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How To Calculate RevPAR & Why It Matters For Your Hotel

As an entrepreneur, it’s important to understand the concept of RevPAR and how it impacts your hotel business. In this article, we will explain what RevPAR is and why it matters for your hotel. We will also provide tips for improving your hotel’s RevPAR.

What Is RevPAR, And Why Is It Important?

So what is RevPAR? RevPAR stands for Revenue per Available Room. It is a metric used in the hotel industry to measure how well a hotel is performing. The higher the RevPAR, the more money the hotel is making per room.

RevPAR is important because it is a good indicator of how profitable a hotel is. A high RevPAR means that the hotel is generating a lot of revenue, while a low RevPAR indicates that the hotel is not performing as well.

How To Calculate RevPAR

There are two main components to RevPAR: room rate and occupancy rate. Room rate is how much money you make per room, and occupancy rate is how many rooms are occupied.

To calculate RevPAR, you simply multiply the room rate by the occupancy rate.

For example, if your hotel has a room rate of $100 and an occupancy rate of 80%, your RevPAR would be $80.

Now that you know how to calculate RevPAR, let’s take a look at how you can improve it.

 

Tips For Improving RevPAR

There are several things you can do to increase your hotel’s RevPAR.

Provide Great Customer Service

One of the best ways to improve your hotel’s RevPAR is to provide great customer service. Happy customers are more likely to come back and recommend your hotel to others. They will also be more likely to leave positive reviews online, which can help attract more business.

Make sure your employees are polite and friendly, and that they go above and beyond to take care of guests’ needs. If you provide great customer service, your hotel’s RevPAR will increase.

Improve Marketing Strategies

Another way to improve your hotel’s RevPAR is to focus on marketing and promotions. Make sure you are reaching your target audience and that your marketing message is clear. You may also want to offer discounts or special rates to attract more business. Marketing drives business so this is an essential step to increasing your RevPAR.

Establish Minimum Length Stays

If you want to increase your hotel’s RevPAR, you may want to consider establishing minimum length stays. This means that guests must book a certain number of nights¬† to get the best rate.

While this may not be popular with all guests, it can help increase your hotel’s revenue. Guests who are looking for a lower rate may be more likely to book a room at another hotel.

Decrease Cancellations

You should also aim to decrease cancellations in order to increase your hotel’s RevPAR. This means that you will need to have a strict cancellation policy in place. You may also want to consider charging a cancellation fee or requiring a deposit.

Increase Room Rates

And finally, you can increase your hotel’s RevPAR by increasing room rates. This is usually done when demand is high or during peak season. You may also want to consider offering discounts or special rates to attract more business during slower periods.

 

Final Thoughts

These are just a few of the things you can do to increase your hotel’s RevPAR. By increasing your average room rate and occupancy rate, you can make your hotel more profitable. So start implementing these tips today and watch your RevPAR grow. For more information about other KPIs to keep track of, check out our article on KPIs and performance metrics for hotels.