Balancing Revenue: Understanding Rate vs. Occupancy
As most of you know, almost our entire AOS management team came out of the hotel world. We were primarily associated with the Marriott Brand of hotels. It is here that our team and our revenue managers perfected their skills.
When revenue management is done properly, the balance between rate and occupancy results in maximum revenue generation for the owners. This is the goal of revenue management-NOT increased occupancy alone.
Case in point-a resort in our AOS portfolio. When looking at their November numbers, their occupancy is down 5% over last month, but revenue is up over $8000. In addition, this park does not pass electric on to their long term guests, thus they are what I call, "Double Dipping." They are up in revenue, down in electric expense, and all this at a lower occupancy.
Most often in this industry, owners do not understand this principle out of the gate. They panic when they see empty accommodations, but with a little education, they learn the rate occupancy balance is really what is ideal.
With AOS on your revenue, the overall picture is a balance that results in year over year growth in REVENUE-even if occupancy is down.