Pearson New International Edition International pcl tp indd 1

REVENUE MANAGEMENT
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ccupancy rate of a selected hotel
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ccupancy rate of that hotel's competitive set
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ccupancy index
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For some hotels, an evaluation of monthly or even weekly occupancy indexes may
be misleading, because the hotel’s volume may vary greatly within a week. For exam-
ple, a hotel may run a very strong occupancy index through the week and a much lower
index on the weekends. In other hotels, this trend is reversed. Therefore, many rev-
enue managers monitor their weekday and weekend occupancy indexes separately.
ADR Index
ADR and occupancy percentages are equally weighted components of RevPar.
Therefore, control of ADR is just as important for revenue managers as occupancy
management. Many hoteliers believe that a hotel’s occupancy rate is tied to the hotel’s
selling ability and that ADR is more related to the guest’s perception of value. Guests
who think that the room rates they paid are reasonable are likely to return. Those
without this perception of value are less likely to return. Revenue managers must
ensure a rate structure that maximizes their guests’ feelings of value.
Earlier in the chapter we examined a variety of methods used for determining
initial room (rack) rates. Recall that the development of rack rates is a starting, not
ending, point in managing room rates. Revenue managers continually make decisions
related to transient room discounting, establishment of negotiated rates, and granting
discounts for large groups. In addition, the skillful use of special event rates and
blackout dates significantly affect a hotel’s ADR. If a hotel’s rack rates are essentially
in-line with rates of its competitive set, the ADR index is the industry’s standard for
measuring the effective management of room rates.