SINGAPORE – 5th August, 2019
In 2018, the Hospitality Sales & Marketing Association International (HSMAI) Asia Pacific commissioned Singapore Institute of Technology (SIT), represented by Assoc. Professor Dr. Detlev Remy, and a joint research team (Asst. Prof. Tan, SIT, Asst. Prof. Boo, SIT, Ms Shirley Tee, NYP, Mr. Stan Josephi, NHTV) to undertake a research on revenue management. The study aims to identify the different Revenue Management performance metrics in use, their limitations, and the possible new performance metrics.
KEY HOTEL METRICS FINDINGS
- Current performance metrics are still valued by then majority of hoteliers
- Majority of hoteliers are very interested in new measurement metrics, in particular nRevPAR and RevPAC.
- These new measures more accurately measure the performance of hotels
The performance of revenue management has been traditionally measured with metrics, such as occupancy (OCC), average daily rate (ADR) and revenue per available room (RevPAR). These revenue management metrics utilized by the hospitality industry have been in existence since almost 30 years ago. Nevertheless, some hospitality businesses today have progressed to extended measures, such as gross profit per available room (GopPAR) and total revenue per available room (TRevPAR). As the world shrinks with globalization and revenue management has evolved, there is an urgent need to revise the metric that the industry employs. In fact, practitioners have urged for new metrics to reflect more accurately the new development in revenue management. One example of such new metrics is the application of Total Revenue Management which includes other departments on top of rooms. Another example resulting from the shift towards Customer-centric Revenue Management is Revenue per available customer (RevPAC). Both metrics are under discussion but yet to conceptualize.
Here are the key findings:
EXISTING HOTEL METRICS
The major concern for these commonly used revenue management metrics is that they have only considered the room division component. Guest-room revenues may well account for nearly all of the revenue for a budget hotel but not for a luxury business/leisure/golf/casino hotel room. Room revenues for the latter may only be less than half of its total revenues, which points to a need for a more holistic measurement. Furthermore, as hotel companies become better at collecting and collating transaction data from all revenue streams, it is inevitable that the number of performance measures used by revenue managers will also grow.
NEW HOTEL METRICS
A variety of new revenue-management metrics have been under discussion for some time, including:
- NRevPAR — net revenue per available room
- RevPAC — revenue per available customer
- RevPASH — revenue per available seat hour, for use in restaurant revenue management
- RevPATH — revenue per available treatment hour), for use in spa revenue management
- ConPAST — contribution per available space time, for use in function space revenue management
The majority of respondents to the new study said they are willing to adopt NRevPAR and RevPAC despite several concerns, including perceived usefulness (or lack of it); data inaccuracy and unavailability; the substantial effort involved in collecting, collating, and analyzing the data; and management support and resource constraints within the organization.
The full study goes into much greater detail about the use of existing metrics and the perceived advantages and disadvantages of new metrics. Download a copy here.
NEXT STAGE OF METRICS STUDY
Based on this study, HSMAI and the Singapore Institute of Technology (SIT) are embarking on the next step which is to conceptualise nRevPAR in order to provide hoteliers and software vendors with an opportunity to measure net Revenue performance in an accurate way.
Any hoteliers, or accommodation providers who are interested in getting access to this research, or, who are interesting in volunteering for the next stage of this research, please contact HSMAI.
About HSMAI Asia Pacific
HSMAI Asia Pacific is the industry’s leading advocate for intelligent, sustainable hotel revenue growth. HSMAI is an individual membership organisation comprising more than 7,000 members globally with a presence in the Americas, Asia Pacific, Europe, Brasil and the Middle East.
HSMAI Asia Pacific’s mission is to be the leading source of information, tools, insights, business development, and educatio for professionals in the hospitality industry. With a strong focus on education, HSMAI has become the industry champion in identifying and communicating trends in the hospitality industry while operating as a leading voice for hotel sales, marketing and revenue management disciplines. Activities in the region are held in Singapore, Hong Kong and mainland China, Indonesia, Thailand and Australia.
For additional information, refer to our website at www.hsmaiasia.org or our HSMAI Academy portal at https://hsmaiacademy.org. Follow us on Twitter @hsmaiasia or Facebook or join our LinkedIn group at HSMAI Asia Pacific.
About Singapore Institute of Technology
Singapore Institute of Technology (SIT) is Singapore’s university of applied learning. SIT’s vision is to be a leader in innovative learning by integrating learning, industry and community. Its mission is to nurture and develop individuals who build on their interests and talents to impact society in meaningful ways.