Occupancy in the hospitality sector

The formula for calculating the occupancy is done by simply applying the following formula: Occupancy (OCC) = Number of rooms that are sold/ Available number of rooms Part B ADR stands for average daily rate, which is also known as KPI that is basically used to measure the performance of hotels. The formula that is used for calculating the ADR is: ADR= Revenue of the room/Total number of rooms old Part C Revenue per available room is denoted by RevPAR, it is one of the

Revenue Management

1 | P a g e R e v e n u e M a n a g e m e n t
Table of Contents
Answer to question 1.............................................................................................................................1
Part A................................................................................................................................................1
Part B.................................................................................................................................................1
Part C.................................................................................................................................................1
Answer to question 2.............................................................................................................................1
Answer to question 3.............................................................................................................................3
Answer to question 4.............................................................................................................................3
Answer to question 5.............................................................................................................................4
Answer to question 6.............................................................................................................................5
References.............................................................................................................................................7

2 | P a g e R e v e n u e M a n a g e m e n t
Answer to question 1
Part A
While analysing in the hospitality sector, the occupancy indicates the number of rooms that
are occupied by the customers (Sturman, Corgel & Verma, 2011). The performance of hotel
is found by checking the percentage of available rooms and the beds that are booked. It is
necessary to keep track about the bookings regularly this helps hotel manager to calculate the
average daily rate and check the future demand.
The formula for calculating the occupancy is done by simply applying the following formula:
Occupancy (OCC) = Number of rooms that are sold/ Available number of rooms
Part B
ADR stands for average daily rate, which is also known as KPI that is basically used to
measure the performance of hotels. The average price of each room is calculated everyday so
that it is sold accordingly(Landman, 2018). ADR is a factor that is used by hotels to improve
their performance so that revenue and profit margins could also be increased.
The formula that is used for calculating the ADR is:
ADR= Revenue of the room/Total number of rooms old
Part C
Revenue per available room is denoted by RevPAR, it is one of the important factors to
calculate the key performance of the hotel. It is a key factor that is used to determine the
revenue earned by a hotel at a specific time period (Landman, 2018). The performance can be
evaluated by comparing the figures calculated using PrePAR and the computed set of the
hotel.

3 | P a g e R e v e n u e M a n a g e m e n t
The formula that is used for calculating RevPAR is as follows:
Revenue per available room = Rooms revenue / Number of rooms available
Answer to question 2
The STR report of hotel can be calculated by following three findings that helps in analysing
the hotel performance and conditions (Chathoth, Ungson, Harrington & Chan, 2016). Listing
the three key findings:
 By analysing the STR report, it can be said that RevPAR is quiet well of the hotel.
From the analysis it was found that, revenue is increased by 25.5% of the week and on
the other had the comp set of hotel that is the market contribution has increased only
by 3.3%. If analysing the performance of hotel in terms of revenue it is quiet
satisfying (Chathoth, Ungson, Harrington & Chan, 2016).
 Considering the average daily rate it was found that ADR of hotel has shown a huge
change and it was found that it got decreased by 9.8% in the whole week. If it is
calculated of the competitors it was observed that it got reduced only by 3.4%. The
reduction in ADR directly impacts the occupancy of the hotel. This factor somewhere
degraded the performance of hotel (Baum, et. al, 2016).
 As last comparing the occupancy factor of the hotel as compared to other hotels, it
was found that occupancy is better than the other competitors. It is seen that the
occupancy increased by 39.1% and came to 91.8%. This happened because of low
ADR ratio during the recent week. The market occupancy also changed and it was
increased by 6.9% (Baum, et. al, 2016). Thus, from the analysis it was found that
hotel has performed well as compared to the compset.

4 | P a g e R e v e n u e M a n a g e m e n t
From all the above analysis, it can be concluded that the performance of hotel is up to make
and good enough from all the other competitors in terms of revenue and occupancy. The best
performing days of hotel is Sunday and Monday to Thursday (Enz & Thompson, 2011). The
occupancy of hotel is poor on Friday which reduces the ADR ratio. This future decreases the
revenue of the hotel and lowers the market PevPAR. It was found that on weekends and
Friday the occupancy of room was high but still the revenue is less as compared to other
days. If discussing the fact about Saturdays and Sunday it is found that occupancy was high
as compared to other days but it was lower that the market (Enz & Thompson, 2011).
The reason behind the bad performance of these days was less demand in the market or less
number of customers arriving at the hotel. The other reason is related to the service that was
provided by the hotel, the high quality service was not offered due to rush and more demand
(Carr,Ruhanen & Whitford, 2016). The service was not up to the mark due to which the daily
rates were increased. Thus, the overall performance of hotel was affected by such conditions.
Answer to question 3
There are many ways through which performance of hotel can be evaluated, one such way is
through STR report and other ways through which action plan could be decided and
performance could be improved are listed below:
 The competitors could be analysed by creating excel sheet and other tools that can
help hotel managers to make correct decision. One such tool is hotel competitor
analysis tool that allows making comparison on different parameters (Buhalis &
Amaranggana, 2015). The hotel managers make use of this tool so that they can
access the strategies and plans used by the competitors and then make future planning

