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Bridget Baker Consulting
How to use Spa to drive RevPar
& Room Occupancy
UK Spa & Wellness Conference
10 November 2010
Services to the Hotel & Leisure
Sector
• Market demand studies and financial feasibility
studies
• Acquisition & Due Diligence advice
• Operational reviews
• Strategic advice for existing & new businesses
• Planning advice
• Market positioning and expansion plans
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What is RevPar?
Room Occupancy x AARR
Room Occupancy = ratio of total bedrooms sold
AARR = Average Achieved Room Rate
= Net room rate after taxes, breakfast and
discounting
Why is RevPar important?
• Measure of hotel bedrooms performance
• Allows benchmarking against competition
• Hotel Bedrooms usually represent more
than 50% of total revenue
• Hotel bedrooms usually highest profit
margin in a hotel
What doesn’t it account for?
•Other Revenues including Food & Beverage,
Spa, other leisure
•Non residential business eg Day spa customers
•Retail sales, rentals
•Revenue per square metre
•Cost performance
•Profit levels
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Optimising the RevPar
Hotel A
• Occupancy 55%
• AARR £120
?
Hotel B
• Occupancy 75%
• AARR £88
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RevPar
£66
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Hotel Performance UK
2010 YTD August
Occ%
AARR
Revpar
London
81.9%
£127.37
Country
House
65.3%
£85.54
2009
Occ%
AARR
RevPar
£104.32 81.1%
£126.40
£102.51
£55.86
£85.13
£53.97
63.4%
Where are the Opportunities?
Months
December
November
October
September
August
July
June
May
Ap ril
March
February
January
Occupancy %
Average Occupancy –London Hotels
95.0
90.0
85.0
80.0
75.0
70.0
2010
65.0
2009
2008
Average Occupancy – Country
House Hotels
80.0
75.0
2010
65.0
2009
60.0
2008
55.0
50.0
Months
December
November
October
September
August
July
June
May
April
March
February
45.0
January
Occupancy %
70.0
Seasonality – Days of Week
London
105.0
90.0
75.0
60.0
45.0
30.0
15.0
0.0
86.4
86.0
77.2
81.7
88.7
81.3
Days of Week
rd
ay
Sa
tu
ay
Fr
id
ay
ur
sd
es
d
ed
n
W
Th
ay
y
da
Tu
es
ay
on
d
M
ay
62.1
Su
nd
Occ %
London Daily Occupancy 2009
AARR - London
£160.00
£150.00
£140.00
£130.00
£120.00
2010
£110.00
2009
£100.00
2008
Months
December
November
October
September
August
July
June
May
April
March
February
January
£90.00
RevPar - London
£150.00
£140.00
£130.00
£120.00
£110.00
£100.00
£90.00
Months
December
November
October
September
August
July
June
2008
May
£60.00
April
2009
March
£70.00
February
2010
January
£80.00
AARR – Country House
£110.00
£100.00
£90.00
£80.00
£70.00
2010
£60.00
2009
2008
Months
December
November
October
September
August
July
June
May
April
March
February
January
£50.00
Seasonality – Days of Week
UK Regional Upscale
100
102.00
90
100.00
80
98.00
70
96.00
60
94.00
50
92.00
40
90.00
30
88.00
20
86.00
10
84.00
0
82.00
Sun
Mon
Tues
Occ %
Weds
Thur
Fri
AARR £
Sat
Average Room Rate £
Occupancy %
Regional UK & Luxury Upscale
(running 28 day total to 9th October 2010)
RevPar – Country House Hotels
£80.00
£70.00
£60.00
£50.00
£40.00
£30.00
2010
2009
Months
December
November
October
September
August
July
June
May
April
March
February
January
£20.00
2008
Seasonality – RevPar
UK Regional Upscale
Regional UK & Luxury Upscale (running 28 day total to 9th October
2010
100.00
90.00
80.00
RevPar £
70.00
60.00
50.00
RevPar
40.00
30.00
20.00
10.00
0.00
Sun
Mon
Tues
Weds
Thur
Fri
Sat
AARR – Country House & Spa
Hotels
AARR Country House & Spa Hotels
100
95
AARR £
2007
90
2008
2009
85
2010
80
75
Country House
Spa Hotels
Year
Non spa
Are Spa Hotels Maximising their USP?
Occupancy County House & Spa
Hotels
Occ %
Occupancy Country House & Spa Hotels
70%
69%
68%
67%
66%
65%
64%
63%
62%
61%
60%
Country House
Spa Hotels
Non spa
2007
2008
2009
Year
2010
RevPar – Country House & Spa
Hotels
RevPar Country House & Spa Hotels
65.00
60.00
RevPar £
55.00
Country House
50.00
Spa Hotels
45.00
Non spa
40.00
35.00
30.00
2007
2008
2009
Year
2010
Spa Packages – Impact on
RevPar
• Impact on RevPar depends on
package breakdown
• Are spa packages maximising
Revenue?
Package choices
• Day Package £59 £79 =
(1 treatment, lunch,
leisure use)
• Spa overnight
package – £99 per
person
• Bed & Breakfast
£129 - £175)
= B&B allocation
(after spa use)
£40 - £80
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Issues to consider when setting
Spa package prices
• Days of week
• Bedroom source markets & price
points
• Slow demand in spa area
• Residential versus Day use
• Maximising revenue from both
bedrooms and spa allocation
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Why should we monitor
maximisation of spa use?
• Historic Trends give indication of possible
future trends
• Budgeting with base of knowledge
• Where shall we spend our marketing
budget?
• Assists in staffing rota’s
• Proactive not Reactive Decision Making
• Maximisation of Revenue & Costs
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Bridget Baker Consulting Ltd
Phone 44 (0)1273 560655
Mobile 0794 1461180
[email protected]
www.bridgetbaker.co.uk
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