Repeat Guest Ratio, Average Length of Stay
Two sure paths to revenue growth nirvana for hotels are the repeat guest ratio and the average length of stay which are very critical indices of operational analysis.
Every business enterprise is chasing the perennial revenue growth nirvana which is the basic ingredient for continuous top and bottom line performance.
If you arrived at this post directly, you may want to visit Market Segmentation Reports – Road Map to Revenue Results and 5 Myths about Financial Analysis, to catch the thread of earlier related posts.
Repeat Guest Ratio
It is a kind of mantra in marketing circles that incremental revenue from existing customers is a faster, cheaper and better method of sustaining growth. In the hotel industry, this is measured by the Repeat Guest Ratio. What is this ratio about?
Repeat Guest Ratio is a simple ratio which measures the extent of guests who are coming back to patronize the hotel compared to the total number of guests. In effect, how many number of times a guest stays in a particular hotel.
Repeat Guest Ratio has two major elements to it:
- Room nights and
- Room stays.
Room nights measure the number of nights a guest stayed at your hotel in a particular stay or the total number of nights during a certain period. Stays measure the number of times a guest stayed at your hotel over that period irrespective of the number of room nights that constitutes. Both these elements are expressed in terms of number of guests.
3 Awesome benefits of a High Repeat Guest Ratio
A high repeat guest ratio simply means that a majority of the guests staying at a hotel during a certain period are guests who have stayed there before. This can be calculated by dividing the total number of guests in the hotel at any point of time who have been there before by the total number of all guests.
This is a very powerful method of measuring the perpetuation of growth in revenues and has numerous qualitative as well as quantitative benefits to it. Apart from the obvious benefits of appreciative guest patronage, referrals, etc., the three most awesome quantitative ones are:
- Revenue per guest goes up substantially if you consider that actually the number of guests are less (if you consider the repeat factor)
- Guests who patronize hotels repeatedly also talk to their friends, family and colleagues resulting in incremental revenue without resultant marketing costs
- High Repeat Guest Ratio also has a significant impact on the departmental profitability of rooms since average rates of repeat guests do not fluctuate wildly (as first time guests could possibly).
Average Length of Stay
Average Length of Stay is the other path to Revenue growth nirvana. While the repeat guest ratio measures the loyalty that guests feel and show towards a brand or hotel, the average length of stay is a direct element of the room stay (which is also tracked for repeat guests).
Simply stated, average length of stay is ratio of guest nights to guest arrivals. What it seeks to measure is how long a guest stay amounts to expressed in number of days. The higher the average length of stay, the higher the resultant revenues (not just room revenues but also from food and beverage and other facilities like, spa, laundry, gift shop etc.,).
Average length of stay is impacted by many factors like the extent of flights in and out of the city where the hotel is located (this may mean that guests do not stay over the weekends preferring to leave and return), the availability or otherwise of comparably priced serviced apartments, whether stay is for leisure or for business, whether it is a hotel or a resort to name a few. The key point is that often these factors are out of the control of the hotel.
3 Awesome benefits of a higher Average Length of Stay
- To begin with, the higher the average length of stay compared to a previous period, the higher will be the incremental revenue earned (room as well as others).
- A higher average length of stay also results in lesser manpower deployment (check-ins and check outs are averted since guest stays more nights in the same stay)and even some variable costs
- Finally and most importantly, the higher the average length of stay the better the contribution to departmental profitability generally speaking.
Repeat Guest Ratio & Guest Recognition and Loyalty Programs
Now that we have seen how beneficial it is from a revenue growth and profitability perspective to enjoy high repeat guest percentage and average lengths of stay, it is important to know that guest recognition and loyalty programs are put in place in hotels to attack these very indices (actually applies more to repeat guest factor than average length of stay). In fact, one can go as far to say that the success of these programs can be measured definitely by the success of the repeat guest percentage.
What are your thoughts and views on the revenue growth nirvana in this post?
Leave a comment and tell us what you think.
Click this RSS Link or the one on the Top Right side of the home page to be updated automatically when a new post appears or forward to your friends who you think will benefit from the discussion.
In our next post in this series, we will be looking at Table Turnover Ratio and Meal Period Analysis, two major indices of restaurant revenue growth and how they contribute significantly to financial analysis carried out on monthly food and beverage departmental statements.
These are as critical to the food and beverage operation as repeat guest ratio and average length of stay are for the rooms operation.
Pingback: Staff to Room Ratio in Financial Analysis - indicator at best | Financial Analysis sans Tears
20. I am really inspired along with your writing talents as smartly with the layout for your weblog. Is this a paid subject matter or did you modify it yourself? Either way stay up the excellent quality writing, it’s rare to look a great weblog like this one nowadays..
Love this blog. I just wanted to let you know how much I appreciate how much time and effort you’ve put into the site. All of the content is absolutely wonderful and a joy to read. I just wish there were more sites likes these around. Anyway, thanks again and keep up all the great work. Cheers!
Hi there
Thank you for your good comments. I am constantly making an effort to improve my site and content. Stay tuned as I hope to post some videos as well. Thank you for your support and tell your friends or anybody you know who will benefit from the content.
