Hotel Management SPHM Hospitality

OCCUPANCY RATE

What does Occupancy Rate means?

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 What is an Occupancy Rate?
Occupancy rate is a KPI used by those within the hotel industry to assess the performance of a
hotel. As a metric, it is concerned with the percentage of a hotel that is occupied and can be used
alongside other KPI’s, such as ADR (average daily rate) and RevPAR (revenue per available room)
as part of a revenue management strategy.

What does occupancy rate stand for?

In simple terms, occupancy rate refers to the number of occupied rental units at a given time,
compared to the total number of available rental units at that time. It is one of the most popular
KPI’s in the hotel industry for revenue management, highlighting how much of the available
space in a hotel is actually being utilized.

The occupancy rate of a hotel is expressed as a percentage. So, for example, if a hotel has 100
rooms available to be sold and 100 of those rooms are occupied, the occupancy rate would be
100 percent. If the same hotel had 60 rooms occupied, the occupancy rate would be 60 percent.

How to Calculate Occupancy Rate

The occupancy rate KPI can be calculated with the following formula:
Occupancy Rate = Number of Occupied Rooms / Total Number of Available Rooms
Example: If your hotel has 220 rooms and 210 of the rooms are occupied:

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 AVERAGE DAILY RATE

What does Average Daily Rate means?

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 What is an Average Daily Rate (ADR)?
Average daily rate (ADR) is a KPI which is commonly used for revenue management within
the hotel industry. The primary value of ADR, as a metric, is its ability to reveal the average
rental income connected to occupied rooms each day, which is valuable for revenue
management. It can, therefore, give hotel owners an idea of their current operating
performance, especially when compared to other hotels with similar characteristics.

What is ADR?
In simple terms, the average daily rate of a hotel is the average rental income per paid
occupied room in a specific time period. By calculating their ADR, owners within the hotel
industry can compare their performance with other hotels, or against their own historical
performance, allowing them to make changes to their revenue management.
As a metric, ADR is not concerned with revenue earned in other areas of the hotel.
Complimentary rooms, house use rooms and other rooms that are given out free of charge
are not factored into the calculation.

How Do You Calculate ADR?

The simple formula for calculating the KPI average daily rate (ADR) is as follows:
ADR = Rooms Revenue Earned / Number of Rooms Sold

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 REVENUE PER AVAILABLE ROOM

What does RevPAR means?

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 What is RevPAR?
Revenue per available room, or RevPAR as it is usually shortened to, is a KPI used
within the hotel industry in order to assess financial and business performance. As a
metric, it is concerned with both room revenue and occupancy rate, which makes it an
important indicator of the overall performance of a hotel, as well as a useful
component of a revenue management strategy.

What does RevPAR stand for?

Essentially, RevPAR is a measurement of both a hotel’s average daily rate and its
ability to actually fill those rooms. Within revenue management, this is incredibly
important, because it provides a clear idea of current performance and provides an
idea of how much a hotel is able to charge for its rooms.
Hotels should ultimately aim to increase their RevPAR as much as possible, because
an increase suggests improvement to occupancy, revenue, or both.
How Do You Calculate RevPAR?
There are two possible was to calculate the KPI revenue per available room:
RevPAR = Rooms Revenue / Rooms Available
RevPAR = Average Daily Rate x Occupancy Rate
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 REVENUE PER OCCUPIED ROOM

What does Revenue Per Occupied Room means?

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 What is RevPOR?
Revenue per occupied room, also known as RevPOR, is a KPI used within hotel
management to assess financial performance. As a result, it can play a role in a revenue
management strategy. Its main value to hotel owners is in giving them an idea of exactly
how much revenue they are making from the rooms that they manage to sell.

What does RevPOR stand for?

As a performance metric, RevPOR is concerned with all of the revenue generated by
occupied rooms. It differs from average daily rate (ADR) by including revenue stemming
from things like room service, and it differs from revenue per available room (RevPAR)
because it only factors in rooms that are occupied.
For revenue management purposes, it can give owners an understanding of how much
revenue they are generating, on average, from each party that stays at the hotel,
providing some indication of individual spending habits.

How Do You Calculate RevPOR?

The simple formula for calculating the KPI revenue per occupied room (RevPOR) is as
follows:
RevPOR = Total Revenue Generated By Occupied Rooms / Number of Occupied Rooms
Uses and Limitations
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 TOTAL REVENUE PER AVAILABLE
ROOM

What does TRevPAR means?

