What are the indicators for evaluating hotel operating performance? How to calculate?

How to measure the operating performance of a hotel? The commonly used standard of domestic hotel industry is to look at the room occupancy rate of this hotel. In the hotel industry in Europe and America, hoteliers, hotel investors and hotel investment analysts are generally accustomed to using the concept of RevPar (revenue per available room) as the basis for measuring and analyzing their hotel performance. RevPar is a widely used measure in the international hotel industry, which reflects the room income generated by each room, so it can measure the success of hotel room inventory management. Undeniably, the goal of hotel managers is to maximize RevPar through the improvement of room occupancy rate and average house price, because room income does account for a large proportion of total hotel operating income. Generally speaking, 50%-65% of the total revenue of a three-star hotel providing full-service comes from rooms. In budget hotels or long-stay hotels with limited ancillary services (mainly catering services), up to 90% of the income comes from rooms.

Compared with RevPar, it is unscientific for China's hotel industry to measure hotel performance based on room occupancy rate. Especially those hotels that compete at low prices in pursuit of high occupancy rate, the room occupancy rate can't explain the problem at all. Although RevPar is recognized by the international hotel industry as the most commonly used indicator of business performance, and it can provide general market trends and some income indicators, there are also some obvious shortcomings when analyzing the business performance of a hotel based on RevPar. Therefore, some international experts have also put forward a performance measurement concept that can make up for the deficiency of RevPar, namely: GopPar.

I. calculation of RevPar

RevPar is calculated by dividing the hotel's net room income (that is, income after deducting discounts, sales tax and other items) by the total number of rooms available for rent, or multiplying the average daily room rate (ADR) of the hotel by the room occupancy rate. The specific formula is as follows:

Total room revenue ÷ total number of rooms ÷ days per year =RevPar

Such as: 2555000÷ 100÷365 = RevPar, 70 yuan.

Or:

Average daily room rate (ADR)X room occupancy rate =RevPar

Such as: 100 yuan× 70% = 70 yuan RevPar.

Secondly, some shortcomings of measuring hotel operating performance with RevPar.

Income composition: As we all know, hotel room income sometimes does not exceed 50% to 55% of the total hotel income. This mainly involves hotels with a large number of catering operations and conference and exhibition businesses. In this case, RevPar only reflects a part of the hotel's revenue performance, without considering all other revenue sources. In this case, we will produce inaccurate analysis when comparing the operating performance of hotels. For example, the average room rate of Hotel A is 70 yuan, the room occupancy rate is 70%, and the total number of rooms is 100. The operating income of other departments of the hotel (including catering and other operating income) is 500,000 yuan. On the other hand, suppose that the scale and average house price of Hotel B is the same as that of Hotel A, while the room occupancy rate is only 60%, while the income of other departments reaches 65,438+0,000,000 yuan. Although the RevPar of Hotel A is about 15% higher than that of Hotel B (49 yuan and 42 yuan), the total revenue of Hotel B is higher than that of Hotel A. If the direct expenses of the two hotels are similar (for example, accounting for 35% of the total revenue), the headcount expenses of the two hotels are the same. Although the RevPar of the second hotel is not ideal, it will eventually earn more money than that of the first hotel.

Scale: Compared with small hotels, RevPar calculation method is not good for big hotels. Common sense shows that hotels with only 100 rooms are more likely to get a higher occupancy rate than hotels with 200 rooms, especially when there are seasonal peaks and valleys. In this case, under the same market conditions, the RevPar of big hotels may be lower than that of small hotels. Therefore, hotel managers and investors need to consider the scale of hotels when comparing their RevPar performance with other hotels. Due to economies of scale and sporadic income, it is not impossible for big hotels to have better financial performance than small hotels with higher RevPar.

Meaning of value: The value of a hotel is based on its net free cash flow, not its total income. Although RevPar has something to do with the value of the hotel, it cannot be completely related to the capitalized value of the hotel assets. However, the change of hotel value is often closely related to the change of RevPar. Because it reflects an elastic relationship.

3. what is GopPar?

The English full name of GopPar is: gross operating profit per available room, which specifically means: the operating gross profit (GOP) of each room available for rent every day. In this definition, the operating gross profit (GOP) is equal to the total hotel revenue minus the total operating income and operating expenses of the department. The calculation of GopPar is clearly explained in the following table. Table 1 GopPar calculation description (unit: yuan)

Because GopPar can't display the income portfolio of a hotel property, it can't make an accurate evaluation of the room income department. However, GopPar can provide a clear indicator of the hotel's profit potential. Moreover, GopPar can better reflect the profitability, management benefits and overall value of the hotel in most cases.

Fourth, the advantages of GopPar measurement standard

Income composition: Because GopPar reflects the operating profit of the hotel, it can also show the overall operating performance or cash flow potential of the hotel more clearly. Therefore, the performance evaluation of a hotel management company by hotel management companies, hotel investors, investment appraisers and hotel developers will not only be based on room income, but also on total operating income and operating efficiency.

Scale: GopPar should consider all operating expenses, mostly including fixed and variable expenses. Fixed expenses are mainly related to the scale and requirements of the hotel, while variable expenses are related to the business volume of the hotel. Even under the same market conditions, large hotels will undoubtedly generate higher operating expenses than small hotels. Small hotels may spend more on the basis of each room available for rent (because of the economies of scale of big hotels). If the annual energy expenditure of a hotel with 400 rooms is175,000 yuan (that is, 437 yuan per room), the energy expenditure of a hotel with only 200 rooms in the same city will reach 100000 yuan (that is, 500 yuan per room). Therefore, regardless of the scale, GopPar can provide a good performance measurement for hotels. Sometimes, small hotels can also benefit from higher RevPar (because small hotels can maximize room occupancy rate and room price more effectively), and their operating expenses per room may be higher than those of large hotels.

It is worth noting that GopPar is very sensitive to any change and fluctuation of RevPar. The profit margin of hotel room service department is much higher than that of any other business department. Therefore, a slight fluctuation of RevPar can greatly affect GopPar, and then affect the value of a hotel. In Table 2, it is assumed that the occupancy rate and average room rate of Hotel C decreased by 5%, resulting in a corresponding decrease of RevPar by 65,438+00%. In addition, assume that other income has decreased by 2. 5%, and departmental expenditures will also change with the change of business volume. Therefore, the GopPar of Hotel C also decreased by about 16%, that is, from 42 yuan to 35 yuan. Table 2 Transformation of C Hotel from RevPar to GopPar (Unit: Yuan)

It can be seen that the conversion from RevPar to GopPar is very high, almost one to one. A small fluctuation of RevPar may have a very important impact on GopPar. Therefore, when analyzing the performance of a hotel or a hotel group, hotel management analysts should not only rely on a measurement method, but should take GopPar as a supplement to RevPar.

In a word, RevPar shows a hotel's performance in room inventory management, which can provide some basic market trends, but it can't provide any cost indicators of a hotel, so it can't show that the hotel has made more money. On the other hand, GopPar can show the profits of hotels more clearly by considering management control and efficiency and excluding the potential advantages of small hotels. As a hotel manager in China, it is a basic principle to measure the performance of hotel management, whether it is to continue to use the room occupancy rate standard, to adopt RevPar, or to adopt the general idea of international hotel industry.