Post by mdkabila on Mar 11, 2024 21:48:47 GMT -6
Correctly applying revenue management techniques is not sufficient to guarantee optimal financial performance for the hotel. Looking at historical data to predict the future and trying to maximize employment and revenues will not help if in parallel we do not apply a careful analysis of management and distribution costs . Investing in a good revenue management strategy without taking into account spending forecasts, therefore fixed and variable costs , is a bit like doing the math without the innkeeper. For the hotel, management of this type is misleading and potentially dangerous.
Revenue and costs: independent but interconnected In recent times, RMs have stopped using RevPAR as a sole performance indicator, integrating it with other equally relevant indices. In an interesting article , Franco Grasso delves into the differences between fixed and variable costs and gives some Denmark Phone Number useful advice on how to calculate and rationalize them. Grasso explains very clearly how using Costpar (fixed + variable cost per available room) to define the bottom rate is equally misleading as using RevPAR as the sole well-being index of the structure. “But then shouldn't we consider Cost.par as a starting point when developing a price? No! The only value to know is that of the variable room cost , not the Cost.par! Knowing the Cost.
Par of our structure is important to acquire a correct awareness of the costs of the room, but we must not be conditioned in the elaboration of the hotel rate which, instead, lives a life of its own absolutely independent from that of the costs ." The difficulty of calculating the real costs of the structure If the hotel's fixed costs can be calculated more or less precisely, the same cannot be said about the variable costs ; this is why hoteliers often don't take it into account when establishing sales or marketing strategies. Let's take distribution costs : each channel requires a different commission; It is difficult to predict a priori how many rooms will be sold each month on one channel instead of another and therefore how much future total commissions will amount to. The same thing goes for the hidden costs that often escape the hotelier's attention, as Grasso explains: “One for all is the extension.
Revenue and costs: independent but interconnected In recent times, RMs have stopped using RevPAR as a sole performance indicator, integrating it with other equally relevant indices. In an interesting article , Franco Grasso delves into the differences between fixed and variable costs and gives some Denmark Phone Number useful advice on how to calculate and rationalize them. Grasso explains very clearly how using Costpar (fixed + variable cost per available room) to define the bottom rate is equally misleading as using RevPAR as the sole well-being index of the structure. “But then shouldn't we consider Cost.par as a starting point when developing a price? No! The only value to know is that of the variable room cost , not the Cost.par! Knowing the Cost.
Par of our structure is important to acquire a correct awareness of the costs of the room, but we must not be conditioned in the elaboration of the hotel rate which, instead, lives a life of its own absolutely independent from that of the costs ." The difficulty of calculating the real costs of the structure If the hotel's fixed costs can be calculated more or less precisely, the same cannot be said about the variable costs ; this is why hoteliers often don't take it into account when establishing sales or marketing strategies. Let's take distribution costs : each channel requires a different commission; It is difficult to predict a priori how many rooms will be sold each month on one channel instead of another and therefore how much future total commissions will amount to. The same thing goes for the hidden costs that often escape the hotelier's attention, as Grasso explains: “One for all is the extension.