Hotels. The same RevPar. High average price and occupancy? What is more profitable? let me teach you some tricks

Original: Li Sheng

Selecting equal RevPar

Equivalent hotel payback

High average price or occupancy? What is more profitable?

In economics or hotel revenue management

Just use economic theory

Let me analyze case

View

Which one is most beneficial for hotel?

Let's first talk about calculation formula and logic

Profit per number

=Profit margin - fixed price per room

Margin contribution

=RevPAR*Contribution Margin Ratio

Fixed price for a single room

=Fixed price/Sold nights

Margin contribution

=Total Contribution Margin/Total Operating Profit

Simply put

Subtract fixed cost of one number from marginal contribution and remainder is profit

Notes

In terms of economics:

Deposit margin is remainder of income

Used to offset fixed costs

When all fixed costs are fully offset, it becomes a profit

I use case as an example:

Guess:

I have a hotel

Number of rooms available for sale: 250

Hotel

Controlled single room rate is RMB 39

Controlled cost is cost of opening a room to create a room

If you don't open this room, no fee

For example:

Disposable items, laundry costs, etc.

Hotel

RMB 5,000 daily fixed fee

We assume hotel is PR: 60 RMB unchanged

For example:

Average price:

60, 70, 80, 90, 100

120, 150, 200 total 8

Relevant occupancy:

100%, 86%, 75%

67%, 60%, 50%, 40%, 30%

I have a form

In following way:

CASE

Average room rate

Padding

RP

1

$60

100%

60

2

$70

86%

60.2

3

$80

75%

60

4

$90

67%

60.3

5

$100

60%

60

6

$120

50%

60

7

$150

40%

60

8

$200

30%

60

After customizing form

First step

Calculate margin

Margin contribution

=Total mContribution margin/Total operating profit

In following way:

CASE

Average price per room

Variable price for a single room

Deposit margin of one number

Number of rooms sold

Income

Total Variable Cost

Total contribution margin

Margin contribution

1

60

39

21

250

15000

9750

5250

35.00%

2

70

39

31

215

15050

8385

6665

44.30%

3

80

39

41

188

15000

7332

7668

51.10%

4

90

39

51

168

15075

6552

8523

56.30%

5

100

39

61

150

15000

5850

9150

61.00%

6

120

39

81

125

15000

4875

10125

67.50%

7

150

39

121

100

15000

3900

11100

74.00%

8

200

39

161

75

15000

2925

12075

80.50%

Second

Calculate a fixed room rate

Fixed price for a single room

=Fixed price/Sold nights

In following way:

Column 1

Number of rooms

Padding

Number of nights sold

Fixed costs

Fixed price for a single room

1

250

100%

250

5000

$20

2

250

86%

215

5000

$23.26

3

250

75%

188

5000

$26.60

4

250

67%

168

5000

$29.76

5

250

60%

150

5000

$33.33

6

250

50%

125

5000

$40

7

250

40%

100

5000

$50

8

250

30%

75

5000

$66.67

Last

Calculate profit per number

Profit per number

=Profit margin - fixed price per room

Margin contribution

=RevPAR*Contribution Margin Ratio

In the following way:

Column 1

1

2

3

4

5

6

7

8

RevPAR

60

60.2

60

60.3

60

60

60

60

Margin contribution

35%

44.30%

51.10%

56.30%

61%

67.50%

74%

80.50%

Margin contribution

21

26.6

30.7

34

36.6

40.5

44.4

48.3

Average fixed cost per item sold

20

23.26

26.6

29.76

33,33

40

50

66,67

Marginal Benefits

1

3.34

4.1

4.24

3.27

0.5

-5.6

-18.37

You can see it at a glance, right?