Hotel revenue and stay profitability analytics system
The guide compares the revenues of stays and sales channels to their costs. Demand, cancellations and employment data help consider price changes.
Demand, rates, channel commissions, packages, cancellations, reserved room blocks and service costs are analysed separately. Prices change based on occupancy, not always considering how much revenue remains after deducting the cost of a stay.
How the solution works
- Combine units of stay and available volume
- Agreeing on net income and selected cost volume
- Explain the result of the channel and package
- Evaluate a price or sales cap scenario
- Compare the decision taken with the later fact
Key challenges
- Income management is not sufficiently linked to actual costs
Solution capabilities
Scope of indicators
Separates the room sold at night, available for sale at night and the number of guests. The method of rooms removed for repairs is maintained comparable.
Channel costs
Includes commissions, payment fees, discounts, and an agreed-upon draw. A direct channel is not considered free.
The contribution of the stay
Displays revenue after clearly listed variable costs; this result is not called the final profit of the hotel as a whole.
Demand Script
Appreciates booking rates, cancellations, guaranteed blocks and terms for a specific period of time. Increasing employment is not the only goal.
History of the decision
The recommendation, the assumptions used and the rate actually published remain for comparison. The cost of additional package services is not forgotten.
Business context
- Income management is not sufficiently linked to actual costs
- Demand, rates, channel commissions, packages, cancellations, reserved room blocks and service costs are analysed separately. Prices change based on occupancy, not always considering how much revenue remains after deducting the cost of a stay.
- The stay offer is assessed against the remaining margin
- The same employment can yield different results due to channel commissions, cancellations and service costs. Linked analytics allows for a more reasonable consideration of the price and the mix of sales channels. The hotel can create offers that match the demand and the economy of its service.
Core features
- Scope of indicators
- Channel costs
- The contribution of the stay
- Demand Script
- History of the decision
Key integrations
- Reservations and rates
- Room nights, terms of sale, blocks and cancellations.
- Accounting and channel reports
- Net income, commissions and clearly attributable costs.
Potential impact (%)
The ranges indicate an illustrative relative change in the metric under the stated assumptions. Results depend on the starting position and actual use of the solution. Percentages for different metrics must not be added together.
Preparation time for the profitability assessment
12–36%Decreasing
This illustrative scenario assumes that 30-60% of manual data entry and handover work can be addressed. That share is assumed to fall by 40-60%. Company data is needed to verify both the addressable workload and the resulting change.
Measure working hours to produce the result of a comparable volume of channel and stays.
Cost estimation error
3–16%Decreasing
This illustrative scenario assumes that 15-40% of forecast error is attributable to the data and model used. That share is assumed to fall by 20-40%. Company data is needed to verify both the addressable share and the resulting change.
To measure the absolute difference in the forecast of included variable costs in euro for a comparable stay.
Earnings from available hotel rooms
1–6%Increasing
In the example scenario, 20-40% of the original value of the indicator is associated with the change in hotel prices and sales channels implemented. This share is predicted to grow by 5-15% without other conditions changing.
After the implemented pricing or channel change, the earnings per room available are compared to the same pre-agreed cost volume. The number of rooms and season conditions are compared.
Conditional calculation scenarios. The assumptions have not been validated against client measurements.
When this solution is relevant
- Room prices are measured by occupancy, excluding booking channels and service costs.
- It is difficult to compare the profitability of different guest groups, stays and offers.
Project scope and implementation
Stay income is linked to booking channel, service and other agreed costs. For a small object, a report from existing accommodation and accounting systems may be sufficient. A wider analysis is selected based on the variety of rates, channels and services.
Further development options
- Evaluation of price scenarios with sufficient history and comparable periods of demand.