FRONT OFFICE SERVICES

PERFORM
SIMPLE
CALCULATIONS
Group members:
Anika Sunshine Kc

Job Prince
 FRONT OFFICE FORMULAS
Potential Average Rate Single and Double Rate
Calculating the hotel's yield statistics is one of the key
computations involved in front office or revenue management.
Possible Average Rate gives the amount of money that would
have been made if all the rooms were sold at their suggested
or rack price. For hotels where their single rate and double
rate for all room types are same then the PAR for Single &
Double will be same as their Rack rate. But in most of the
hotels the single rate changes as per room category or type.
In such cases an average single rack rate to be calculated.
 The Formula for Potential Average Single Rate
Potential Average Single Rate = Single Room Revenue at
Published Tariff or Rack Rate Number of Rooms sold as
singles
Example 1 - Potential Avg. Single Rate (Where the
single rate is same for all room types):
Total Number of Rooms sold in Single =25
Rack Rate / Published Tariff for Single =125.00
Single Room Revenue at Published Tariff = 25* 125.00
=3125.00
Potential Avg. Single Rate for 01st Jan 2017 = 3125.00 / 25
= 125.00
Example 2 - Potential Avg. Single Rate (Where the single
rate varies as per room types)

Deluxe Room - Rack Rate / Published Tariff for Single = 125.00

Deluxe Room Number of Rooms Available in the hotel = 100
= 125.00 * 100
= 12500.00

Suite Room - Rack Rate / Published Tariff for Single = 168.00

Suite Room Number of Rooms Available in the hotel =30
=168.00 * 30
= 5040.00
 Single Room Revenue at Published Tariff = (12500.00 + 5040.00)
= 17540.00

Potential Avg. Single Rate for 01st Jan 2017 = 17540.00 / 130
= 134.92
The Formula for Potential Average Double Rate
Potential Average Double Rate =Double room revenue at Published tariff
or rack rate Number of rooms sold as Double

Example 1 - Potential Avg. Double Rate (Where the Double rate is

same for all room types):
Total Number of Rooms sold in Double = 55
Rack Rate / Published Tariff for Double = 175.00
Double Room Revenue at Published Tariff = 55 * 175.00
= 9625.00
 Example 2 - Potential Avg. Double Rate (Where
the Double rate varies as per room types):
Deluxe Room - Rack Rate / Published Tariff for Double = 185.00
Deluxe Room Number of Rooms Available in the hotel = 100
= 185.00 * 100
= 18500.00
Suite Room - Rack Rate / Published Tariff for Double = 215.00
Suite Room Number of Rooms Available in the hotel = 30
= 215.00 * 30
= 6450.00
Double Room Revenue at Published Tariff = (18500.00 + 6450.00)
= 24950.00
Potential Avg. Double Rate for 01st Jan 2017 = 17540.00 / 130 =
134.92
 Formula For Average Guest Per
Room (APR)
Average Guest Per Room (APR) - Provides the average number of
guests occupied per room in the hotel, This ratio is normally based on
the total guest in the hotel including children divided by the total
number of rooms sold.
The formula for calculating Average Guest Per Room (APR) is as
below:
Average Guest Per Room = Total Number of Guests
Number of Rooms Sold
Average Guest Per Room W/O Child = Total Number of Adults
Number of Rooms Sold
Example 1 APR with Total Guests:
Total Guest Occupied for 12th September 2017 = 453
Total Rooms Sold for 12th September 2017 = 200

Average Guest Per Room = 453 / 200

= 2.26

Example 2 APR Without (W/O) Child:

Total Adults Occupied for 12th September 2017 = 410
Total Rooms Sold for 12th September 2017 = 200

Average Guest Per Room = 410 / 200

= 2.05
 Example 3 APR with Total Guests (Monthly):

Total Guest Occupied for September 2017 = 11935

Total Rooms Sold for September 2017 = 5840

Average Guest Per Room = 11100 / 5840 = 1.9

Formula For Average Rate Per Guest (AGR)

The Average Rate Per Guest (AGR) - Provides the average

revenue contribution by each guest occupied in the hotel, This
rate is normally based on every guest in the hotel including
children. Some hotels take their AGR without considering
children.
The formula for calculating Average Rate Per Guest (AGR) is as
below:

