How to Calculate the Average Room Rate Using Hotel RMS?

The concept behind calculating the average room rate is to determine the price of the room in real time For this, you need to understand the occupancy rate which can be calculated using revenue management software. Undoubtedly, the peak season is the best time for every hotel owner to have a 100% occupancy rate. Here RMS software can help in understanding how to calculate the occupancy rates in your hotel

What is the formula to calculate the occupancy rate of a hotel?

An occupancy rate is the percentage of occupied rooms in your hotel at a particular time. To carry out the correct calculation, you need to have the following data such as room occupancy, desired profit, average daily rate(ADR), price floor and own costs

The simple formula to calculate ADR:

Average daily rate= Total room revenue/Total room sold and

To calculate the occupancy rate:

Number of occupied rooms /number of rooms available x 100

Occupancy rate is an essential KPI(Key performance indicator) that shows how full your hotel rooms are, and can suggest the busiest times for visitors during special events. The best way to raise your occupancy rate is by implementing length of stay limitations(LOS):

● Minimum length of stay- It is a period of high demand that is followed by a period of low demand that is for a longer duration.

● The maximum length of stay- You can charge for additional nights for the visitors who stay longer than the desired length.

● Close to arrival dates- It occurs during high demands and you can maximize your occupancy rate by longer stayovers rather than permitting fresh arrivals.

Wrapping up

Take the advantage of RMS software by PricePoint that uses dynamic pricing to make you understand how to calculate the average room rate of your hotel. It is a modern AI-based revenue management software that can provide a strategy to balance occupancy and ADR that will guarantee you an increase in your occupancy rate by more than 13%.

To know more, click on this link and get in touch with their experts.