### Planning and Evaluating Operations

```Planning and Evaluating
Operations
1
Occupancy Ratios
• Measures the success of the front office in
selling rooms.
– Common data includes:
•
•
•
•
Number of Rooms Available for sale
Number of Rooms Sold
Number of Guests
Net Rooms Revenue
2
Occupancy Ratios: Occupancy Percent
• Proportion of rooms sold or occupied during a
specific time period (Day, Month, Year)
• Rooms Occupied / Rooms Available
• Example : Rooms Occupied = 750; Rooms
Available = 1000
• 750 / 1000 = .75 or 75%
3
Occupancy Ratios: Average Daily Rate (ADR)
• The average of all the room rates on the
property.
• Room Revenue / Rooms Sold
• Example: Room Revenue = \$125,000 and
Rooms Sold = 700
– \$125,000 / 700
4
Occupancy Ratios: REVPAR
• Measures Financial Performance
– Based on Total Available Rooms
• Room Revenue / Available Rooms
• Example: Room Revenue = \$125,000 and
Available Rooms = 1000
• \$125,000 / 1000
• Revpar = \$125.00
5
Occupancy Ratios:Yield Statistic
• Ratio of actual room revenue to potential room
revenue.
• Actual Rooms Revenue / Potential Room Revenue
• Example: Rack rate = 189.00; Number of Rooms sold
= 700
• Potential Room Revenue = \$189 X 700 = \$132,300
• Actual Revenue was \$105,623
• \$105,623 / \$132,300
• = 79%
6
Occupancy Ratio Exercise
• Last night the Triple Diamond Resort reported
the following:
• 1,250 rooms were available for sale; 1,132
rooms were sold; Room revenue was \$201,858
and the rack rate for the evening was \$209.00
• What was the Occupancy Percent? What was
the ADR? What was the Revpar? What was the
Yield Statistic?
7
Budgeting for Operations
• Most important long term planning function.
– Revenues
– Expenses
• Used to evaluate the actual results of the
operation.
8
Forecasting Room Revenue
• Rooms Available X Occupancy Percentage X
– Rooms Available = 43,800
– Occupancy % = .76 (76%)
• 43,800 X 76% X \$132.66 = \$4,415,986
9
Estimating Expenses
• Direct Expenses (Payroll, Guest Supplies,
Laundry)
– Vary in proportion to rooms revenue
– Historical Data can be used based on a percentage
of room revenue.
10
Examples
• Room Revenue = \$1,997,280
– Payroll = 17.6%
• Estimated Payroll = \$351,521
• \$1,997,280 X 17.6%
– Guest Supplies = 3.2%
• Estimated Laundry = \$63,912
• \$1,997,280 X 3.2%
11
• Sample Profit and Loss Statement
12
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