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 What is TRevPar?
Total revenue per available room, or TRevPAR, is a KPI used by those within the hotel industry to
assess business results. It is concerned with total revenue generated from rooms, and space
available. As a result, it can play an important role in a revenue management strategy, and can
provide a useful snapshot of overall performance.

What does TRevPAR stand for?

TRevPAR, or total revenue per available room, is used within the field of revenue management to
assess total amount of revenue generated by a property, on a per room basis, regardless of
whether rooms are sold. As a KPI, its value is in demonstrating how effectively space is being used
for revenue generating purposes.
In general, hotels should aim to increase TRevPAR, because that is indicative of either an increase
in average revenue, an increase in occupancy, or both. TRevPAR can be calculated with the
following formula:
TRevPAR = Total Revenue / Number of Available Rooms

What is the Difference Between RevPAR and TRevPAR?

Although the metrics of RevPAR and TRevPAR seem pretty similar on the surface, there is one key
difference between the two. RevPAR, as a KPI, is concerned solely with revenue generated from
selling rooms, while TRevPAR factors in all revenue, including money spent on room service, in
the restaurant, at the bar, etc.
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 NET REVENUE PER AVAILABLE ROOM

What does NetRevPAR means?

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 NRevPAR Clearly Explained!
Net revenue per available room, or NRevPAR, is used by those within the hotel industry as part of a
wider revenue management strategy, helping them to assess overall business performance. As a KPI,
the NRevPAR metric is similar to RevPAR, but factors in distribution costs. Therefore, it is arguably a
more accurate performance indicator.

What is NRevPAR?
The NRevPAR metric is used to calculate the net revenue generated per available room in a hotel. In
this context, net revenue refers to the room revenue generated, minus any costs associated
with distributing the room. As a KPI, it provides a picture of how successful a hotel is at making money
from each of its available rooms.
NRevPAR can also be used alongside other revenue management metrics to make adjustments
to pricing, in order to increase levels of occupancy, or the revenue received. It can be calculated with
the following formula:

NRevPAR = (Room Revenue – Distribution Costs) / Number of Available Rooms

What is the Difference Between RevPar and NRevPAR?
In many ways, the NRevPAR metric is very similar to RevPAR, in that it is concerned with revenue
generated on a per available room basis. However, unlike RevPAR, NRevPAR looks at net revenue,
rather than simple room revenue. Therefore, distribution costs, such as travel agent commissions and
transaction fees, are subtracted from room revenue first, before the number is divided by the number
of rooms available.
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 EBITDA

What does EBIDA means?

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 What does EBITDA stand for?
Earnings before interest, taxes, depreciation and amortization, or EBITDA for short, is
a KPI that is becoming increasingly prevalent in hotel management. Sometimes
referred to as operational cash flow, the metric can be used to determine the
operational profitability of a business, taking into account only its key daily running
costs.

Why is EBITDA Important?

EBITDA has emerged as an important metric for certain types of businesses, including
those in the hotel industry, to keep track of, because it is a way of assessing basic day-
to-day operational profitability. The elimination of expenses like interest, taxes,
depreciation and amortization from the metric means that performance can be
viewed away from accounting, financing and political decisions, which can otherwise
distort financial results.

The earnings before interest, taxes, depreciation and amortization KPI can be
calculated with the following formula:
EBITDA = Total Revenue – Expenses (excluding interest, taxes, depreciation and
amortization).
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 AVERAGE REVENUE PER ACCOUNT

What does Average Revenue Per Account means?

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 What is ARPA?
Average revenue per account, or ARPA, is a KPI used in the hotel industry for revenue
management purposes. The metric tells hotel owners the amount of revenue generated, on
average, per customer account. As a result, it is a good indicator of business performance. The
metric is sometimes known as average revenue per user.

What does ARPA stand for?

ARPA, or annual revenue per account, details the average amount of revenue a hotel is
generating from each of its customer accounts over a specified time period. It is, therefore,
extremely valuable for those in the hotel industry, because it is able to demonstrate business
growth at a per unit level.

How Do You Calculate ARPA?

In order to calculate ARPA, a time period must be decided. It is usually done on a monthly or
yearly basis. Looking back at recent past months can help to establish the average revenue per
existing account, while measuring upcoming months and comparing it to past performance can
help to show average revenue per new account.

