BOULDER, Colorado—Revenue-per-available-room performance is a factor of both occupancy and average daily rate; each individual hotel achieves RevPAR performance through a unique combination of both. Even while operating in the same environment, hotel managers will push one metric harder than the other depending on the unique attributes of their asset.
A new tool from STR Analytics allows an individual property to view the various positions and benchmark those achievements within its competitive set. The RevPAR Positioning Matrix allows a more in-depth understanding of the performance strategies achieved in your market.
Figure 1 shows the RPM for one month of competitive data. Each data point represents a competitor and the numeral represents that competitor’s RevPAR ranking for that month. In this figure, the subject property, represented by the orange data point, achieved a RevPAR ranking of 3.
The crosshairs of the graph surround the subject, creating a four quadrant grid, each section of the grid representing a different level of performance. Properties that outperformed the subject in both ADR and occupancy will be in the upper-right quadrant, properties that outperformed in occupancy but underperformed in ADR will be in the lower-right quadrant, and so on. In the example, two competitors outperformed the subject in terms of monthly RevPAR ranking, both doing so by achieving lower rates at higher occupancy levels. Only one property outperformed the subject in rate, but that property ranked fourth in overall RevPAR.
The RPM tool is useful to gauge which strategies are clearly working most effectively in a particular comp set. The tendency to discount rates has never been more prevalent than during the previous two years and the RPM would illustrate the effectiveness of those decisions and how effective those decisions were for each participant in a comp set. As rates were discounted, did those properties doing the discounting effectively increase occupancy? And if so, did they improve their actual RevPAR rank in the process?
Studying an RPM graph over a longer period of time can also prove insightful. For example, a property might be the market leader and comfortable at their position. But how far behind are its competitors? Are they creeping up by employing effective revenue management strategies?
Similarly, the RPM can be used to study the effectiveness of a long-term (multi-month) revenue management campaign and can also be used to help shift strategy mid-campaign if warranted by competitor movement.