The strategic importance of RevPar and ratings

RevPar (revenue per available room) is the most important strategic figure of all hotel activities. It provides information about the two most important basic numbers: occupancy and average price. It often only plays a secondary role, which is wrong, because it is the most telling indicator in hotel management and the best reflection of the success of your activities.

Revpar Strategy

In addition to using RevPar as a measure of success, you should also employ another, more qualitative indicator. The new measure of quality for hotels is no longer how many stars it has, but instead the ratings and comments which customers can write and submit on all the online sales portals and – especially – ratings portals. The relationship between these two qualitative and quantitative indicators does not merely involve correlating the data. Much the opposite, in fact: RevPar and the average rating calculated on portals are inseparably intertwined. A higher score results in an average 1 percent increase in RevPar. Good ratings, which guests submit based on a hotel‘s quality, result in a direct rise in revenue. The rating system can help you increase your RevPar directly, if you concentrate on the factors your customers emphasise positively in their ratings. A crucial aspect of a rating system is the thresholds used in the online portals‘ search systems. Users can search for certain ranges of ratings (from 7 to 8, from 8 to 9 and so on). Online customers usually display these ratings in descending order, which means the hotels with the best ratings appear at the top. Your rating on these online portals is crucial for customer selection. Due simply to this typical search process, passing the threshold from a rating of 7.9 to 8.0 on the portals increases booking volumes on all platforms, as well as advance bookings. The customers trust in the score you have been given and more open to risk, which motivates them to book earlier. And the most interesting result of passing such a threshold is that RevPar increases by at least 5 percent. This increase is clearly attributable to the higher booking volume which results from the better rating, as well as the higher subjectively perceived

A crucial aspect of a rating system is the thresholds used in the online portals‘ search systems. Users can search for certain ranges of ratings (from 7 to 8, from 8 to 9 and so on). Online customers usually display these ratings in descending order, which means the hotels with the best ratings appear at the top. Your rating on these online portals is crucial for customer selection. Due simply to this typical search process, passing the threshold from a rating of 7.9 to 8.0 on the portals increases booking volumes on all platforms, as well as advance bookings. The customers trust in the score you have been given and more open to risk, which motivates them to book earlier. And the most interesting result of passing such a threshold is that RevPar increases by at least 5 percent. This increase is clearly attributable to the higher booking volume which results from the better rating, as well as the higher subjectively perceived.

Due simply to this typical search process, passing the threshold from a rating of 7.9 to 8.0 on the portals increases booking volumes on all platforms, as well as advance bookings. The customers trust in the score you have been given and more open to risk, which motivates them to book earlier. And the most interesting result of passing such a threshold is that RevPar increases by at least 5 percent. This increase is clearly attributable to the higher booking volume which results from the better rating, as well as the higher subjectively perceived quality of your property. Once you‘ve passed a score of 9.0 on the online portals, you‘re on the safe side. You‘re then in the top score range, which customers are likely to search for, and they will be more willing to risk an advance booking with you. The price is no longer the decisive factor for the search, but instead the actual and perceived level of quality. Buying behaviour changes radically as a result and you gain a sustained advantage from its impact. From now on, you concentrate on doing your best to keep your score above this threshold and consolidate it, to stabilise your long-term RevPar at a high level. This requires regular analysis of the comments and ratings you receive, as well as tracking of internal corrective measures. This will help you maintain your score and avoid dropping back down into lower score ranges. It‘s a long slog, but it might even exceed your expectations in the end. HotelPartner is there to help you succeed with this objective. We offer services which enable you to adapt your yield management strategy to your review score on the various online portals, to maximise your revenues and your RevPar.

Courtesy of our partners – HotelPartner, Source: The Hotel Partner No. 05 Oktober 2015




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