What is RevPAR?
RevPAR meaning and formula
Before diving into strategies to improve RevPAR, let's clarify the RevPAR meaning and formula. RevPAR or Revenue Per Available Room measures a property’s ability to fill its rooms at an optimal price.
How to do the RevPAR calculation? You can calculate RevPAR by dividing the total room revenue by the total number of available rooms or by multiplying the Average Daily Rate (ADR) by the occupancy rate (OCC).
- Formula 1: RevPAR = total room revenue / # available rooms
- Formula 2: RevPAR = ADR x OCC rate
By understanding the RevPAR meaning and RevPAR formula, you can ensure that every room and every guest contributes to your accommodation’s profitability.
#1 - Increase RevPAR by improving your occupancy rate
As becomes clear from the RevPAR meaning and RevPAR formula, your occupancy rate can be an important determining factor. The best way to raise your occupancy rate is by enhancing your online visibility. This allows more potential guests to find your accommodation, resulting in more bookings.
However, the real art lies in converting this increased occupancy into higher Hotel RevPAR by setting optimal room prices.
#2 - Increase RevPAR by optimising your room pricing
Room pricing is key to increasing hotel RevPAR. If you want your rooms to generate more revenue, you need to offer the right price at the right time to the right customer.
The best way to maximise the RevPAR of your hotel or accommodation is to implement dynamic pricing. Adopting a dynamic pricing strategy ensures your accommodation remains competitive and maximises revenue during peak seasons, without compromising occupancy during calmer periods.
It goes without saying that your room prices should respond to demand fluctuations. Depending on your target audience, you can charge higher rates during weekends, peak periods like school holidays, well-known events happening nearby… Also take into account competitors’ prices and your own occupancy rate. For example, if you often have inventory left for certain periods, you could apply a lower last-minute rate (keeping in mind the added cost of filling those extra rooms) to increase RevPAR.
Searching for a feasible way to apply dynamic pricing? You can automate this process with the Pricing Assistant connected to Cubilis. This powerful tool is proven to boost RevPAR by recommending optimal prices based on data and AI, ensuring your pricing is both competitive and profitable. Try it for free or contact us for more info.
#3 - Increase RevPAR by upselling higher-value packages and extras
Technically, RevPAR looks at your room revenue without any additional products or services sold alongside it. However, selling extras and packages contributes to the same goal: increasing your revenue and thus enhancing your profitability.
Upselling is a great way of increasing your revenue per booking. Offer nice extras and higher-value packages to encourage guests to spend more for a richer experience or for extra services like meals, a bottle of champagne, spa, guided tours, bike rental... Be sure to showcase these packages on your website with enticing descriptions and photos and make them directly bookable with a link to your Booking Engine!
#4 - Increase RevPAR by generating more direct bookings
Direct bookings can significantly improve your RevPAR and reduce commission costs as an added bonus. In 2023, our clients’ average booking value of direct bookings was 30% higher than the average price of OTA bookings. Conclusion? Your own website offers upsell opportunities and travellers who book directly tend to spend more, whereas OTA clients are often looking for low-cost options.
To receive more direct bookings, you need a professional website with clear calls to action and a seamless direct booking process. Add the Cubilis Ratebox to your homepage (our price comparison pop-up) to highlight the benefits of booking directly.
Why is the Ratebox so essential? Recent analysis of our customers’ direct booking results (2023) indicates that clients with a good Booking Engine and Ratebox on average receive 38% direct bookings, as opposed to 17% with a less optimal booking module and no Ratebox.
What makes a good Booking Engine?
- Real-time availability
- At least 3 to 5 high-quality photos per room type
- Straight-forward steps
- Clear room descriptions & amenities
- Custom colours that match your branding
- Instant booking (no booking request)
- Secure payment options
For more direct booking tips, be sure to download our free eBook.
Boost your RevPAR efficiently with the help of Cubilis
With the Cubilis Channel Manager and Booking Engine, you can efficiently put the above tips into practice. Fill out the form below to request a free product demo and 14-day free trial of Cubilis, including the new Pricing Assistant!
