How RevPAG Drives Guest Experience and Hotel Profitability

Today's travelers often want more than just a room; they're looking for immersive experiences and value from additional hotel offerings. The hotel and leisure industry has responded to this desire by delivering increasingly elaborate and indulgent offerings and facilities. And yet, in many cases, hotel managers have not expanded the success metrics they use so that they reflect the value of these broader guest relationships. Instead, they remain focused on the traditional room-confined Revenue per Available Room (RevPAR) without also considering the broader guest-centered metric Revenue per Available Guest (RevPAG).

As hotel managers evolve and innovate, they grow to value the insights gained by having a holistic view of how revenue streams originate and interact across amenities they offer, including food and beverage (F&B) services; spa experiences; golf, tennis, gym and other fitness activities; club and lifestyle memberships; pool and beach areas; and a host of other offerings. These guest-centered expansions play a significant role in shaping the revenue model and profit potential for a hotel. For example, according to data from STR Global, F&B revenue can comprise between 20% and 40% of a full-service hotel's total income. This percentage can be even higher for luxury hotels and multi-amenity properties, where guests often spend more on high-end restaurant meals, craft cocktails at the bar and uniquely tailored experiences across a property.

Increasingly, hotel managers understand that embracing the opportunity to optimize revenue streams beyond the room can meaningfully improve the guest experience while simultaneously boosting profits.  

A Clearer Financial Picture

To track their performance across all revenue centers more effectively, hotel managers are adopting RevPAG to gain a more accurate picture of their property’s financial health.

One-way hotels can capture RevPAG data is to implement a modern property management system (PMS) capable not only of managing room revenue but also of collecting and integrating data from revenue centers across a property to clearly reveal the full impact of income streams from guest spending. By factoring in non-room revenue, hotel managers can make smarter decisions about prices, promotions, specials, and what services and experiences to offer to each guest. Moreover, by capturing real-time RevPAG data, a strong, well-considered PMS becomes a springboard for hotels to innovate. Hotels can integrate new technologies or utilize existing ones to improve features such as on-demand services based on guest spending trends.

Target Upselling with Real-Time RevPAG

Monitoring RevPAG in real-time provides powerful insights for creating targeted marketing campaigns and promotions. By analyzing guest spending habits on rooms, food & beverage, and other hotel amenities in real-time, hoteliers better understand the true economic value of each guest and can respond accordingly with personalized offers while the guest is on the property. By identifying trends in guest spending, they can tailor promotions and offers that resonate with high-value guests. For example, data can reveal a couple booking a romantic getaway, prompting the hotelier to recommend and promote an in-room couples massage, arrival flowers and champagne, a special candle-lit dinner or all these amenities.

Furthermore, real-time data can help identify areas where guests might be under-spending – for example, neglecting the hotel spa on one visit when they previously have enjoyed it, or not being aware of fitness classes or private dining options available. This is where targeted promotions can encourage guests to explore additional amenities, ultimately enhancing their stay and the bottom line. Additional communication channels such as real-time SMS texts and property-branded mobile apps can promote special offers and personalized experiences in the moment, making it easy for guests to book when they are ready to buy. For example, open appointments in spa schedules can be promoted by SMS text with offers of free spa products to guests who respond first, or guests can be alerted when pool or beach bars open for the day or entertainment acts are starting in the lounge.

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On-Demand Services Using Real-Time RevPAG Data

Beyond promotions and targeted marketing, hotels can elevate the guest experience and boost revenue by leveraging on-demand services and real-time data. This creates a frictionless, guest-centric environment that translates to happy customers, increased revenue, and a competitive edge.  

Mobile technologies now enable guests to explore the property’s culinary options by using their smart devices to order from any restaurant onsite and have meals delivered directly to their rooms, to a poolside cabana or anywhere they are on property. This degree of flexibility and convenience caters to diverse preferences and provides the freedom to buy anything, anywhere, anytime. On-demand services extend beyond food and beverage to cater to a guest's entire on-site experience, including wellness and fitness.

For example, guests can browse spa treatments, book appointments, and pre-pay for a relaxing massage – all from the comfort of their rooms.  Similarly, cooking classes or hotel gym activities can be reserved on-demand, eliminating the need to wait in line at the front desk. This convenience and control -- with effortless browsing, booking, and payment options -- translates to smoother, more satisfying overall experiences.

For hoteliers, on-demand services also create efficiency advantages. Real-time restaurant menus ensure guests see only available items, eliminating the frustration of ordering unavailable dishes. An understanding of real-time capacity and demand dynamics enable hoteliers to offer only premium services during peak times and attract customers with deals during slower periods, maximizing revenue across the board. These systems also streamline operations and reduce both underutilized capacity and overbookings.

What about when a guest is on a flight that has been delayed? An unintegrated system might mean pre-existing bookings across the hotel facilities go unused, creating waste or guest dissatisfaction as booking penalties are applied. An integrated system could mean that any impacted bookings are automatically updated across the property, enabling the hotel to resell capacity, reduce administrative overhead and welcome the delayed guest with a modified itinerary that perhaps goes some way to alleviating their frustrations caused by the delay.

Factoring in the human touch with advanced technology is even more impactful. For example, Mobile Point-of-Sale (POS) technology empowers staff to get out from behind sales counters and take services directly to guests. A poolside attendant can come to where guests are to take a drink order on a mobile device, and a personal trainer in the gym can help a guest browse and book exercise or yoga classes or muscle-relieving spa treatments while together in a workout session. This personalized approach creates meaningful interactions, uncovering opportunities to tailor guest experiences and create lasting memories – all while maximizing revenue potential. RevPAG data generated in real time also can identify guests who might be interested in a last-minute deal and target them with special offers as soon as they become available.

A Data-Driven Winning Strategy

Centering revenue assessments on guests rather than real estate creates new revenue streams and builds stronger customer connections. Real-time RevPAG data acts as the key, granting hoteliers a comprehensive view of guest spending across all revenue centers. This empowers them to personalize marketing, optimize pricing and please guests in new ways with fresh experiences. It's a recipe for increased revenue, brand reputation and long-term success. It's the future of hospitality.