• ( If you have differential room pricing ) selling a higher proportion of your higherpriced rooms
RevPAR is useful in the hotel industry as it can be used as a comparator between different hotels within a group , or between hotel groups etc . In your case as the owner of a B & B , there will probably be no opportunity to compare “ RevPAR ” figures with others , and nor would it be of much interest to you in all probability unless it related to your nearest competitors . So another way of measuring the same combination of occupancy and actual achieved price may be preferable to you : simply , the total sales of your B & B ( excluding meals & beverages ) measured over a unit of time – a week , a month , a quarter , a season , or even a weekend .
Total sales in any time period actually gives you the same information as RevPAR , but expressed overall rather than on a “ per room ” basis . Assuming that you have not added or closed any rooms , comparing total sales between two similar periods will be the same as comparing RevPAR between the two periods .
We mention this because we feel that most B & B owners will feel no need to calculate “ RevPAR ” but will be happy simply comparing their total B & B sales figure between periods . After all , it equates to your total gross revenue ( if you don ’ t sell meals or drinks , it will be the same as your total gross revenue ), so it is a very important figure which should always be at the top of your mind !
The measurements above of course measure the income side of the business only ; although in a B & B we do not have a “ raw material ” to buy in as Fred does with his whelks , we do need to keep a close eye too on the outgoings . In a B & B , these are mainly overheads : ie advertising and marketing , insurance , cleaning etc . The closest we come to a “ raw material ” cost is the cost of our property ( mortgage , maintenance , utilities etc .), which of course can be expressed as a cost per day per guest bedroom , but in our case this is an overhead – it is a fixed cost , however many bookings we make .
Direct Costs and Gross Profit ( GP ). There are some direct costs per booking , of course : breakfast ingredients , cleaning , room consumables ( soap , lavatory paper , shampoo , bin bags , tea & coffee etc .) and laundry costs . These also can be calculated pretty accurately on a per room , per night basis . But the important thing to recognize about the B & B business model of course is that these “ direct ” costs are very small relative to the gross sales income . A typical figure might be £ 3 per night direct costs against a sale of £ 60 per night , in which example 95 % of the room price is “ gross profit ” ( GP ).
In this example , £ 3 per room-night is your “ variable ” or “ direct ” cost , so any revenue above that level is a “ contribution ” to your bottom line ( ie to overheads and ultimately to profits ). So selling a room at the last minute at half price (£ 30 ) gives you a £ 27 (£ 30 - £ 3 ) “ contribution ”, not a £ 30 “ loss ”. The concept of “ contribution ” is one to keep in mind in planning all your marketing activities .
Note : these calculations ignore any valuation of your own time ( assuming that you will be doing the work yourselves ). This is valid if you would otherwise be unemployed ,