Assessment 2 A – Report Analysis Questions.

  1. What does the acronym RGI stand for and describe how this is calculated?

RGI = Revenue Generator Index

RGI gives a comparison of a hotel’s performance in comparison with its competitors. It is calculated using the RevPAR figure from the hotel divided by the RevPAR of the competitors (Compset). This gives an index which is sometimes multiplied by 100. A figure of more than 100 indicates outperformance compared with the Compset.

The RGI is the most significant of the three indices because it is based on RevPAR which incorporates occupancy and ADR.

  1. What does the acronym MPI stand for and describe how this is this calculated?

MPI = Market Penetration Index

MPI is calculated by comparing hotel occupancy with the Compset occupancy.

(Occupancy Hotel ABC/Occupancy Compset) x 100 = MPI

  1. What does the acronym ARI stand for and describe how this is this calculated?

ARI = Average Rate Index.

ARI is calculated by comparing hotel average room rate (ADR) with that of the Compset.

(ADR Hotel/ADR Compset) x 100 = ARI

  1. For the current month, is property ABC over or under-performing in market share for

Average Rate?

It is underperforming – the ADR is 241.62 compared with the Compset ADR of 252.15. This is also reflected in the ARI index which is less than 100 (95.8)

  1. For the current month, is property ABC over or under-performing in market share for RevPAR?

It is underperforming – the RevPAR is 197.91 compared with the Compset RevPAR of 210.26. This is also evident from the RGI index which is less than 100 (94.1)

  1. For the current month, is property ABC over or under-performing in market share for occupancy?

It is underperforming – the occupancy is 81.9 compared with the Compset occupancy of 83.4. The MPI index is less than 100 (98.2).

  1. For the current month what is the market share percentage growth across the three KPI’s?
  2.      MPI = 5
  3. ARI = -4.7
  4. RGI = 0.0
  5. Describe how property ABC is performing year to date (YTD), running 3 months and running 12-months across the three KPI’s –
  6. MPI: YTD: 95.9 3 months: 98.3      12 months: 98.2
  7. ARI: YTD: 96.2 3 months: 98.0      12 months: 98.0
  8. RGI: YTD: 92.3 3 months: 96.4      12 months: 96.2

These figures are indicating underperformance in all indices.  To have a better understanding of whether these figures can be considered positive or negative, one must look at the growth figures to see whether there is actually growth that is greater than that of the competitors. If this is the case then one can say that while there is underperformance, the performance is catching up with the competitors and that the apparent underperformance can still be considered as a positive result.

Data Sheet B – Competitive set by month

The competitive set report, shows a line graph which gives a visual representation of property ABC’s market performance in relation to the competitive set across each month.

  1. Looking at the Current Month Occupancy graph, which month or months is property ABC outperforming the competitive set in MPI, ARI and RGI.

From the graph and the table it can be seen that the property ABC outperformed the Compset ARI from February til May with growth from 100.6 to 102.2.

(In February ABC outperformed the Compset in ARI registering a figure of 262.68 vs 261. For March the ARI trend was similar and again it outperformed the Compset 274.22 vs 273.63. In April there was also an outperformance of 241.85 vs 240.46. May – ARI is higher 247.53 vs 242.13.)

Occupancy in June outperforms the Compset slightly. 78.5 vs 78.2.

In July and August all three KPIs outperformed the Compset with a significant improvement over the preceding month.

In September only the Occupancy outperformed – 79.7 vs 78.3

In October all three KPIs outperformed the Compset.

  1. Looking at the Monthly Indexes graph, summarise the historical performance of Property ABC by month or like month ranges and suggest possible areas where an adjustment to the strategy may have been needed – An example is included for the historical date range November 2012 – January 2013.

Period: February – May:

There is a slightly positive trend for the ARI over this period compared to the Compset but there is a negative trend for the MPI and RGI which are underperforming in comparison to the Compset.

Following the analysis from November to January, it can be said that the trend for all three indices is positive although the MPI and RGI are still well below the Compset. The only index keeping pace and slightly outperforming the Compset is the ARI, because of a lower occupancy. The strategy adjustment needed is to grow the occupancy and the ADR which means adjusting the rates for different segments in order to see whether the optimal price is being charged to each market segment. For instance it may be possible to reduce the rate for the lower cost rooms while offsetting this with rate increases for the high priced suites which are less price sensitive.

  1. What dates was this report printed?

The report was created on May 24, 2014 and run on December 13th 2018

  1. Looking at the RevPAR percentage change graph, what does this graph show for property ABC’s RevPAR performance compared to its competitive set for the following periods –
  2. Year to date
  3. Running 3 months
  4. Running 12 months

The RevPAR for all three time periods is consistently higher than that of the Compset.