Average Rate Per Guest = Total Room Revenue

Total number of guests

Average Rate Per Guest W/O Child = Total Room Revenue

Total Number of Adults

Example 1 AGR with Total Guests:

Total Guest Occupied for 12th September 2017 = 453
Total Room Revenue for 12th September 2017 =
70000.00
 Average Rate Per Guest = 70000 / 453
= 154.53
Example 2 AGR Without (W/O) Child:
Total Adults Occupied for 12th September 2017 = 410
Total Room Revenue for 12th September 2017 = 70000.00
Average Rate Per Guest = 70000 / 410
= 170.73
Example 3 AGR with Total
Guests (Monthly):

Total Guest Occupied for September 2017 = 11935

Total Room Revenue for September 2017 = 1926000.00
Average Rate Per Guest = 1926000.00 / 11935
= 161.37
 Example 4 AGR Without (W/O) Child (Monthly):
Total Adults Occupied for September 2017 = 11100
Total Room Revenue for September 2017 =1926000.00

Average Rate Per Guest = 1926000.00 / 11100

= 173.51
Formula to Calculate Average Room Rate (ARR) | Average
Daily Rate (ADR)
ADR (Average Daily Rate) or ARR (Average Room Rate) is a measure of the
average rate paid for the rooms sold, calculated by dividing total room
revenue by rooms sold. Some hotels calculate ARR or ADR by also including the
complimentary rooms this is called as Hotel Average Rate. By Taking the
HARR the management can find out the actual effect of complimentary stays
on the average room rate.
 Average Room Rate (ARR or ADR) = Total Room Revenue
Total Rooms Sold

Or
Average Room Rate (ARR or ADR) = Total Room Revenue
Total Occupied Rooms
Example 1:
Total Room Revenue for 01st Jan 2017 = 25000.00
Total Room Sold for 01st Jan 2017 = 250
ARR or ADR for 01st Jan 2017 = 25000.00 / 250

Example 2: = 100

Total Room Revenue for 31st Dec 2016 = 95985.58

Total Room Sold for 31st Dec 2016 = 277

ARR or ADR for 31st Dec 2016 = 95985.58 / 277 = 346.52

 FO Formula - Hotel Occupancy Percentage | Occupancy Ratio Calculation

Occupancy Percentage is the most commonly used operating ratio in the hotel
front office, The Occupancy percentage indicates the proportion of rooms
either sold or occupied to the number of rooms available for the selected date
or period.
The Formula for Occupancy Percentage
= (Number of Rooms Occupied) / (Total Number of Rooms Available for sale) *
100
Also at some hotel Available Rooms are taken after reducing the OOO (Out
of Order Rooms) ie. Sellable Rooms = Available Rooms - Out Of Order Rooms.
Other hotels always take all rooms in their hotel as Available Rooms
because this gives a consistent base on which the occupancy is measured.
 1) Example Occupancy Percentage Calculation (Based on Rooms
Occupied)
Total Number of Rooms Available in the hotel = 215
Number of Rooms Occupied on 10th September 2017 = 207
Hotel's Occupancy Percentage = 207 / 215 *100
= 96.28 %
2) Example Occupancy Percentage Calculation (Based on Rooms Sold)

Total Number of Rooms Available in the hotel = 215

Number of Rooms Occupied on 10th September 2017 = 207
Total House Use and Complimentary Rooms =2
Hotel's Occupancy Percentage = (207 - 2) / 215 *100
= 95.34 %
 3) Example Occupancy Percentage Calculation (Based on Available
Rooms)
Total Number of Rooms in the hotel = 215
Number of Rooms Occupied on 10th September 2017 = 207
Hotel's Occupancy Percentage = 207 / 215 *100
= 96.28
4) Example Occupancy Percentage Calculation (Based on Sellable Rooms)
Total Number of Rooms Available in the hotel =215
Number of Rooms Occupied on 10th September 2017 = 207
Total Out of Order (OOO) Rooms = 5
Hotel's Occupancy Percentage = 207 / (215 - 5) *100
= 98.57 %
 Multiple Occupancy Ratio / Multiple Occupancy
Multiple Occupancy Percentage is used to determining the double
occupancy ratio of the hotel and to forecast food and beverage
revenue, identify clean linen requirement and also to analyze average
daily room rates. Multiple occupancy percentages can be calculated in
different ways. Below are few methods or formulas for calculating
multiple occupancy ratios for your hotel.
Multiple Occupancy Percentage = (Number of Rooms Occupied by more than
one Adult or Pax)

