# 1 Planning and Evaluating Operations. 2 Occupancy Ratios Measures the success of the front office in selling rooms. –Common data includes: Number of Rooms.

## Presentation on theme: "1 Planning and Evaluating Operations. 2 Occupancy Ratios Measures the success of the front office in selling rooms. –Common data includes: Number of Rooms."— Presentation transcript:

1 Planning and Evaluating Operations

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

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 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 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 Sample Profit and Loss Statement

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