5 | P a g e R e v e n u e M a n a g e m e n t
so that analysis could be done. The spread sheet should be in proper format so that
strengths and weaknesses could be found. The aim of this tool is to improve the
performance by making the modifications in the action plan and then improving the
area in which modification is required (Buhalis & Amaranggana, 2015).
 The other method that is used for mentoring the performance of hotel is search engine
optimization that is denoted as SEO. This method is widely adopted by many hotel
managers to analyse the competitors and improve the brand image and make it
popular among customers (Enz, 2010). This factor helps in bringing the hotel in the
top most search list so that customers are attracted towards the hotel. When customers
look for a hotel in a particular city then search it with the phrase” top hotel in the
desired city. SEO then displays thousands of results but ranking it accordingly to the
popularity. Thus, customers mostly tend to choose the top results displayed by SEO.
Hence, it is an additional feature that is used by hotel managers so that they can bring
their hotels in the top search. SEO also support hoteliers to search and update their
competition on the online platform (Berry, LaGreca & Bruynzeel, 2018). This is how
the hotel managers can properly analyse their competitors at time of improving their
searches.
Answer to question 4
Yield management deals with reaching to the right customers at the right time with the
correct product (Dhiman, 2016). Some of the yield management techniques that are used to
improve the overall performance are discussed are:
 Establishing the market segment- This strategy is used in yield management by the
hotel manager in which they divide the target audience into various segments and sub-

6 | P a g e R e v e n u e M a n a g e m e n t
segments. It supports the managers to look the requirements according to the location
and then design policies so that customers are attracted towards it (Gretzel, Sigala,
Xiang & Koo, 2015). The sub segments are analysed and then facilities are offered so
that customers could be targeted and revenue could be increased.
 Open pricing strategy- This helps in making pricing decisions so that profit margins
could be maximised. It makes the decisions by checking the demand of each segment.
It also allow hotel to define different pricing policies so that customers choose the
best option that is available (Gretzel, Sigala, Xiang & Koo, 2015). The room prices
should be adjusted according to the demand and they should not be fixed. Fixing the
price according to the demand will help hotel to enhance adaptability and flexibility.
Additionally, the pricing strategy states that best discount offer should be offered to
customers rather than just giving fixed discount.
 Maintain demand calendar- This technique is used by the managers to make
decisions by analysing the statistical data that is maintained. The demand calendar
also helps in measuring the overall profit margins and revenue generated by the
hotels. It also helps in knowing the positive as well as negative demand in the market
(Budeanu, Miller, Moscardo & Ooi, 2016). The performance could be improved if
the demand of customers is known clearly especially the consequences faced on
Friday and Sunday could be resolved (Ladkin & Buhalis, 2016).
 Maintenance of data- The accurate data and past records should be maintained so
that right decisions could be taken on time. The correct data helps in analysing the
situation and male correct pricing decisions so that revenue margins could be
increased and the yield of hotel could also be increased (Ladkin & Buhalis, 2016).
 Focusing on direct booking- The direct booking should be promoted by hotel
manager’s that audience gets attracted towards it. Theses time of steps contributes in

7 | P a g e R e v e n u e M a n a g e m e n t
increasing the revenues of hotel. Thus, the website should be designed in a user
friendly way and should remain updates so that customers can making their booking
easily and also choose among all the other options (Battour & Ismail, 2016). The pre
booking can help the hotels to improve their service and management department.
Answer to question 5
Some of the stakeholders to which these strategies need to be communicated are as
follows:
 Suppliers- One of the stakeholders who take part in such activities is suppliers
they supply various stuff so that demand of customers are fulfilled. They also
offer a detail listing of all the products in a summarised way so that suppliers can
bring up innovative strategies (Pojasek, 2017). They also design monthly
subscription plans, newsletter or advertisement so that all the information
regarding the hotel is reached to the customers.
 Investors- The other stakeholder that takes part in the property is the investors.
They are the audience who invest in such properties so that they can get their
money back with higher interest. The amount of interest is completely dependent
on the profit margins of the hotel. The more the investors better is the yield
management. The investors can be made by building regular conference calls and
meeting so that they can remain updated (Pojasek, 2017). Both the written and
oral communication allows the hotelier to share the strategies with investors and
to have feedback on the same. The assistant is done by the investors in form of
funds.
 Employees- They are one of the main stakeholders as they are the one who are
responsible for overall working of hotel and other factors. They assure that there is