The basic formula for calculating average revenue per account is as follows:
ARPA = (Monthly) Recurring Revenue / Total Number of Accounts

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 GOP PER AVAILABLE ROOM

What does GOP Per Available Rooms mean?

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 What does GOPPAR stand for?
A key performance indicator, or KPI, is a quantifiable measurement of business performance. The
use of KPIs is essential for implementing a successful revenue management strategy, as it allows
businesses to identify areas of success and failure, as well as trends related to demand and
customer behaviour.
GOPPAR is one of the most important KPI used by hotels for the purpose of revenue Management.
In this article we explain what GOPPAR stands for and why it is important.

GOPPAR Explained
GOPPAR is an acronym, which stands for gross operating profit per available room, and this is a
commonly used key performance indicator in the hotel industry. It is a particularly useful metric for
hotel owners, because it gives them an idea of the bigger picture in terms of how valuable their
hotel is as an asset.
Crucially, GOPPAR is concerned with the number of rooms available in your hotel, rather than the
number you have sold. In addition, it looks at gross operating profit, rather than revenue generated
from selling hotel rooms alone and it is, therefore, a very good indicator of how effective your hotel
is overall.
Gross operating profit can be calculated by taking your gross revenue and subtracting your gross
expenditure. This figure can then be divided by the number of rooms available in your hotel to give
you your GOPPAR. In some cases.

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 Hotel Spa – KPI’s

Hotel Spa – Key Performance Indicators

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 Hotel Spa - KPI
1. Capture Rate - Treatment
Expressed as a %
Calculated by Total Spa Guests / Total Hotel Guests in-house
This is really a measure of relevance. The Capture Rate - Treatment tells you how
many of the guests in the hotel saw the value in coming to the spa. These hotel guest
committed to taking an hour or three out of their day and come to your spa to spend
money for a treatment. The higher this number, the more relevant your spa is to the
hotel.

2. Capture Rate - Retail

Expressed as a %
Calculated by Total Retail Guests / Total Spa Guests
What we are measuring here is how many of the guests who came to the spa and had
a treatment or service, also bought some retail product to take with them. It can also
be considered a measure of relevance. It measures how relevant your retail offering
was to your spa guests.

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 Hotel Spa - KPI
3. Average Cheque - Treatment
Expressed as a $0.00
Calculated by Total Treatment Revenue / Total Spa Guests
The pricing of the treatments on your spa menu is the key variables in this KPI. BE
careful. This is not necessarily a measure of efficiency. A 1 hour treatment that sells
for $100 is more efficient than a 2 hour treatment that sells for $185. If you book
more of the 2 hour treatments, your Average Check will be higher, but you are
actually being less efficient with your resources. As cost of treatment is not factored
in here, this is also not a profitability measure.
 
4. Average Cheque - Retail
Expressed as a $0.00
Calculated by Total Retail Revenue / Total Spa Retail Guests
The retail products in your spa will most likely have a wide range of prices based on
size, ingredients and quality of the various products on your shelves. Your goal here
should be to either sell higher priced SKUs or multiple smaller priced items per sale.
This is not a measure of either efficiency of stock or profitability.

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 Hotel Spa - KPI
5. Therapist Utilisation
Expressed as a %
Calculated by Total Treatment Hours performed / Total Hours Worked
This is a measure of how productive your spa therapists are in terms of performing
treatments. For most spas, the treatments and services performed by your therapists
are your primary source of revenue. Thus, this is a critical KPI.
 
6. Spa Occupancy
Expressed as a %
Calculated by Total Treatment Hours Sold / Total Treatment Hours Available
Your Spa Occupancy will tell you how close you are to operating at full capacity. This
measurement should be based on total treatment beds, not just treatment rooms.
This measure takes no account of how many therapists you have available.
nb: Total Treatment Hours Available is calculated by the number of treatment beds in
your spa x number of operating hours of the spa.

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 Hotel Spa - KPI
7. Treatment Room Occupancy
Expressed as a %
Calculated by Total Treatment Hours Sold / Total Treatment Room Hours Available.
Your Spa Occupancy will tell you how busy your treatment rooms are, but not
necessarily how close you are to full capacity. This measurement is based on total
treatment room, not the actual number of treatment beds.
NB: Total Treatment Room Hours Available is calculated by the number of treatment
rooms in your spa x number of operating hours of the spa.
 
