The ADR is the average daily price charged by the hotel for each occupied room. Depends on different types of room and how many sold per day, the average daily rate is different for each room. The ADR reflects the ability of the hotel how to balance the relationship by increasing the room rate or selling more overnights (Formula 2) or room nights (Formula 2) between revenues and occupied rooms. It is similar to the occupancy rate, special events, contract conditions or customer demands will affect the average daily rate.
The occupancy rate is one of the metrics to measure the usage of the physical capacity of the hotel. There are two ways to calculate the Occupancy rate, which is based on overnights (Formula 1) or room nights (Formula 1). …show more content…
RevPar is a ratio widely used to measure financial performance in the hospitality industry. It is a very important metric to measure the connections between room rates and occupancy among hotel managers. There are two ways to calculate RevPar, one is based on the total revenue and available room (Formula 3), another one is based on the ADR and occupancy rate (Formula 3). According to the Jan Freitag, VP of global development for STR, RevPar’s increase can be driven by two factors: increases in a hotel’s occupancy or increases in a hotel’s average daily rate (HotelNews Now, 2009). Although RevPar provides a very convenient way to show how well the hotel is dealing its rooms, it only can be used in the limited hotels. RevPar is arguably by the efficiency in the big company or …show more content…
This index is similar to the revenue generation index, comparing with the average daily rate of their competitors set, if the index is greater or equal to 1.00, it means that the hotel’s average daily rate is more expensive than or just equal to their average daily rate in order to gain more revenue; if the ADR Index is less than 1.00, it means that the hotel’s average daily rate is less than other competitor’s set as well as more competitive to their competitors.
Market penetration Index (MPI)
MPI is a calculation to measure the hotel’s occupancy compared to the average market occupancy levels. This metric helps the hotel to know that which level of market proportion to other competitors in the market generally.
Drawbacks of RGI, ARI and MPI
Although RGI, ARI and MPI show that the market position and market share of the hotel compare to other competitors in the market, they cannot provide the accurate market strategy for the hotel that how to improve the performance in details. Another drawback for this index is lacking data, it’s very difficult for hotels to collect all the data from the market, therefore, the hotels may get the unreliable information and put themselves in the wrong market
The occupancy rate is one of the metrics to measure the usage of the physical capacity of the hotel. There are two ways to calculate the Occupancy rate, which is based on overnights (Formula 1) or room nights (Formula 1). …show more content…
RevPar is a ratio widely used to measure financial performance in the hospitality industry. It is a very important metric to measure the connections between room rates and occupancy among hotel managers. There are two ways to calculate RevPar, one is based on the total revenue and available room (Formula 3), another one is based on the ADR and occupancy rate (Formula 3). According to the Jan Freitag, VP of global development for STR, RevPar’s increase can be driven by two factors: increases in a hotel’s occupancy or increases in a hotel’s average daily rate (HotelNews Now, 2009). Although RevPar provides a very convenient way to show how well the hotel is dealing its rooms, it only can be used in the limited hotels. RevPar is arguably by the efficiency in the big company or …show more content…
This index is similar to the revenue generation index, comparing with the average daily rate of their competitors set, if the index is greater or equal to 1.00, it means that the hotel’s average daily rate is more expensive than or just equal to their average daily rate in order to gain more revenue; if the ADR Index is less than 1.00, it means that the hotel’s average daily rate is less than other competitor’s set as well as more competitive to their competitors.
Market penetration Index (MPI)
MPI is a calculation to measure the hotel’s occupancy compared to the average market occupancy levels. This metric helps the hotel to know that which level of market proportion to other competitors in the market generally.
Drawbacks of RGI, ARI and MPI
Although RGI, ARI and MPI show that the market position and market share of the hotel compare to other competitors in the market, they cannot provide the accurate market strategy for the hotel that how to improve the performance in details. Another drawback for this index is lacking data, it’s very difficult for hotels to collect all the data from the market, therefore, the hotels may get the unreliable information and put themselves in the wrong market