RevPAR vs. RevPOR

Date : September 25, 2013
RevPAR vs. RevPOR

When it comes to the terms RevPAR and RevPOR, RevPAR (revenue per available room) gets most of the attention. And it better, because it’s incredibly important for hotel operations and management. But RevPOR (revenue per occupied room) is equally important. In essence, it combines the metrics of RevPAR and occupancy into a “per capita” number, and when compared quarter-over-quarter or year-over-year, it can reveal some extraordinary guest insights.

It’s best to illustrate this through an example: the traditional North American low season (excluding sun destinations) of January through March. It’s customary to witness a sizeable drop in occupancy during this time, which would subsequently lower RevPAR. However, because RevPOR assumes occupancy as static, it is a better barometer of changing patterns in how much guests are spending. Suppose during this low season you notice a jump in RevPOR for this year over last. This would be a good indicator that some of your upselling efforts — be it the rooms, F&B, spa or golf — have actually paid off.

From there you can ask yourself: why have they paid off? What did I do to get my guests to spend more on site? What do the competition’s RevPOR figures look like? And because, in theory, getting new customers is one of the costliest endeavors a business can pursue, one of your foremost goals should be maximizing the revenue attained from each guest, not necessarily maximizing the number of the guests.

So much emphasis is placed on RevPAR, and yet RevPOR is often ignored or assumed. I beseech you to put more stock in RevPOR and dig down into its contributing numbers to find out where you are lacking and where you have the most potential to increase this metric. You never know — this might elucidate some very grave problems in how you operate.

(Article published by Larry Mogelonsky in HOTELSmag on September 16, 2013)