In the previous post, we detailed 05 key performance indicators metrics there are, to measure your business with. There will always be new ways of measuring the business of hotels, outlets and venues.
Let's us bring you in a more figures approach with an elaborate calculation of those metrics.
Let's put data from Bur Dubai Market:
Month: 31 Days
Number of Hotel Room for Bur Dubai Market: 5,428
We estimated each room in Bur Dubai to be 30m2 so in total there were 5,048,040 m2 available (Total Number of Rooms Available multiply by Square Meter Average multiply by number of days in the month).
Market Room Revenue: AED 49,975,596
Occupancy Rate: 78.9%
1) RevPAR Calculation
This will give you RevPAR (Revenue per Available Room) on Hotel Rooms at AED 297.00.
2) RevPAS Calculation on Hotel Rooms
In addition, your REVPAS (Revenue per Available Square Meter) on Hotel Rooms will be:
Market Room Revenue divided by Total Available Square Meter for Rooms
The RevPAS on Hotel Rooms will be at AED 9.90 (Nine Dirhams and Ninety Fills).
3) TREVPAR Calculation
You will need to gather your Room, F&B, Spa and Health Club, Parking, Business Center and Other Income from your financial controller, and divide total revenues by number of room available in the market. Till date, I don't know if any benchmarking company such as STR, Benchmarking Alliance, MKG can provide markets with such an information. Obviously it would be a key metrics to measure, especially while you are running a Total Hotel Revenue Management strategy.
4) GOPAR Calculation
Same as above, Revenue Manager need an access to a Profit and Loss (P&L) from the Hotel Manager or Financial Controller, because they need to extract the expenses lines. If you have never been exposed to P&L (see post in February), don't bother asking all expenses details, and asked your FC to provide you the Gross Operating Profit results. Once you have it, divide it by Number of Rooms Available. Then call up your revenue manager in the market, and compare it. If there are unable to do so, present the idea to your GM and network accordingly. Here are the keys to make your role looking like the most accurate person, not only from your hotel but also from your owners representative.
5) REVPAM Calculation
The Bur Dubai Conference and Banquet Hall Market details:
- Number of Available conference square meters: 581,250
- Conference Revenues: AED 24,412,500
- Occupancy: 24%
REVPAM on Conference Rooms will be at AED 42.00
Interesting it seems there are plenty of money to explore in conference and event.
6) RevPASH and RevPAT will occur in a separate post as they require some excel template to be submitted as there are featuring multiple metrics to look at.
In the Revenue Management Get Together, organized once a month, it would be interesting for Revenue Managers to discuss those metrics rather than Best Practices. Once you will start comparing, you can see that there are plenty of money for RevPAM - Conference Room, because to the exception of Monday - Tuesday (Corporate Business) and Weekends (Weddings, Social and Family Gathering), there are lots of money left on the table.
Owners representative companies should really get involved in those 5-6 metrics, as there are really driving the performance of an entire hotel team. With those metrics, generated on a regular basis, throughout the market, it will help Asset Management companies to build the right hotel, for the right owner at the right location. How many hotels in Al Barsha, Deira, Dubai Marina, Palm, Bur Dubai, Al Ain, Sharjah and Northern Emirates, end up with under use conference facilities.
Think Total Hotel Revenue Management process in your hotel and make sure you start practicing Revenue Management on Conference and Events space, food and beverage, spa and health club. Ensure that you understand the demand pattern, and also the one from your competitive set. Discuss with your Banqueting Manager, CCS Manager, and show them where you want to reach.
I am sure these topics will be discussed at the Arabian Hotel Investment Conference that will occur in Dubai. It's great to build Financial Assessment and Business Models between Development Team and Metrics company. HVS, Jones Lang Lasalle, Horwarth HTL, STR
Romain @ RSVP-Hospitality