When guests have a fun, refreshing experience with your hotel, they are also willing to pay more for that experience. While sales and marketing attracts new guests, and great hospitality keeps those guests coming back, occupancy alone is not the sole driver of healthy income. Revenue management and strategies will ensure that you are not only providing a superb guest experience, but also making money while doing so.  But after you apply a revenue strategy, how do you know it worked 

Industry Tools for Evaluating a Revenue Strategy

The hospitality business has a valuable resource called STAR Reports provided by Smith Travel Research (STR) Global.  STAR Report provides an impartial view of the aggregate performance of all of the hotels in your local compset, region, across the state, and for hotel class. Using room count, daily revenue, and occupancy, STR Global generates metrics for the average daily rate (ADR), revenue per available room (RevPAR), and occupancy percentage by day, month, quarter and year-to-date for your property and your competition.  For maximum understanding of the effectiveness of a rate tool like Innskeeper provides, it is recommended that your STAR compset match that closely to your chosen compset in the Innskeeper portal. 

STAR Indicators are Effective for Evaluating a Revenue Management Strategy

RevPAR % Change :  This is a metric that tells you whether or not your RevPAR has changed, relative to your competitors during a specified period of time. If it is a positive percent change, it tells you that your RevPAR has increased relative to your competitor’s RevPAR. In other words – you are making more money per occupied room than your competitor, and something you are doing to increase revenue is working! 

To understand whether your increase in RevPAR Index was related to room sales or was driven by increasing room rates, you can take additional looks at the STAR report’s Occupancy Index (% change) or ADR Index (% change). If your Occupancy Index is negative, it means that while you sold less rooms, you increased your revenue by charging more for those rooms – your rate strategy worked! If your ADR Index is negative, it means that while you were charging less for your rooms, you were able to sell more rooms – your sales discounting strategy worked! 

 

RevPar Index – Another useful metric is the RevPAR index. Based on 100%, this can also tell you how you are performing relative to your competitors. If you are below 100%, it means your competitors are outperforming you. If you are above 100%, it means you are outperforming them. For example, if you are 110% that means you are outperforming your compset average by ten percent! 

 

RevPAR Rank: If you subscribe to daily or weekly STAR Reports, a quick glance at your RevPAR Rank  helps you determine how you rank, in your compset, relative to RevPAR For example, if you are curious how you did on a previous Saturday that everyone in your compset sold out on take a look at the RevPAR rank for that day.  A 1 out of 8 means that while everyone sold out you ended up with the highest average daily rate for that day and more revenue per room than everyone else in your compsetThis can be done on a daily, or 28-day average view. ..can be a great way to analyze a tighter window. As a daily recommendation tool, Innskeeper’s goal for your property is for our intelligent recommendations to help you drive year-over-year RevPAR improvement.   

   

To understand whether your increase in RevPAR Index was related to room sales or was driven by increasing room rates, you can take additional looks at the STAR report’s Occupancy Index (% change) or ADR Index (% change). If your Occupancy Index is negative, it means that while you sold less rooms, you increased your revenue by charging more for those rooms – your rate strategy worked! If your ADR Index is negative, it means that while you were charging less for your rooms, you were able to sell more rooms – your sales discounting strategy worked! 

Josh began his career in hospitality in 2003 from the ground floor… or more appropriately, from the front desk… at a branded hotel run by a small property management company. Josh is passionate about the hospitality industry and loves the energy that comes with a high-performing hotel.