Revenue Management Formulas

Few formulas to make life easy.....

1. Potential Average Single Rate

= Single Room Revenues at Rack Rate

Number of Rooms Sold as Singles

2. Potential Average Double Rate

= Double Rooms Revenues at Rack Rate

Number of Rooms Sold as Doubles

3. Occupancy Percentage

= Total Number of Rooms Sold

Actual Number of Rooms

4. Rate Spread

= Potential Average Double Rate – Potential Average Single Rate

5. Potential Average Rate

= (Multiple Occupancy Percentage x Rate Spread) + Potential Average Single Rate

6. Room Rate Achievement Factor

= Actual Average Rate

Potential Average Rate

7. Yield Statistic

= Actual Rooms Revenue

Potential Rooms Revenue

= Room Nights Sold x Actual Average Room Rate

Room Nights Available Potential Average Room rate

= Occupancy Percentage x Achievement Factor

8. Rev Par

= Actual Room Revenue

Number of Available Rooms

= Occupancy Percentage x ADR

9. Equivalent Occupancy

= Current Occupancy Percentage x Rack Rate – Marginal Cost

Rack rate x (1- Discount %) – Marginal Cost

= Current Occupancy Percentage x Current Contribution Margin

New Contribution Margin

10. Required Non-Room Revenue Per Guest

= Required Increase in Net Non- Room Revenue / CMR_W

Number of Additional Guests

CMR_W = Total Non Room Revenue – Total Room Revenue Center Variable Costs

Total Non- Room Revenue

11. Percentage of No-Shows

= Number of Rooms No-Shows

Number of Room Reservations

12. Percentage of Walk-Ins

= Number of rooms Walk-Ins

Total Number of Rooms Arrivals

13. Percentage of Overstays

= Number of Overstay Rooms

Number of Expected Checkouts

14. Percentage of Understays

= Number of Understays Rooms

Number of Expected Checkouts

15. Forecast Formula

= Total Number of Guest Rooms – (Number of OOO rooms + Number of Rooms Overstays + Number of Room Reservations) + ({Number of Room Reservations x % of No-Shows} + {Number of Rom Understays}) – Number of Room Overstays = Number of Rooms Available for Sale

16. Average Guests Per Room Sold

= Number of Guests

Number of Rooms Sold

17. Average Daily Rate

= Rooms Revenue

Number of Rooms Sold

18. Average Rate Per Guest

= Rooms Revenue

Number of Guests