Revenue and Profit Maximization Revenue Optimization Exercise This

Revenue Optimization Exercise *This is a Holiday Inn Hotel

Reservation Request EXAMPLE A new reservation will appear every few seconds. Just like the

How did you do? • Add Up the total revenue for each day •

How did you do? Highest possible revenue = $1980

CPOR • Who knows what CPOR is? • Who can tell us what the

CPOR • We know what it is, but how do you calculate it? Total

Calculate the CPOR for Your Hotel • Use 2015 December P&L Actuals • Formula

Calculate the CPOR for Your Hotel • Profit. Sword Path: Site Reports, Monthly Reports,

Calculate the Profit of your 5 Room Hotel • Find the CPOR: – $25,

Calculate the Profit of your 5 Room Hotel • Calculate the Profit – several

Calculate the Profit of your 5 Room Hotel What is the profit of the

Comparison of Highest Revenue vs. Highest Profit Reservations: Unconstrained Revenue Unconstrained Profit

Revenue vs. Profit • Variables – Total Revenue – LOS (Length of Stay) –

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Revenue and Profit Maximization

Revenue Optimization Exercise *This is a Holiday Inn Hotel

Reservation Request EXAMPLE A new reservation will appear every few seconds. Just like the real world, you won’t know when they will stop!

Revenue Optimization Exercise *This is a Holiday Inn Hotel

Reservation Request

How did you do? • Add Up the total revenue for each day • Then add up the total revenue for the week

How did you do? Highest possible revenue = $1980

Now, What about…

CPOR • Who knows what CPOR is? • Who can tell us what the CPOR is for their hotel?

CPOR • We know what it is, but how do you calculate it? Total Room Labor + Benefits + Other Expenses Number of Rooms Sold

Calculate the CPOR for Your Hotel • Use 2015 December P&L Actuals • Formula = Total Room Labor + Benefits + Other Expenses Number of Rooms Sold

Calculate the CPOR for Your Hotel • Profit. Sword Path: Site Reports, Monthly Reports, P&L Report Prism Hotel

Calculate the CPOR for Your Hotel

Calculate the Profit of your 5 Room Hotel • Find the CPOR: – $25, 000 in labor and benefits – $15, 000 in other expenses – 1341 rooms sold • What is the CPOR for the 5 room hotel? – ($25, 000+$15, 000)/1341 = $29. 83

Calculate the Profit of your 5 Room Hotel • Calculate the Profit – several ways: – Total rooms sold X CPOR = Cost of all rooms, then subtract from the Total Revenue – Net room rate – CPOR = Profit of 1 room, then add up all rooms sold – Calculate the profit of each room rate, than add all together

Calculate the Profit of your 5 Room Hotel What is the profit of the 5 room hotel? $1, 174. 61

Comparison of Highest Revenue vs. Highest Profit Reservations: Unconstrained Revenue Unconstrained Profit

Revenue vs. Profit • Variables – Total Revenue – LOS (Length of Stay) – Cost of the Room/Stay – Pattern – Distribution Costs – Future Business – Repeat or new piece of business – Ancillary Spend