Revenue Manager @ Hotel Home In By Amrik Sukhdev India | 1278 Followers
17 days ago

Hospitality Tip Of The Day (54)
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Fair Market Share
What is the meaning/definition of Fair Market Share in the hospitality industry?
Fair Market Share is an indication that a hotel’s overall performance stacks up against its immediate competitors.
A hotel within a competitive set can work out if it’s getting its Fair Market Share through a simple calculation:
Fair Market Share = Total number of rooms at the hotel / Total number of rooms in the comp set
However large or small the comp set, a hotel trying to make itself more competitive can use a Fair Market Share tool to compare its individual percentage to their comp set.
During peak times, a hotel can gather important info about the performance of the other hotels in their comp set. Then, using a Fair Market Share tool, it can discover how it compared to other hotels during those busy times. This can help when planning ahead.

Revenue Manager @ Hotel Home In By Amrik Sukhdev India | 1278 Followers
17 days ago

Hospitality Tip Of The Day (53).
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Calculating The Room Rate Spread:-

Rate Spread is another important matrix used by revenue management team in large hotels or by the front office manager in smaller hotel operations.

The value for rate spread is derived from various room types in the hotel in order to make essential yield decisions by the hotel management. Rate Spread is calculated by taking the difference between Potential Average Double Rate and Potential Average Single Rate.

The Formula for Calculating Rate Spread

Rate Spread = Potential Average Double Rate - Potential Average Single Rate

Rate Spread of Hotel:

Example

Potential Average Single Rate = 150.00
Potential Average Double Rate = 225.00
Rate Spread of the hotel = 225.00 - 150.00
= 75.00

Example 3 (Monthly Rate Spread):

Potential Average Double Rate For the Month = 158.88

Potential Average Single Rate For the Month = 129.69

Rate Spread of the hotel = 158.88 - 129.69

= 29.19

Revenue Manager @ Hotel Home In By Amrik Sukhdev India | 1278 Followers
17 days ago

Hospitality Tip Of The Day (52)
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The role of rate parity agreements
Due to the power OTAs have in the on-line world, they typically insist on a clause in their contract commonly referred to as rate parity. Rate parity prevents hotels from offering a lower price elsewhere on the Internet, including to customers that try to book directly with the hotel itself.
Rate parity agreements are essential to preserving the OTA commission model. This is because the price the guest pays would be the same no matter whether they book via a third-party website or directly with the hotel.
With rate parity agreements hotels are actively prohibited from marketing any rate which is cheaper than the rate offered by the OTA. This makes hotels unable to offer a lower price to customers that book direct, even though the cost for customers arriving directly is insignificant.
Hotels can monitor rate parity compliance of their own hotel and the ones of their competitors via a rate shopping platform. The premium plan of Hotel Price Reporter includes a rate parity monitoring service.

Revenue Manager @ Hotel Home In By Amrik Sukhdev India | 1278 Followers
17 days ago

Hospitality Tip Of The Day (51)
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What is rate parity?
Rate parity is a legal agreement between a hotel and an OTA.
It obligates the hotel to provide the same rate for the same room on all sales channels. Rate parity covers all rooms in all public configuration options.
For example: Hotel XYZ sells an ocean-view double room for a 2 night stay with breakfast for $200 on their own website. Under the rate parity agreement, they have to offer the same room at the same rate to Expedia and GO-MMT if they want to be listed there.
Why is rate parity important?
Rate parity is essential to the OTAs because it preserves and maintains their business model.
If guests know that they can save by booking directly with the hotel, they will do it. If enough people do that, then the current business model of the OTAs would be invalidated.

Revenue Manager @ Hotel Home In By Amrik Sukhdev India | 1278 Followers
17 days ago

Hospitality Tip Of The Day (50)
#hospitalitytipoftheday (Daily Hospitality tip for hotelier)

How do you calculate your hotel RGI?

Here’s what you need to do to calculate your hotel’s RGI.
Decide on a period you are going to be looking at. This can be a week, a month or an entire year of trading.
Calculate your own hotel’s RevPAR.
Calculate the local market’s RevPAR. You can use the help of a rate shopper for this purpose. You can find out what a rate shopper is in this blog post.
Divide your own hotel’s RevPAR with the local market RevPAR figure.
Multiply this number by 100.
Here’s how this looks: RGI = (Your Hotel RevPAR / Local market RevPAR) * 100
How do you calculate your RevPAR?
There are two different ways you can compute RevPAR for your hotel:
Formula: RevPAR = Average Daily Rate * Occupancy Rate
Formula: RevPAR = Total Room Revenue / Available Rooms