Hoteliers are shifting their focus away from revenue per room available (RevPAR), to revenue per guest available (RevPAG), and maximizing technology to provide better experiences while increasing revenue. RevPAG measures the total experience and services offered to guests, not just the room inventory. The consumer’s behavior is evolving towards a more experience-driven approach to travel. This gives hotels a greater opportunity to increase revenue by leveraging technology.
RevPAR to RevPAG
RevPAG is the new standard for the hospitality industry. It involves understanding the experience of the guest beyond the room inventory. This shift was prompted by changing consumer behaviors. Travelers are more experience-driven than ever, regardless of whether they’re on business or leisure. This means that they are willing and able to allocate a greater share of their budget towards ancillary service, like food, beverages, and spa treatments.
How technology can help generate revenue
Leila JIWNANI, Deloitte’s director and head, hospitality and leisure consulting, believes technology can be used to generate new revenue streams for hotels. It can fill up capacity and generate demand. Dynamic pricing helps manage the peaks of demand. This allows hotels a greater variety of products, and a wider range of customers.
Technological Advancements in the Hotel Industry
The technology is a major factor in the creation of new services and the monetization of more hotel space. Richard Valtr stated that technology was “on its way” in offering a revenue-management system that would enable hotels to earn more.
The Retail Perspective
Bashar Wali – founder and CEO This Assembly – has pointed out the fact that the hotel sector is behind the retail industry in terms of technology usage. He said that the retail sector has been able to use technology to its advantage because it is a necessity to stay in business. Wali says hotels should view themselves as retailers who have perishable products and embrace technology.
The RevPAG is applicable to all hotel segments
RevPAG applies to all segments in the hotel industry – from luxury hotels to large economy chains. Its implementation may differ. Hotels at lower levels may earn more money by charging extra for amenities. Luxury hotels, on the other hand, might be focused on creating a 360 degree view of their customers to provide personalized experiences.
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