During a lunch in London we started discussing an article we read online about RevPAR, RevPAS, GOPPAR, RevPD and all the abbreviations there are out there to measure your business with. We even got a few new ones on our table after speaking to one of our clients; MCP = Management Controllable Profit. The Conclusions where that there will always be new ways of measuring the business of hotels and venues. Still, our discussion continued and the RevPAS for Hotel Rooms versus RevPAS on Conference Rooms came up as an interesting point of debate – Which actually makes more per square meter? I said bedrooms, and James could not quite make up his mind, but we both agreed that it would be interesting to see if it is possible to do?
So, Back in the office we put together a case study with some data from the Stockholm market on Hotel Rooms (Data collected from December 2009 STR Global):
• Number of Hotel Rooms: 15842
• We estimated each hotel room in Stockholm to have 25m2 so in total in December there were 12.277.550m2 available
• Revenue: 26.888.944 €
• Occupancy: 53,8%
This will give RevPAS (Revenue Per Available Square Meter) on Hotel Rooms at 2,19 €
We did the same for the data we have in The Conference Bench December 2009:
• Number of available conference square meters: 1.246.417m2
• Revenue: 4.924.729€
• Occupancy: 18,48%
This will give RevPAS (Revenue Per Available Square Meter on Conference Rooms at 3,95 €
Looking at the result, we see clearly that there is more € per square meter made in The Conference Department than on the hotel rooms. Still putting all the cost you have per hotel room vs. the conference, for sure the results will shine clear that hotel rooms make more money. This is another story.
Our conclusion is that with the result we have here as our case study plus speaking with our clients and other industry people, is that Conference and Banqueting needs more focus as there are plenty of money to make there when leaving the “First come first served” practice. Think Total Revenue Management in your hotel and make sure you start practicing Revenue Management on your C&E space. Make sure you know your demand pattern, with help from The Conference Bench, also see the demand pattern on the market and in your competitive set. Do you think your hotel makes more money per square meter in its conference space or in its bedrooms? I am sure there will be some calculators humming away in some of our venues!
