Raising RevPar - Getting the Most for Your Dollar!

This has no doubt been a horrible economy and while we can blame our low ADR and occupancy on lack luster business, there’s no excuse for low RevPar. Heads on beds…I hear it all the time. However, I can’t impress enough that your low revenues are dependant not just on filled rooms, but all the accounts you’ve been wheelin’ and dealin’ with to get business through the door. Remember, increased volume also means increased labor – not necessarily revenue. In effort to increase your RevPar and bottom line, I highly recommend the following:

1. Reevaluate your CompSet. How you compare your property to varying competition, could produce false data. First identify where your brand of property sits with those brands listed in your CompSet report. Your property needs to be in line with those on the report. Second, compare ADR – if your competition listed has an average of $70 (or more) dollar variance above or below yours, it doesn’t belong on your CompSet. Compare features and services – all properties should be fairly similar. This does not mean – don’t steal business. Your sale’s effort should still make ongoing inquiries and try to gain business from competitors as necessary.

2. Review your accounts. I bet you’ll find at least 20 accounts that are dragging down your revenues. If you’re struggling to increase your ADR, look for accounts that are offering $30 dollar deals below ADR and see if the account has a contract for at least 20 room nights a month. If not, you’re offering too good a deal. As much as you want your clients, they must qualify in effort to get the deal. You need room nights, they need discounts. Therefore, negotiate a contract to ensure you’re getting the most room nights and that it will adjust up if their room nights fall – or that they’ll still be billed for vacant rooms. Also, as much as I love contractors from the corporate market, these accounts are vulnerable and quick to drag down your revenues. Watch your room inventory, number of guests and if you offer F&B, watch your comp breakfast coupons (great deal for guests, but at a cost to you). All of these contribute to increased or decreased funds.

3. Review and evaluate your sales contracts. Does your contracts hold your clients accountable for their end of the bargain? Remember how they came to you with inflated ideas and promises to bring in business as they reap the rewards for lower rates? Think again…most contracts do not state in the fine print that the client will be charged and accept the charge for rooms not filled. Hence, upon checkout, you’re wondering why a $5,000 account turned into $1500. Either your clients are billed for the empty rooms or the rate per room goes up when guests don’t show up or cancel. Manage your revenue and room inventory weekly.

Whether you have a team of two or more or it’s just yourself, you must identify what is causing spikes in revenues and what caused a valley of agony. When applying these ideas, you will notice your RevPar increase, ultimately impacting your bottom line. Good luck! Next week – I’m blogging about labor!