ROOMS MANAGEMENT

ROOMS MANAGEMENT

ROOMS MANAGEMENT

Introduction

The following paper has two parts. In the first part the revenue per available room and the gross operating profit per room are discussed briefly in detail. In the second part the explanation for the importance of the revenue management is discussed briefly and along with those steps of the revenue management is also discussed briefly.

Question # 1

RevPAR

Revenue per Available Room is the ratio which is used to analyze and measure the financial performance in the hospitality industry. The metric that is basically the function of both room rates and the occupancy is one of an important element that gauges the health among the operators of hotels (Younes, 2003).

It is calculated in two ways.

Formulae

RevPAR = Rooms Revenue/Total Number of Rooms

It can also be calculated using following formula

RevPar = Average Daily Rate * Occupancy Rate

RevPar is defined as the hotel performance tool. It is used to analyze the performance such as date, month or the year. It is also used to evaluate the performance of the competitors with in the market or the hotel industry because the competitive data is available throughout the several tools makes. It is widely used metric in the rooms for the segments of division (Younes, 2006).

For instance if in a hotel there are 1000 rooms in total while the average room rate is 90. The occupancy rate is 75% and the total room revenue is (1000*90*75%)*90 is a quarter = 6075000.

Using the first formula = 6075000/90000= 67.50

If second formula is used then 90*0.75 = 67.50

Using this approach it can be analyzed that hotel generated 67.50 per day.

RevPar is important among all the ratios that are used in the hotel industry because it provides a convenient snapshot of how good a firm is filling its room and also helps in analyzing that how much well it is able to charge. RevPar is calculated using per room basis. Thus one hotel can have higher revenue per available room that the other hotel but still the total revenues if the second firm managers the more rooms.

GOPPAR

GOPPAR is defined as the ratio between the gross operating profit available per room on daily basis (total revenue - operating and department expenses).

GOPPAR = (gross operating profit)/(per)available room (Brown, 1999).

Gross operating profit per available room solves the needs and also gives the valuable look for the performance of the property. GOPPAR is a new technique which is used to analyze the management of revenue and to analyze the performance of the property. Gross Operating Profit per available room is also the best way for the performance of the property and also in order to make the adjustments that can affect the best interest of what the hotel is being trying to achieve. GOPPAR allows the management to look what is made by the management, how the outcomes will be affected and also how it will driver. The management of the revenue is the mastery of the basic laws of the economics like the price value and the scenarios of demand ...