A question about the numbers game

So, when you're tallying up your numbers each month, do you include the rooms you might have 'given away' in your total? For instance, earlier in the spring, I had a Facebook contest and the prize was a free night's stay. I figured I give enough rooms away for other peoples' good causes and charities, why not do one for myself, right? And, I had two nights where my uncle and his wife were visiting and I did not charge them (topic for another discussion)
Anyway, do I include these free nights in my total of rooms I've 'rented'for the month? Of course it will skew my ADR a bit since technically I go $0 for it, but will that really make a difference in the long run?
Also - when figuring occupancy rate, do you include ALL room for ALL days of the month? For example, I have 5 rooms, so for the month of July, I could have rented 155 rooms (5 x 31 days in the month). However, I was closed for 5 days (had a new boiler installed). So, do I use 155 as the denominator, or do I use 130 (5 x 26) ?
In the past, I've gone with the 'worst case scenario' - all rooms for all nights as the denominator (150 or 155 or 140 or 145 for February) AND I've included the freebie rooms.
Just wondering what others do or if there's even a standard. Thanks.

For what purpose? Are you doing the numbers for yourself, for a prospective buyer, what?

Just for myself, mostly. But, like all of us, I hope to sell someday when I grow up.

You gave it away... it counts! Your costs change because of it... it counts.

Aussie Innkeeper said:

Just for myself, mostly. But, like all of us, I hope to sell someday when I grow up..

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Aussie Innkeeper said:

Just for myself, mostly. But, like all of us, I hope to sell someday when I grow up.

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I track all rooms all the time. When we're closed we have 0% occ. If we're closed for a few days in a busy month, it lowers the occ. I make notes to myself so years later I will know we were closed.
So when we sell I'll let the new folks know they can up the occ by not taking as much vacation as we do. We generally plan at least 2 months off over the course of the year. The number keeps creeping up the older we get. ;-)

Count everything you give away, every block, every discount. Otherwise, you're just fooling yourself.
My only regret is that when I looked at occupancy numbers given by the seller, I didn't press them on whether they included all these things or not.

How are you accounting for it in your online system? Make sure that tracks with your numbers - when we sold, the new owners took over the rez system and when they switched to a new inn they converted the old reservations. Coding them appropriately there helps for a year-to-year comparison.
The brokers involved, and mortgage companies, won't care about anything more than the gross numbers - revenue, expenses, etc. But it's good if they match up to your tax reporting - otherwise, you might have some 'splaining to do.

I think the key for us is to use the actual number of days we are open to calculate our average daily rate. This is a number we use to determine how much revenue we are generating from an occupied room as well as the whole inn. It's more about room and amenity performance for us. Are we selling more dinners etc? REVPar

I am starting to gravitate toward RevPAR as a better metric than simply noting my ADR and occupancy percentage. Usually one always performs better than the other. I'm starting to look at my RevPAR vs. the same month last year, and then using ADR and occupancy second to figure out WHY my revenue per available room went up or down vs. last year. (Did I cut my rates too much? Did we rent more rooms? )
The only challenge we always face is that with a seasonal business, you can't compare month-to-month. You have to have at least 1-2 years of historical before you can really evaluate how you're performing.
We're also working to develop a KPI for gift shop sales per room night and alcohol sales per room night as a way of seeing if we need to be pushing these more.

PhineasSwann said:

I am starting to gravitate toward RevPAR as a better metric than simply noting my ADR and occupancy percentage. Usually one always performs better than the other. I'm starting to look at my RevPAR vs. the same month last year, and then using ADR and occupancy second to figure out WHY my revenue per available room went up or down vs. last year. (Did I cut my rates too much? Did we rent more rooms? )
The only challenge we always face is that with a seasonal business, you can't compare month-to-month. You have to have at least 1-2 years of historical before you can really evaluate how you're performing.
We're also working to develop a KPI for gift shop sales per room night and alcohol sales per room night as a way of seeing if we need to be pushing these more..

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Ah- I just edited my post to add RevPAR. That is the better choice since it is per available room.
I would want buyers to look at those numbers and then look at our ARR (Average Room Rate), which excludes rooms that complimentary and out of inventory, and our Occupancy Per Available Room.
Then, I would like to see the growth potential if they added to the inventory, which would amount to about a 30% increase in available revenue, given that our closures are not linked to a season.
Then, I would use the 5th room we are authorized to offer but don't as another major opportunity for revenue growth.

Here's how I think about this: a room is either occupied, available, or blocked (not available to be occupied).
It doesn't matter what the person occupying the room paid, it is still occupied.

Morticia said:

For what purpose? Are you doing the numbers for yourself, for a prospective buyer, what?.

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Morticia said:

For what purpose? Are you doing the numbers for yourself, for a prospective buyer, what?

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That's what I was going to say. It depends on what you want to know.

happykeeper said:

I think the key for us is to use the actual number of days we are open to calculate our average daily rate. This is a number we use to determine how much revenue we are generating from an occupied room as well as the whole inn. It's more about room and amenity performance for us. Are we selling more dinners etc? REVPar.

Click to expand...

happykeeper said:

I think the key for us is to use the actual number of days we are open to calculate our average daily rate.

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That's fine for your own measurements, and maybe you can get a listing broker to use that number for your sales price, but a buyer, buyer's broker or inn consultant is going to look at occupancy over 365 days. That's the only way to standardize anything for an industry comparison.

muirford said:

happykeeper said:

I think the key for us is to use the actual number of days we are open to calculate our average daily rate. This is a number we use to determine how much revenue we are generating from an occupied room as well as the whole inn. It's more about room and amenity performance for us. Are we selling more dinners etc? REVPar.

Click to expand...

happykeeper said:

I think the key for us is to use the actual number of days we are open to calculate our average daily rate.

Click to expand...

That's fine for your own measurements, and maybe you can get a listing broker to use that number for your sales price, but a buyer, buyer's broker or inn consultant is going to look at occupancy over 365 days. That's the only way to standardize anything for an industry comparison.
.

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Not sure what the industry standard is, but if planning to sell, the critical thing is to include whatever metrics are used by brokers of B&Bs...

muirford said:

happykeeper said:

I think the key for us is to use the actual number of days we are open to calculate our average daily rate. This is a number we use to determine how much revenue we are generating from an occupied room as well as the whole inn. It's more about room and amenity performance for us. Are we selling more dinners etc? REVPar.

Click to expand...

happykeeper said:

I think the key for us is to use the actual number of days we are open to calculate our average daily rate.

Click to expand...

That's fine for your own measurements, and maybe you can get a listing broker to use that number for your sales price, but a buyer, buyer's broker or inn consultant is going to look at occupancy over 365 days. That's the only way to standardize anything for an industry comparison.
.

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Agreed. See my comments below about what I mean. You want to provide honest information that shows the numbers that are standard, but you also want use those standard numbers that help you explain why you are successful. There is no need to get a listing broker to show cooked books. I wouldn't want to have that happen to me and I don't intend to do that to someone else.

Harborfields said:

Here's how I think about this: a room is either occupied, available, or blocked (not available to be occupied).
It doesn't matter what the person occupying the room paid, it is still occupied..

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Makes perfect sense. A blocked room has been removed from inventory.