Industry Expert: Are you giving your guests enough RevPAH?

As I often say in my hospitality workshops, we in the hotel industry are in a unique business of selling space and time, so we had better be REALLY good at the intangibles. Although we charge them for rooms, the guests are buying an overall experience that is made up mostly of human interactions. With hotel brands so quickly copying each other’s amenities, services and décor, just about the only point of differentiation are the human engagement delivered by the people we call colleagues.

In the hotel business, we measure our RevPAR, which everyone knows is Revenue Per Available Room Night. Fortunately for us, our guests do not use a similar equation to evaluate their hotel stay, which they might call RevPAH because even at an economy hotel the RevPAH is exorbitant at times.

What is RevPAH? It is Revenue Per Awake Hour. Let’s take a closer look. First, the official check-in time for most hotels is 4 p.m., with check-out at 11 a.m. or possibly Noon. Ironically, the fancier the hotel the more likely it is that we kick them out the door at 11 a.m., giving our housekeepers time to service all those nifty features, replace the fancy amenities and fold the towel into an animal shape. So the total awake time is at most upscale hotels 19 hours, assuming they arrive right at 4 p.m.

Next, let’s subtract a good night’s sleep which is perhaps 8 hours. Then take out the time they spend doing whatever it is that brought them into town in the first place. At most hotels the average numbers of “Awake Hours” a guest might spend might be 4. Now depending on where this upscale hotel is located at, whether there is a hotel fee or charges for basics such as internet and parking, and what the local and state taxes might run, the revenue could be quite high, easily reaching several hundred dollars just for the room. Yet let’s just keep it at a nice even number of US$200, bringing us to a RevPAH of US$50 per awake hour for those 4 hours, which breaks down to about US$0.83 per minute or US$1.35 per second. Drop those pennies into a piggy bank one after another and it would sound like a jackpot on a slot machine.

If you are in a major metropolitan area or resort destination, changes are your RevPAH is much higher. Of course, if you are an economy hotel in small town suburbia your rates might be much lower than US$200 and therefore your RevPAH might be less. But for your guests, it is all relevant to their personal travel budget. Another of my mantras is that “The Super 8 is somebody’s Ritz-Carlton.” For guests on lower budgets, the dollars to them are as big or bigger of an expenditure as they are to guests with more economic means.

To take this concept of RevPAH further, let’s think about what we give those guests at the end of their stay… NOTHING! Well, maybe something – a nice pen and some fancy soap bottles.

Those who understand what the hospitality business is all about know that the truth is we give them something much more important than a physical “thing,” which is a fond memory of an emotionally based experience. But only if we focus on creating hospitality excellence at each phase of the “guest circle of life” of their stay.

So at your next revenue management meeting or front office pre-shift huddle, when you review the latest RevPAR numbers take a moment to switch your mindset to the other side of the front desk or the other side of the guest room door. Pause to consider what RevPAH guests are receiving for whatever it is you are charging.This article was originally published on hospitalitynet.org. Doug Kennedy is President of the Kennedy Training Network, Inc. a leading provider of hotel sales, guest service, reservations, and front desk training programmes and telephone mystery shopping services for the lodging and hospitality industry. The opinions expressed in this column do not necessarily reflect the opinions of Hotelier Maldives and its affiliated companies. Please feel free to comment or contact an editor with any questions or concerns.