripAdvisor survey, guests read 6-12 reviews on average before booking a hotel. While it’s important to thank guests for positive reviews, responding whenever someone has had a negative experience is particularly important. A whopping 87% of TripAdvisor users agree that an appropriate management response to a bad review improves their impression of the hotel.
If you need a little help with your marketing efforts, we’ve recently put together a Marketing for Hoteliers E-book. In it, we cover how to increase online hotel bookings, promote your hotel on social media, select the right images to boost your hotel’s online presence and how to set up and manage Google Hotel Ads. And the best part: it’s completely free. Download our Marketing for Hoteliers E-book now.
3.) Introduce average length of stay (ALOS) packages
Another great RevPAR strategy is to experiment with different hotel packages and offers around average length of stay. During high season, try using ‘minimum length of stay’ packages by only accepting longer term bookings. You could also opt for ‘maximum length of stay’ offers by promoting discounted rates for a set number of nights. Finally, ensuring you have the right cancellation rate by making reservations non-refundable, will almost certainly increase your occupancy rate.
At HotelREZ, all our member hotels have access to CentralREZ, our central reservation system (CRS). CentralREZ can easily be interfaced to any PMS, Channel Manager or Revenue Management System, allowing you to control your ALOS accordingly. We additionally have a highly experienced team of revenue experts on hand to assist you with your pricing strategy. In fact, each one of our hotels has a dedicated person that works as an extension of their team.
4.) Don’t solely rely on online travel agencies (OTAs)
While allocating the majority of your inventory to OTAs might seem like an easy way to increase your occupancy rate quickly, it’s not an effective strategy to improve RevPAR. OTAs attract travellers because they sell rooms at highly discounted prices. While this will surely fill your rooms, it will decrease your hotel’s revenue. Instead of attracting guests by charging less, you should increase the perceived value of your room with additional amenities or packages.
Choose a partner to assist you with your pricing strategy
While experimenting with different RevPAR strategies is a good start, nothing beats working with a partner that can bring both the technology and experience you need to succeed. At HotelREZ, we strongly believe in working closely with all of our clients to help them increase revenue at an attractive RevPAR and cost of sale. With 7 worldwide offices, our dedicated Revenue, Demand and Marketing teams are on hand 24/7 to assist you with the growth of your hotel.
HotelREZ Hotels & Resorts was founded in 2004 by Mark Lewis, an experienced hospitality industry professional and entrepreneur. Over the course of over a decade the company has grown to be one of the leading hotel representation companies dedicated to marketing and connecting independent properties with bookers worldwide. HotelREZ now provides distribution, revenue, sales consultancy and marketing services and support to more than 1,500 hotels, apartments and hotel groups in over 100 countries including private label GDS chain code solutions. HotelREZ Hotels & Resorts is a SAAS company. HotelREZ also incorporates the global World Rainbow hotels, the world’s only GDS enabled LGBT global hotel consortia representing some 1200 hotels in 230 destinations across the globe.