1. 1 Planning and Evaluating Operations

2. 2 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

3. 3 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%

4. 4 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 –ADR = $178.57

5. 5 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

6. 6 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%

7. 7 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?

8. 8 Budgeting for Operations Most important long term planning function. Addresses –Revenues –Expenses Used to evaluate the actual results of the operation.

9. 9 Forecasting Room Revenue Rooms Available X Occupancy Percentage X ADR –Rooms Available = 43,800 –Occupancy % =.76 (76%) –ADR = 132.66 43,800 X 76% X $132.66 = $4,415,986

10. 10 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.

11. 11 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%

12. 12 Sample Profit and Loss Statement