Pearson New International Edition International pcl tp indd 1

REVENUE MANAGEMENT
297

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These examples illustrate that manipulating ADR does, in some cases, make good
sense and can contribute to the achievement of a revenue manager’s RevPar goals.
Evaluating Effectiveness
How do revenue managers evaluate the effectiveness of their occupancy and ADR
management decisions? How are their decisions evaluated by those who supervise
them? Historically, the persons responsible for rate and occupancy decisions have
been evaluated based on the hotel’s occupancy rate and ADR. More recently, RevPar
has been the major factor used to evaluate revenue managers. Currently, some indus-
try observers and professionals have suggested that GoPar is a more useful measure
of effectiveness. General managers and revenue managers should understand the
advantages and limitations of each of the following measurement tools and know
how to use them: occupancy index, ADR index, RevPar index, and GoPar.
Occupancy Index
One question frequently asked by persons with limited knowledge of the hotel indus-
try is, “How’s your occupancy?” The question implies that a high level of occupancy
is good, and that a lower level of occupancy is bad. Even though that may, in fact, be
true sometimes, it is a very limiting approach to occupancy management. In most, if
rooms were sold for $1 per night, the hotel would achieve a sellout each day and
would achieve a 100 percent occupancy rate. However, the hotel would not likely stay
in business despite its good occupancy. If a hotel’s rates are in-line with rates of its
competitive set, the occupancy index is the industry’s standard for measuring the
management of occupancy rates.