Hello, i have read your post: 2 Paths to Revenue Growth Nirvana | Financial Analysis sans Tears. I believe it is awesome post however i checked its ranking on search engines and it doesn’t ranks as high as it should be so i’m quite sure you need more backliks. I am sure you know that EDU backliks can easily bust your search engine rankings. I have found awesome edu links creation service for as cheap as $5 here http://fiverr.com/users/edubacklinkspro/gigs/create-20-high-pr-edu-profile-backlinks-and-get-them-indexed. See that offer.Regards,Get 30 Edu Backlinks For Cheap
Hi there
Thank you for your good comments and recommendation. Will definitely take a look.
Thanks for the post I actually learned something from it. Very good content on this site Always looking forward to new post.
Hi Lindsay
thank you for the good comments. Please share with your friends who can benefit from the posts. Stay in touch for more to follow.
This was novel. I wish I could read every post, but i have to go back to work now… But I’ll return.
Hello! I just would like to give a huge thumbs up for the great info you have here on this post. I will be coming back to your blog for more soon.
Hi
thank you for the good comments. Will continue to produce posts of value, so stay tuned.
De Tandarts knol te Utrecht is een profesionele tandzorg praktijk. Bent u op zoek naar een tandarts, bezoek deze site en laat je gebit controleren.utrecht tandarts
Can you say that in english? thank you.
Pingback: 2 Paths to Restaurant Revenue Growth Nirvana | Financial Analysis sans Tears
It’s hard to find knowledgeable people on this topic, but you sound like you know what you’re talking about! Thanks
There are some interesting points in time in this article but I don’t know if I see all of them center to heart. There is some validity but I will take hold opinion until I look into it further. Good article , thanks and we want more! Added to FeedBurner as well
Would you be interested in exchanging links?
Hi there
Yes. May I have your website or blog URL so that I can also take a look.
thank you
very nice post, i certainly love this website, keep on it
Hi there
thank you for your comments and the recommendation.
I want to make my blog “the place” for everything related to financial analysis and in a manner which is easily understood by non-financial managers.
Stay tuned for more posts of value (please click the RSS link to be kept updated automatically on new blog posts). I will be introducing videos also going forward.
Please click the facebook “Like” and be a fan of this post if you liked it.
thank you once again for the motivating comments.
good luck
To: Website Owner! I like your WordPress site and I got to your page through Google so I figure you could make some money off of this. There’s a WordPress addon for SEO that does automated SEO for your page, automated SEO plugins like this are brand new to the online blog scene so having this would give your page a huge boost in views. If you’re serious about helping your blog get more popular and make money then check it out @ http://tiny.cc/0ej3z. Peace, keep up the good work.
Have you seen this new wordpress plugin from internet marketing master Daniel Tan known as SEO Pressor yet? I have been using it for the past couple weeks and I now have five of my new sites on the very first page of google for very competetive terms! I would suggest you try it out here: SEOPressor
Hi there
thank you for the recommendation. I will check it out. If you like this blog, please be a fan and click on the Facebook “Like” button on top. Please also click on the RSS link to be updated automatically when a new post comes up.
thank you once again for your comments.
To: Website Owner! I like your WordPress blog and I found your page with Google so I figure you could make some money off of this. There’s a WordPress addon for SEO that does automatic SEO for your website, automated SEO add-ons like this are brand new to the blog scene so owning this would give your website a huge jump in views. If you are serious about making your blog grow and make money then check it out @ http://tiny.cc/0ej3z. Peace, keep up the good work.
Hi there
thank you for your comments and the recommendation. I will take a look at the automated SEO add-on to improve traffic to my blog.
I want to make my blog “the place” for everything related to financial analysis and in a manner which is easily understood by non-financial managers.
Stay tuned for more posts of value (please click the RSS link to be kept updated automatically on new blog posts). I will be introducing videos also going forward.
Please click the facebook “Like” and be a fan of this post.
thank you once again for the motivating comments.
good luck
Hello Website Owner! I found your blog on Google and I really like it. My team provides professional article writing, and we are able to do it for $0.01 per word – that’s $4 for a 400 word article. All of our writers are based in the United States, and all of our articles passes the Copyscape test. If you are interested in using our service, or simply want to give us a try, please check out website out http://www.contentwriters.us
Hi there
thank you for your comments. If you like the blog, please click the Facebook “Like” on top of the post as well as the RSS link for automatic updates.
I will take a look at your website.
You should take part in a contest for one of the best blogs on the web. I will recommend this site!
Hi bao
thank you for your hearty comments. I hope to make my blog “the place” for everything related to financial analysis and in a manner that is easily understood by the non-financial fraternity.
Stay tuned for more content of value in the forthcoming blogs. I will be recording videos at a later time as well.
Please recommend this site through facebook (click the Like above) or through Twitter or any of the social media profile you have to all your friends.
Please click the RSS link so that you and your friends (tell them as well) are automatically informed when a new blog or update appears.
once again thank you for the motivating comments