8 | P a g e R e v e n u e M a n a g e m e n t
clear communication between the staff members and employees. They conduct
formal meeting so that management is done accurately (Papadopoulos &
Hamzaoui-Essoussi, 2015). They work together in a direction so that profit
margins and revenue could be increased. They are allowed to provide new and
innovative ideas regarding the same so that more audience gets attracted.
Answer to question 6
Aside from the rooms, the two territories where yield administration techniques can be
connected are the marketing department and the sales departments that aim to bring most
recent innovation in the hotel. Procedures that can be utilized in these two zones:
 Designing the demand logbook implies keeping the hotel technology innovated and
refreshed according to the need of customers as this will pull in more visitor and yield
more income. It will likewise be useful for the promoting office as it will keep them
refreshed with the current interest and costs of the rooms and administrations given by
the inn (Xiang, Magnini & Fesenmaier, 2015). They keep the marketing department
updated so that services and prices of the rooms are provided by the hotel.
 Pricing system is the one which can be connected by advertising deals in the office
while charging from the shoppers for the administrations. Additionally the inn must
guarantee that the innovation bought ought to be at sensible costs.
 Data support is another technique which will most likely help in smooth working of
both the divisions. Individuals in advertising and deals must stay up with the latest
information identified with the interest and supply(Xiang, Magnini & Fesenmaier,
2015) . It helps in making the functions smooth so that demand and supply remains
balanced.

9 | P a g e R e v e n u e M a n a g e m e n t
References
Battour, M., & Ismail, M. N. (2016). Halal tourism: Concepts, practises, challenges and
future. Tourism management perspectives, 19, 150-154.
Baum, T., Cheung, C., Kong, H., Kralj, A., Mooney, S., Ramachandran, S., ... & Siow,
M. L. (2016). Sustainability and the tourism and hospitality workforce: A thematic
analysis. Sustainability, 8(8), 809.
Berry, S., LaGreca, A., & Bruynzeel, P. (2018). Using Data & Texting to Increase
Retention: A Success Story at the Oregon Tech Institute of Technology.
Budeanu, A., Miller, G., Moscardo, G., & Ooi, C. S. (2016). Sustainable tourism,
progress, challenges and opportunities: an introduction.
Buhalis, D., & Amaranggana, A. (2015). Smart tourism destinations enhancing tourism
experience through personalisation of services. In Information and communication
technologies in tourism 2015 (pp. 377-389). Springer, Cham.
Carr, A., Ruhanen, L., & Whitford, M. (2016). Indigenous peoples and tourism: The
challenges and opportunities for sustainable tourism. Journal of Sustainable
Tourism, 24(8-9), 1067-1079.
Chathoth, P. K., Ungson, G. R., Harrington, R. J., & Chan, E. S. (2016). Co-creation and
higher order customer engagement in hospitality and tourism services: A critical
review. International Journal of Contemporary Hospitality Management, 28(2), 222-
245.
Dhiman, M. C. (Ed.). (2016). Opportunities and Challenges for Tourism and Hospitality
in the BRIC Nations. USA: IGI Global.

10 | P a g e R e v e n u e M a n a g e m e n t
Enz, C. A. (Ed.). (2010). The Cornell school of hotel administration handbook of applied
hospitality strategy. California: Sage.
Enz, C. A., & Thompson, G. (2011). The Hotel Competitor Analysis Tool (H-CAT): A
Strategic Positioning Tool for Managers. Cornell Hospitality Tools, 2(3), 6-12.
Gretzel, U., Sigala, M., Xiang, Z., & Koo, C. (2015). Smart tourism: foundations and
developments. Electronic Markets, 25(3), 179-188.
Ladkin, A., & Buhalis, D. (2016). Online and social media recruitment: Hospitality
employer and prospective employee considerations. International Journal of
Contemporary Hospitality Management, 28(2), 327-345.
Landman, P. (2018). Revenue Management Strategies. Retrieved from
https://www.xotels.com/en/revenue-management/revenue-management-strategies-for-
hotels
Papadopoulos, N., & Hamzaoui-Essoussi, L. (2015). Place images and nation branding in
the African context: Challenges, opportunities, and questions for policy and
research. Africa Journal of Management, 1(1), 54-77.
Pojasek, R. B. (2017). Organizational risk management and sustainability: A practical
step-by-step guide. Boca Raton: CRC Press.
Sciences, 3(3), 20-27.
Sturman, M. C., Corgel, J. B., & Verma, R. (Eds.). (2011). The Cornell school of hotel
administration on hospitality: cutting edge thinking and practice. New Jersey: John
Wiley & Sons.

11 | P a g e R e v e n u e M a n a g e m e n t
Xiang, Z., Magnini, V. P., & Fesenmaier, D. R. (2015). Information technology and
consumer behavior in travel and tourism: Insights from travel planning using the
internet. Journal of Retailing and Consumer Services, 22, 244-249.