The bottom line: is REVPAR telling you everything you really need to know?

28 September 2017

As a quick acid test, Revenue per Available Room (REVPAR) helps you to understand whether your hotel is moving in the right direction. However, it doesn’t give you the complete story.

In the current challenging market conditions, you need to know what actions are likely to improve profitability. But perhaps you also don’t have the time for endless analysis – after all it’s taking you away from the operational front line. So what can be done to ensure that you have the information you need to make quick decisions that will directly impact on profit?

The first area to examine is whether your accounting data can be easily linked to the other management information systems you use. Historically, this has been more complex, with ‘on premise’ or ‘server based’ accounting and management information solutions being silo based, meaning linking of these systems can lead to complexities.

Fortunately, there are many new web or cloud-based accounting systems that have been designed from the outset to link to performance tracking software. This gives extensive and in-depth management information which can show you where you are leaking revenue or missing opportunities. By connecting all your operational costs from your accounts system to operational activity per room, you can get a real fix on the type of customer behaviour that makes for a more profitable room stay.

Given that you are now able to get more granular operational cost information per room, you can then start to realise the potential of guest feedback. If you are not already carrying out more formal post stay research, you might want to take advantage of cross referencing profitable guest services and purchases through guest surveys.

As an advisory firm, we also counsel clients in the hotel sector to carefully consider which KPIs to focus on, especially if they are not at the stage of being able to measure room and guest activity in detail. This is especially important due to the ever present risk of management information overload – meaning that unless you have taken the time to really think about the information you need, not so called ‘vanity data’ or ‘nice to have data’, you will end up not acting on what you have. More importantly, your business will not function in a more strategic way.

UHY Hacker Young has been working with a number of cloud based management information and analytics developers to provide daily and weekly reports, helping operators to be agile and to adapt their offer in real time. For example, where we advise clients on the most appropriate reports to integrate and work with management accounts information, we are now able to suggest the use of pre-report surveys that some of our data analytics partners provide.

If you would like to understand more about cloud and data solutions for your business, please contact Paul Townsend, Martin  Jones or your local hospitality sector expert.