Luxury items, such as high-end watches think Rolex or cars think Porsche , cost more to buy than more consumer-friendly items think Casio and Hyundai, to use the watch and car examples. Luxury companies achieve profit on price point and not volume; vice-versa, companies not peddling luxury goods rely on volume over price. The example extends to the hotel space. Removing expenses that accompany the sales of rooms, selling less rooms which drives down occupancy rate at a higher price point can achieve similar results as selling more rooms which drives up occupancy rate at a lower price point.
Unlike Anything Before Results are only as good as the data used to crank them out. There is little argument that COVID will not only end up causing more harm to the hotel industry than any other prior event, but also, conceivably, permanently alter hotel form and function—from construction and design to operations.
A complete paradigm shift. Consider the complimentary breakfast that many select-service brands served guests, traditionally through a buffet-style convention. That just might go the way of the dodo; which is to say replaced by an alternative, such as a grab-and-go styled offering. And while it could be seen as a minus for the guest experience, it could end up being a plus for hotel owners.
Overall, Isenberg sees long-term expenses going down. The pivot now is to recovery time and what that tail will look like. That's how Bob Rauch, CEO of RAR Hospitality, a San Diego-based management company, views it, in what he refers to as "the new normal" that includes safety and sanitation protocols that are hospital grade and "never been seen before in our industry," he said.
Rauch sees the select-service space as setting the bar for the return of travel demand, believing they "will be able to drive a significantly higher rate than economy, hence reducing the occupancy break-even bar," he said.
Luxury, he predicts, will flounder for some time, struggling with selling rooms coupled with continued high payroll costs. Meanwhile, Rauch believes the extended-stay model is a winner in the new normal due to reduced housekeeping costs and turnover. However, the prevailing notion among the industry as a whole is that most segments will embrace and operationalize an extended-stay model when it comes to cleaning that calls for non-daily housekeeping save for amenities replenishment , which could mitigate labor costs.
After years and quarters of positive profit gain for hotels, COVID has forced hoteliers to think differently and consider break-even modeling. Running a hotel that loses money is not a viable business model and with occupancy globally taking a hit, it is incumbent on hoteliers to consider what occupancy rate will allow a hotel to sustain operations. The sooner the better and with the hope that the break-even occupancy rate is only a short-term necessity.
Subscribe to HotStats and get emails delivered straight to your inbox about new resources and insights. Two decades ago, hotel salespeople were given a set of targets to meet based upon the total number of rooms they needed to sell.
If they met their targets, they were awarded with a bonus. These bonuses were based on how far they exceeded their booking goals, which were expressed as a percentage of rooms occupied.
Since the early s, hotels started shifting their focus away from occupancy rates and more towards a measurement known as RevPAR. RevPAR stands for revenue per available room.
It is calculated by dividing the actual room revenue by the number of rooms available. Another important statistic we should mention is ADR, which stands for average daily rate. ADR is calculated by dividing room revenue by the number of rooms sold. Therefore, it is important to look at the occupancy rate together with any of the metrics that take revenue into account. The hotel industry has taken a serious hit beginning in February In May , the hotel occupancy rate in Europe saw the most dramatic effects of the virus, with occupancy rates as low as The graph below from Statista shows the monthly hotel occupancy rates worldwide covering , and , in the U.
There are no hard and fast rules when it comes determining the best occupancy rates for your hotel. What is good for your hotel, may be not good for another hotel. And vice versa. You can find the local occupancy rates in your area in the Hotel Price Reporter dashboard.
Navigate to the Local demand tab, to get day-by-day occupancy rates displayed as percentages for the local area. Once you know the average occupancy in your area, you should aim to reach it for a start. This feature is limited to our corporate solutions. Please contact us to get started with full access to dossiers, forecasts, studies and international data.
You only have access to basic statistics. This statistic is not included in your account. Skip to main content Try our corporate solution for free!
Single Accounts Corporate Solutions Universities. Premium statistics. Read more. In May , the hotel occupancy rate in Europe saw the most dramatic effects of the virus, with occupancy rates of Hotel occupancy rates The occupancy rate of a hotel is the share of available rooms that are occupied or being rented during a given time.
The hotel industry in the United States accounted for billion U. You need a Single Account for unlimited access. Full access to 1m statistics Incl.
Single Account. View for free. Show source. Show detailed source information? Register for free Already a member? Log in. More information.
Other statistics on the topic. Accommodation Leading hotel companies worldwide , by number of properties. Accommodation Sales revenue of selected leading hotel companies globally
0コメント