(Total Number of Rooms Occupied)

Single Occupancy % (Occupied Rooms)
= (Number of Single Rooms Occupied) / (Total Number of Rooms Occupied
100
Single Occupancy % (Available Rooms)
= (Number of Single Rooms Occupied) / (Total Number of Available rooms)
100

Double Occupancy % (Occupied Rooms)

= (Number of double Rooms Occupied) / (Total Number of Rooms Occupied)
* 100
Double Occupancy % (Availalbe Rooms)
= (Number of double Rooms Occupied) / (Total Number of Available
rooms) * 100
 1) Multiple Occupancy Percentage Calculation (Based on Rooms
Occupied)
Total Number of Rooms with More than One Adult on 10th September 2017 =
115 Total Number of Rooms Occupied on 10th September 2017 = 207
Hotel's Occupancy Percentage = 115 / 207 *100
= 55.55 %
2) Double Occupancy Percentage Calculation (Based on Rooms Occupied)

Total Number of Rooms with Double Occupancy on 10th September 2017 =

105
Total Number of Rooms Occupied on 10th September 2017 = 207
Hotel's Occupancy Percentage = 105 / 207 *100
= 50.72 %
 3) Double Occupancy Percentage Calculation (Based on Available
Rooms)
Total Number of Rooms with Double Occupancy on 10th September 2017 = 105
Total Number of Available Rooms on 10th September 2017 = 210
Hotel's Occupancy Percentage = 105 / 210 *100
= 50 %
4) Single Occupancy Percentage Calculation (Based on Rooms
Occupied)
Total Number of Rooms with Single Occupancy on 10th September 2017 = 102
Total Number of Rooms Occupied on 10th September 2017 = 207
Hotel's Occupancy Percentage = 105 / 207 *100
= 49.27 %
5) Single Occupancy Percentage Calculation (Based on Available
Rooms)
Total Number of Rooms with Single Occupancy on 10th September 2017 =
105 Total Number of Available Rooms on 10th September 2017 = 210
Hotel's Occupancy Percentage = 105 / 210 *100
= 50 % Rules
Potential Average Rate (PAR)

PAR or Potential Average Rate is a very important ratio in the

revenue management department. The Potential Avg. Rate (PAR) is
a collective statistics that combines the potential average rate,
multiple occupancy percentages and the rate spread.
 The Formula for Potential Average Rate:

Potential Average Single Rate = (Multiple Occupancy

Percentage X Rate Spread) + Potential Average Single Rate

Example 1 - Potential Avg. Rate:

To determine the prospective average rate, follow these two steps:

Step 1: Is by multiplying the Rate Spread by the hotel's Multiple Occupancy

Percentage.

Step 2: Add the result from Step 1 to hotel's Average Single Rate which will
then give the 'Potential Average Rate (PAR)'
 Multiple Occupancy Percentage = 9.00
Rate Spread = 25.00
Potential Avg. Single Rate = 125.00
Potential Average Rate (PAR) = (9.00 X 25.00) + 125
= (225) + 125
= 350
Example 2 - Potential Avg. Rate:

Multiple Occupancy Percentage = 5.00

Rate Spread = 15.00
Potential Avg. Single Rate = 105.00
Potential Average Rate (PAR) = (5.00 X 15.00) +
105.00
=(75)+ 105
= 180
 Formula for calculating Revenue per Available Room
Revenue per Available Room (RevPAR) - RevPAR is one of the most
important statistics in the hotel industry. RevPAR divides the total
revenue generated by the hotel by the number of available rooms to
sell (Available rooms = Total rooms in the hotel - Out of Order
rooms).
It measures in effect the revenue generation capability of the hotel.
Hotels with a large food & beverage operations and other
recreational facilities have RevPAR well above the average Daily
Rate.
The downside of RevPAR is the formula only evaluates your income from
room sales ie it is not including other revenue generating areas like Food
and Beverage, Spa, Recreational facilities etc. Those hotels with fewer
revenue centres have RevPAR number closer to their ADR / ARR.
 The formula for RevPAR calculation with examples:
RevPAR = Total Room Revenue / Total Number of Available
Rooms for sale
Example 1:
Total Room Revenue for 01st Sep 2017 = 14,585.26
Total Available Rooms for sale 01st Sep 2017 = 258
RevPAR = 14585.26 / 258
= 56.53
Example 2:
Total Room Revenue for 30th Aug 2017 = 22,890.00
Total Available Rooms for sale 30th Aug 2017 = 257
RevPAR = 22890.00 / 257
= 89.06
 Example 3 - Monthly RevPAR:
Total Room Revenue for September 2017 = 682,800.00
Total Available Rooms for sale September 2017= 7750
RevPAR = 682,800.00 / 7750
= 88.10
TRevPOR (Total Revenue per Occupied Room)- Is a measure to
calculate total hotel revenue per occupied room. Which is calculated
or derived from the sum of room revenue, food and beverage (F&B)
revenue, and other revenues divided by the total occupied room

The formula for TRevPOR calculation with examples:

TRevPOR = (Room + F&B + Other Revenue)

Total occupied rooms
 Example 1:
Total Hotel Revenue for 01st Sep 2017 = 25,585.26
Total Rooms Occupied for 01st Sep 2017 = 230
TRevPOR = 25,585.26 / 230
= 111.24
Example 2:
Total Hotel Revenue for 30th Aug 2017 = 33,890.00
Total Rooms Occupied 30th Aug 2017 = 225
TRevPOR = 33,890.00 / 225
= 150.62
Example 3 - Monthly TRevPOR:
Total Hotel Revenue for August 2017 = 775,090.00
Total Rooms Occupied for August 2017 = 6820
TRevPOR = 775,090.00 / 6820
= 113.64
Formula For Calculating Room Achievement Factor AF
(Rate Potential Percentage)

The Room Achievement factor is also known as Rate Potential

Percentage of a hotel, is defined as the percentage of the Rack
Rate that the hotel actually receives by selling their rooms. Room
Achievement factor is calculated by dividing the Actual Average
Rate (ARR or ADR) by the Potential Average Room Rate.

Additionally, depending upon the hotel's management policy the

Actual Average Rate is either divided by the total Rooms Sold or
Occupied Rooms. Room Sold = (Occupied Rooms - Complimentary and
House use)
The Formula for Room Achievement Factor AF: Room Achievement
Factor = (Actual Average Rate) / (Potential Average Rate)

Example 1 - Where Actual Average Rate Taken as Rooms

Sold:
Actual Average Rate = 173.00
Potential Average Rate (PAR) = 223.00
Room Achievement Factor (AF) = 173.00 / 223.00
= 0.78 or 78%
Example 1 - Where Actual Average Rate Taken as Occupied
Rooms:
Actual Average Rate = 165.00
Potential Average Rate (PAR) = 223.00
Room Achievement Factor (AF) = 165.00 / 223.00
= 0.74 or 74%
 The Room Rate Spread
Rate Spread is another another crucial matrix that the
revenue management team uses. while operating a smaller hotel,
by the front office manager.
The figure for rate spread is calculated from the hotel's various
room kinds. in order for the hotel management to decide on crucial
yield choices. The Rate Spread derived by subtracting the Possible
Average Double Rate from Possible Single Rate Average
The Formula for Calculating Rate Spread

Rate Spread = (Potential Average Double Rate) – (Potential

Average Single Rate)
 Example 1:
Potential Average Single Rate = 150.00
Potential Average Double Rate = 225.00
Rate Spread of the hotel = 225.00 - 150.00
= 125.00
Example 2:
Potential Average Single Rate = 99.00
Potential Average Double Rate = 109.00
Rate Spread of the hotel = 99.00 - 109.00
= 10.00
Example 3 (Monthly Rate Spread):
Potential Average Single Rate For the Month = 129.69
Potential Average Double Rate For the Month = 158.88
Rate Spread of the hotel = 129.69 - 158.88
= 29.19