8. Average Treatment Length
Expressed as Hours / Minutes
Calculated by Total Treatment Hours Sold / Total Number of Treatments Sold
This number will tell you if you are just selling your standard treatments or if you are
able to sell more packages or treatment upgrades. Your target for this particular KPI is
fully dependent on the length of the treatment and services on your spa menu.

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 Hotel Spa - KPI
9. Revenue per square metre / foot
Expressed as $0.00
Calculated by Total Spa Revenue / Total Size (in m2 or ft2) of the Spa
This is a measurement commonly used in the retail industry, but not so common in
the spa industry. In many ways it is a reflection on an efficient design. The Total Size
includes the spa’s Back of House, Public Areas and Circulation Spaces.
 
10. RevPATH
Expressed as $0.00
Calculated by Total Spa Revenue / Total Treatment Hours Available
This is a similar measurement to RevPAR in hotels. The key difference is that RevPATH
is based on total treatment beds, rather the total treatment rooms. This is another
good indicator of how efficient your spa is in terms of generating revenue.
nb: Total Treatment Hours Available is calculated by the number of treatment beds in
your spa x number of operating hours of the spa.

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 Hotel Spa - KPI
11. GOPPATH
Expressed as $0.00
Calculated by Total Spa GOP (Gross Operating Profit) / Total Treatment Hours Available
This is the ultimate indicator of how efficient your spa business is operating overall.
Not just in terms of generating revenue, but in terms of controlling expenses and
ultimately generating profits.
nb: Total Treatment Hours Available is calculated by the number of treatment beds in
your spa x number of operating hours of the spa.
 
12. Re-booking Percentage
Expressed as %
Calculated by Number of Spa Guests who Re-book / Total Number of Spa Guests
A re-booking is considered to a booking made immediately following the treatment.
This measure if a good indication of customer satisfaction with the treatment or
service they received. A guest who makes another booking sometime after their initial
treatment would not be counted in this KPI. Rather, we would capture them in the
Repeat Guest KPI (below).

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 Hotel Spa - KPI

13. Upsell Percentage

Expressed as %
Calculated by Number of Treatment Upgrades Sold / Total Treatments Sold
Upgrades can be sold any time after the initial booking is requested, right up until the
time the treatment begins. They can also be made by any member of staff. Upsells
are simply a good measure of the effectiveness of your spa team to sell.
 
14. Repeat Guest Percentage
Expressed as %
Calculated by Number of Repeat Guest / Total Spa Guests
A Repeat Guest is the ultimate measure of customer satisfaction. If a guest returns to
your spa for another treatment or service, chances are they are satisfied with what
the received the first time. A Repeat Guest could be a Re-booking Guest (see above)
or not.

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 Hotel Spa - KPI

15. Outside Customer Percentage

Expressed as %
Calculated by Number of Non-Hotel Customers / Total Spa Customers
This is a measure of how relevant your spa is to customers who are not guests in
your hotel. It can also be considered an indication of how irrelevant your spa is to the
hotel guests.

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 Hotel Food & Beverage KPI’s

Hotel Food & Beverage KPI’s

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 Hotel Food & Beverage KPI
1. Revenue Mix:
The purpose of this ratio is to understand where your revenue is coming from. In
other words, you want to know how each segment of your operation contributes to
your total departmental revenue. Who is the star: banquets, restaurants, in-room
dining? Are there any changes in the ranking? Does your composition reflect that of
similar properties?
To calculate this ratio, simply follow the formula for each segment: venue, In-room
dining, Banquet/Conference/Catering, mini bar, and other.
Revenue Mix % = Total Venue Revenue (or any other segment) / Total F&B Revenue

2. Average Check:
This ratio shows how much on average each customer spends on food and beverage
in your property. You can calculate it by segment and meal period, and differentiate
food from beverage revenue to make it more detailed. This information helps you
understand your customers’ spending behavior, so that you can design action plans
to optimize your pricing strategy.
The formula for this ratio is the same for every segment and meal period:
Average Food (or Beverage) Check = Total Food (or Beverage) Revenue / Number of
Customers
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 Hotel Food & Beverage KPI
3. Food and Beverage Revenue Per Available Room:
With this ratio you can measure the yield achieved by your Food and Beverage operation
relative to the number of rooms available at the property. This information can then be
compared to the results from your competitive set, so as to understand the standing of
your department’s operation in the market in terms of overall performance.
To calculate this ratio, you just need your Total Food and Beverage Revenue and the
number of available rooms:
Total F&B Revenue PAR = Total F&B Revenue / Rooms Available

