For hotels: RevPar and ARR explanations

How many hosts understand and use RevPar and ARR? What do they mean and how can they benefit a hotel to grow its future revenue and profitability?

ARR = Average room rate

RevPar = Revenue per available room

For example, let’s say that he has sold 20 of his 100-room, 100-bedroom homes and 20 non-sold rooms.

The ARR is divided by 100 x 30 = 3000 30 = 100 per room

RevPar is 100 x 30 = 3000 divided by 50 = 60 per room

Two completely different figures. ARR sells rooms on average. RevPar averages rooms that are sold and unsold.

When looking for a hotel that can reliably measure how rates and revenue work, ARR creates an impression on real figures, while RevPar provides a picture of the revenue earned on the hotel. general power.

So how do hotels use that to their advantage? There are several ways to look at revenue generation.

(1) lower the rate and sell 80 rooms at 80 = 4000 with 80 RevPar

(2) Sell 30 rooms to 100 rooms, then lower the sale rate by increasing overall billing and RevPar

The hosts’ decision is how to use their demand, tilt rates, match demand and rates in their field to optimize employment and revenue and seek the best RevPar they can.

Source by James Maddison