Name |
Calculation |
Meaning / Use / Interpretation |
Occupancy ratios
1 |
Rooms occupied x 100
Rooms available
|
Where a hotel has 100 rooms of which 65 are occupied, then the occupancy ratio is 65 per cent. The ratio is important when comparing the performance of a hotel from year to year or in an inter-firm comparative analysis. Its main criticism is that it does not take into account price per room, as this has a direct effect on the occupancy levels of a hotel.
|
2 |
Number of guests x 100
Guest capacity |
This occupancy ratio measures guest capacity to the number of guests staying in the hotel. It is considered to be more accurate that 1 above as it takes into account the possibility that some double rooms could be sold as single.
|
3 |
Actual room revenue x 100
Potential room revenue |
This is known as room sales potential and takes into account the lowering of prices to boost occupancy. Thus a hotel with a high occupancy level could have a low room sales potential due to the lowering of prices to boost occupancy.
|
Average room rate (ARR)
Revenue per available room
(Revpar)
|
Annual room revenue
Rooms occupied x 365
Annual rooms revenue
Rooms available x 365
or
ARR x Occupancy rate |
This ratio measures the relationship between room sales and the number of rooms occupied. It gives an average room sales rate.
Both formulae will calculate Revpar which is considered a more important ratio than the ARR as it takes into account the occupancy levels of a hotel.
For example, a guest house of 10 rooms with an average occupancy of 70 per cent, achieves, on average, daily sales of €700. The ARR equals €100 (€700 ¸ 7). Revpar equals €100 x 70 per cent = €70 or alternatively this could be calculated as €700 ¸ 10 = €70.
A hotel may have a high ARR and a low Revpar due to the company not achieving its occupancy rates in part due to the high ARR.
|
Average rate per guest |
Room revenue .
Number of guests |
This gives the average rate per guest staying in the hotel and again is essential in interpreting any occupancy ratios, as the rate may fall in order to boost room sales.
|
Average spend |
Sales .
Number of covers |
This is a useful ratio for restaurants as it calculates the average spend per cover / customer. This can be done separately for lunch and dinner (a la carte) menus. It is an important ratio in terms of budgeting and planning.
|
Sales mix |
Rooms revenue x 100
Total hotel revenue
Food revenue x 100
Total hotel revenue
Bar revenue x 100
Total hotel revenue
|
This tells us the percentage of total sales that is made up from room revenue, restaurant revenue, bar revenue and any other revenue streams a hotel may have. |
Total sales per room
Sales per seat
Sales per employee
Operating profit per employee |
Total hotel revenue
Room sales
Total restaurant revenue
No. of seats
Total sales
No. of employees
Operating profit
No. of employees
|
These ratios are generally used to spot trends in hotel or restaurant revenue. They make up part of the performance statistics for the business and can be quite useful in measuring performance and forecasting sales.
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Labour costs as a percentage of sales
|
Labour costs x 100
Sales
|
This indicates the extent to which revenue is being absorbed by staff costs. As labour costs are mostly fixed, this ratio will fall as the business experiences an increase in sales. The ratio will increase as sales fall.
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