4. Cost Percentage:
This ratio allows you to evaluate how efficient your operation is in its use of the available
inventory. In particular, you want to assess potential issues with portion sizes, pouring
controls, waste, theft, among others. To make this ratio’s information more actionable, you
should calculate your food and your beverage cost percentages separately.
The formula to calculate this ratio is:
Food (or Beverage) Cost % = Cost of Food (or Beverage) Sales / Total Food (or Beverage)
Revenue

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 Hotel Food & Beverage KPI
5. Food and Beverage Profit Percentage:
This allows you to measure how efficient your operation is at turning every
dollar spent by a customer into profit. How much, after covering costs of sales
and expenses, does the department have left? Again, this is a result you want to
compare against your competitive set.
The calculation is very straightforward:
F&B Profit % = Total F&B Profit / Total F&B Revenue

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 Golf Course & Country Club KPI’s

Golf Course & Country Club KPI’s

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 Golf Course & Country Club KPI’s
Revenue Per Available Tee Time
 
Revenue per available tee time or available rounds is a critical KPI for all golf courses to track.
Just as a hotel has a limited number of rooms, a golf course has a finite number of tee times
available each day. They are also perishable. An unsold tee time cannot be sold or discounted at
a later date. The golf course owner must make certain the revenue from the available tee times
is maximized. Monitoring revenue per available tee time on a monthly basis can reveal how
effective his marketing efforts are in bringing golfers to the course. 
 
Average Length of Round
 
A chronic problem in golf is slow play. The longer it takes to play a round -- particularly having to
wait to play every shot -- the less enjoyment the golfer gets from the playing experience.
For the course owner, slow play means money out of his pocket because the number of rounds
played each day will be below the goal he set.   While the reasons for a lengthy round have been
hotly debated and multiple solutions have been offered - the key is to understand where you are
from a course time management standpoint. 

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 Golf Course & Country Club KPI’s
Repeat Business
 
The course owner should track the percentage of golfers who come back to the course after playing it
for the first time. Repeat business percentage is a KPI that reveals the overall customer satisfaction the
business is achieving. A high repeat business percentage shows that the green fees are priced fairly
and competitively. It also indicates that course maintenance is meeting a high standard. Golfers return
to courses they judge to be well maintained. Smooth greens and healthy turf grass in the fairways and
rough are two components of good maintenance golfers seek. Does your system offer you the ability
to track your customers effectively and gain constant feedback from their overall experience? 
 
Course Utilization
 
The number of rounds sold divided by total available rounds yields course utilization -- similar to
occupancy percentage in the hotel industry. The course owner should track this KPI by time of day, day
of week, and month of the year. Slow days or slow times of the day with few sold rounds require
implementing marketing strategies to bring in more people. Do you have an effective way to monitor
the tee sheet so that you can send out an email blast to your best customers when you have a slow
day - perhaps a special offer or a personal invitation to come out and take advantage of a special rate. I
love getting those emails - it not only tells me of a great deal but it also lets me know I am important to
the golf course as a customer. 

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 Golf Course & Country Club KPI’s
Revenue Stream KPIs

Average merchandise sale per customer, average food and beverage sales per
customer, and the percentage of golfers who purchase practice range fees or lessons
are KPIs that guide the golf course owner toward his goal of providing the best overall
customer experience possible. He might discover that many of the golfers are not
taking advantage of the restaurant after their completed round - or perhaps he didn't
know that your pro shop merchandise prices are competitive  with outside sources.
Determining how much the golfer spends at your facility in addition to the golf is a
great indicator for how your marketing efforts are driving additional business.

Let the professionals at Total E Integrated help you develop a strategy  to define
and understand the KPIs of your business. We have multiple  years of experience in all
areas of your operation; systems, best practices, customer data collection, marketing,
reporting, etc.  We want to give you the information to be as strategic as possible as
you seek to maximize your profitability. We would love to talk and learn about your
business and find a way to work together. 
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 End of Session

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