There's an issue that needs a dose of clarification. When we consider hotel operations and management, RevPAR (Revenue Per Available Room) is a term that gets a lot of attention. But RevPOR (Revenue Per Occupied Room), also known as effective RevPAR, is equally as important. In essence, it combines the metrics of RevPAR and occupancy into a 'per capita' number, and when compared quarter-over-quarter or year-over-year, it can reveal some extraordinary guest insights.
It's best to illustrate this through an example – the traditional North American low season (OK, excluding sun destinations) of January through until March. It's customary to witness a sizeable drop in occupancy during this time, which would subsequently lower RevPAR. However, because RevPOR assumes occupancy as static, it is a better barometer of changing patterns in how much guests are spending. Suppose during this low season you notice a jump in RevPOR for this year over last. This would be a good indicator that some of your 'upselling' efforts – be it the rooms, F&B, spa or golf – have actually paid off.
From there you can ask yourself: Why have they paid off? What did I do to get my guests to spend more on site? What do the competition's RevPOR figures look like? And because, in theory, getting new customers is one of the costliest endeavors a business can pursue, one of your foremost goals should be maximizing the revenue attained from each guest, not necessarily maximizing the number of the guests.
In reading the trades, so much emphasis is placed on RevPAR and yet RevPOR is often ignored or assumed without needing mention. Maybe it's just a typing error as the two can be easily jumbled in standard word software. I beseech you to put more stock in RevPOR and dig down into its contributing numbers to find out where you are lacking and where you have the most potential to increase this metric. You never know, this might elucidate some very grave problems in how you operation.
Larry Mogelonsky (larry@lma.net) is the president and founder of LMA Communications Inc. (www.lma.ca), an award-winning, full service communications agency focused on the hospitality industry (est. 1991). Larry is also the developer of Inn at a Glance hospitality software. As a recognized expert in marketing services, his experience encompasses Four Seasons Hotels & Resorts and Preferred Hotels & Resorts, as well as numerous independent properties throughout North America, Europe and Asia. Larry is a registered professional engineer, and received his MBA from McMaster University. He's also an associate of G7 Hospitality, a member of Cayuga Hospitality Advisors and Laguna Strategic Advisors. Larry's latest anthology book entitled "Llamas Rule" and his first book "Are You an Ostrich or a Llama?" are available at Amazon and Barnes & Noble.
This article may not be reproduced without the expressed permission of the author.
