Hospitality and Tourism Finance Overview

A financial report showing a company's revenue, expenses, gains, and losses during a specific period.

Percentage of hotel rooms occupied during a specific period.

Average price charged per occupied hotel room each day.

Total revenue generated per available room.

Calculating the percentage of rooms occupied during a period. This involves dividing the number of occupied rooms by the total number of rooms available and then multiplying by 100.

Calculating the average price charged per occupied room daily, to evaluate profitability. This involves dividing total room revenue by the number of occupied rooms, or nights sold.

Revenue per available room calculation

Factors influencing the proportion of occupied rooms in a hotel, such as the number of rooms out of order, or rooms allocated to staff.

Revenue per available room. A key hotel performance metric.

Average room rate. The average price charged for a room.

Average price per room per day. Hotel performance metric

Key performance indicators for the income statement, such as net profit and EBITDAR.

Earnings before interest, taxes, depreciation, and amortization. A measure of a company's operating performance.

The point where total revenue equals total costs, resulting in neither profit nor loss.

Direct costs associated with producing the goods sold by a hotel (e.g., food, beverages, raw materials)

Measures a hotel's occupancy rate compared to the average occupancy rate in the market.

The percentage of hotel rooms occupied during a specific period. It's calculated by dividing the number of rooms sold by the total number of available rooms and then multiplying by 100.

The average price charged per occupied room per day. This is calculated by dividing total room revenue by the number of rooms sold.

The total revenue generated by each available room. It's calculated by multiplying the occupancy rate by the Average Daily Rate.

A 1 euro increase in RevPAR directly increases the turnover per room by the value of the number of rooms available over a specific period.

Factors that affect the percentage of occupied rooms include rooms out of order and rooms allocated to staff.

The occupancy rate is calculated by dividing the number of rooms sold by the total number of available rooms and multiplying by 100. The result is presented as a percentage.

The Average Daily Rate is calculated by dividing the total room revenue by the number of rooms sold. This results in the average price per room per day.

RevPAR is calculated by multiplying the occupancy rate by the Average Daily Rate.

The break-even point is the volume of activity (e.g., occupancy) where total revenue equals total costs, meaning no profit or loss. Understanding the break-even point lets us determine how much business is needed to cover expenses and start generating profits.

High COGS can be caused by factors like inflation, poor inventory management, increased supplier prices, waste, incorrect portioning, theft, and more.

MPI measures a hotel's occupancy performance relative to the average occupancy rate in the same market.

Higher labor costs, if not offset by increased productivity, can negatively impact profitability. This can lead to reduced profits or even operating losses.

ARI compares a hotel's ADR (average daily rate) to the average ADR of comparable hotels (comp set) in the same market.

REVPAR is calculated by multiplying a hotel's average daily rate (ADR) by its occupancy rate.