If you work in the travel or hospitality industry, you’ve likely heard the term revPAR. But is revPAR simply the latest buzzword? And how important is it, really? We’ll answer these questions and more in today’s article.
What is RevPAR?
Revenue Per Available Room, or RevPAR, is a key performance indicator (KPI) used in the hospitality industry for hotels to gauge the overall health of their business. Comparing the revenue from operation to the number of available rooms in a given time period will determine whether your hotel is able to fill its rooms, and the average rate of the rooms that have been booked. The goal is to have a high RevPAR, since an increase in RevPAR means that your hotel is achieving higher occupancy rates and average rates per room.
Below is a quick guide explaining the importance of RevPAR, how to calculate this metric, and how implementing web data can help to improve your RevPAR processes.
Why is RevPAR so important?
RevPAR provides critical insights to hotel owners/operators. Understanding this metric helps you know how efficiently your hotel is filling its rooms, along with the rate that you can charge for each of these bookings.
Note: RevPAR only shows revenue as a percentage of rooms booked and does not account for other operating incomes or expenses. Thus, a higher RevPAR doesn’t necessarily translate to higher profits.
How do you calculate RevPAR?
The RevPAR formula comes in two flavors, and either can be used to calculate the Revenue Per Available Room:
- 1) Rooms Revenue / Total Rooms Available
- 2) Average Daily Rate X Occupancy Rate
Regardless of the method you choose, the widespread acceptance of this KPI makes RevPAR a dependable way to compare your hotel to others in the industry.
What is the difference between ADR and RevPAR?
Average Daily Rate (ADR) is used in calculating RevPAR, but it’s also an important metric in its own right. In comparison to RevPAR, which shows the average price of each available room in a given day, month, or year, ADR tells you the average rate that customers have paid for the rooms you have already filled.
- ADR = Rooms Revenue / Rooms Sold
A 100% occupancy rate is indicated when RevPAR is equal to ADR.
How to improve your RevPAR using web data
There is a seemingly infinite amount of information on the web, including data to be analyzed in every industry. Companies can use this information to gain insights into their customers, competitors, industry, and market. The value of these insights are reflected in your RevPAR, and optimizing your web data analytics can lead to a sustainable competitive advantage via revenue optimization, inventory management, and customer loyalty. Here are some of the ways that web data can help to improve your company’s RevPAR:
Gain market intelligence
Efficient web data analysis can lead to market insights that help you capitalize on industry trends. Discover what seasons, or days of the week, generate the most bookings and align your pricing strategy with that data. If there are certain times of the year with greater demand, you will be able to charge more per room during these times. On the flip side, slow periods might require prices to be lowered, but in turn would help you book more rooms during these off-seasons.
This market intelligence can also be harnessed to determine ideal customer profiles, generate leads for your business, monitor search engine rankings, create data-driven content, and more. Understanding what price the market is willing to pay, and monitoring which locations are the most popular at a given point in time, allows you to optimize your locations and prices.
Track and monitor competitor pricing
Web data helps you better understand competitor pricing. The ability to consistently track and monitor what other hotels are charging for similar rooms will allow you to remain competitive in a saturated industry. In addition, this information will provide you with peace of mind in knowing that no potential revenue is seeping through the cracks.
Customer sentiment analysis
Web data can be used to monitor the thoughts and opinions of your customers. Keeping your finger on the pulse of public opinion will help you maintain a strong brand image and lead to increased customer loyalty. Sentiment analysis will also give you the information needed to continually improve your brand’s reputation. Remember, being well respected in the public eye will allow for higher booking rates and higher prices.
Easily capture pictures and descriptions for travel sites
One of the most time consuming aspects of hospitality strategy is the process of copying data and images, from target sources, to ensure that website listings are accurate at all times. Collecting this information manually leaves room for human error and can consume many hours of labor. Utilizing web data allows you to pull images and descriptions for listings automatically. Saving this time and money on manual processes will increase your profits.
How Import.io helps you leverage web data for results
After going over the above benefits that web data provides to your company, it is clear that these advantages provide value in many areas, including higher RevPAR. However, implementation of web data practices comes with its own set of challenges. Import.io created Web Data Integration (WDI), which allows you to get data from anywhere on the web and generate reports in minutes. Implement dynamic pricing models based on multiple points of data, create a strong revenue strategy, and ensure that you are making the most of your RevPAR with Web Data Integration.
To learn more about how Import.io can help your hospitality business improve its Revenue Per Available Room, contact one of our data experts today.