  1. Write down the year to date percentage change index figures for the following KPI’s across 2012, 2013 and 2014 (an example is highlighted in yellow for 2012 on your data sheet) –

2012 – MPI: -0.7      ARI: 4.7        RGI: 3.9

 

2013 – MPI: 9.8       ARI: -1.0       RGI: 8.7

 

2014 – MPI: 7.4       ARI: -1.9       RGI: 5.4

  1. 6. Describe what the percentage change figure means and how it is calculated.

The percentage change figure represents the comparison of an index with the same index in the same month in the previous year (or other specified time period). The difference between the two indices is divided by the earlier index and expressed as a percentage of the earlier index.

Eg:  (Index 2014 – Index 2013)/Index 2013 x 100

April 2014 MPI = 98.2

April 2013 MPI = 93.6

% change = (98.2 – 93.6) / 93.6 x 100 = 4.9145

  1. Evaluate the year to date percentage changes results noted above and summarise the historical and current year to date performance for the property, and note any trends.

2012 – MPI: -0.7      ARI: 4.7        RGI: 3.9

 

2013 – MPI: 9.8       ARI: -1.0       RGI: 8.7

 

2014 – MPI: 7.4       ARI: -1.9       RGI: 5.4

The MPI (reflects occupancy) has improved from 2012 to 2013, reaching its peak in 2013. The growth figure for 2014 is still positive although the trend is weaker than in the previous year.

The ARI (reflects room rates) has declined annually and was 0.9% lower in 2014 compared to 2013. This is definitely related to the gain in occupancy.

The RGI (RevPAR)  has risen substantially between 2012 and 2013 and less markedly into 2014. This reflects the fact that the RevPAR represents both occupancy and ADR, both of which declined in 2014.

Data Sheet C – Day of week performance

Occupancy

  1. Looking at the graph Current Month Occupancy, evaluate and summarise how property ABC is performing by day of week for the month of April in relation to its competitive set.

An example for Sunday is below –

Sunday – Property ABC’s occupancy is substantially lower than the competitive set

Note: when examining this bar chart it is important to keep in mind that the ‘zero’ level is actually 61. In other words, the chart is showing only the tops of each bar which makes the differences appear much greater than they are when one examines the actual figures in the spreadsheet.

Overall, the property ABC, for the month of April, underperformed in both weekdays and weekends compared to its compset. If the graph is examined in detail it can be seen that the peak occupancy is achieved on Tuesdays and Wednesdays when the property ABC outperforms its compset.

Sunday: Occupancy of ABC is the lowest of any day of the week and on this day there is the largest gap between the performance of ABC in comparison with the compset.

Monday: Occupancy of ABC and Compset are better than on Sunday but ABC is still underperforming.

Tuesday: This is a better day for ABC with a degree of outperformance with an overall increase in occupancy in all properties compared with the previous two days.

Wednesday: ABC maintains its superior occupancy compared with the Compset.

Thursday: Overall occupancy is down and ABC again falls behind the Compset.

Friday: Overall occupancy is up but ABC is still underperforming the Compset.

Saturday: This is the peak occupancy day for the week and ABC does not match the Compset.

  1. Check your day of week summary against the listed index figure for MPI. Does the MPI index figure match up to your summary in terms of over or under-performing for each day of week in the current month?

 An example for Sunday is included and the data row is highlighted in yellow on the data sheet

 

Sunday – MPI figure is 88.1 – Yes it makes sense it reflects under-performance

Monday: The MPI is 94.2 which is better than the Sunday figure but still indicative of under-performance as seen on the bar chart.

 

Tuesday: The MPI is 103.2 which is an over-performance and corresponds with the illustration in the bar chart.

 

Wednesday: The MPI is 103.3 indicating an over-performance.

 

Thursday: The MPI is 99.2 suggesting near equivalence with the Compset but still slightly under-performing.

 

Friday: With the MPI at 97.3 there is significant underperformance.

 

Saturday: The MPI is 98.6 which is even poorer than the Friday performance.

 

 

 

  1. Describe property ABC’s total percentage growth for MPI on each day of the week for the current month in relation to its competitive set and list the actual growth for both property ABC and the competitive set.

 

An example for Sunday is below and the data is highlighted in blue on the data sheet

 

Sunday MPI percentage growth is -0.9%, this means property ABC had a negative growth of 0.9% on a Sunday (year on year) in relation to market share against its competitive set. Property growth: 8.4% Competitive set growth: 9.3%

 

Although the property had positive growth, it had a negative growth in comparison to its competitive set.

 

Monday: Although the MPI indicates underperformance, the growth can be considered positive. The registered growth in MPI is 2.6%. The ABC had a percentage growth of 6.7% while the Compset grew by only 4%.

 

Tuesday: There was no change in the MPI growth on this day (0.0%) with both the ABC and Compset recording the same percentage growth.

 

Wednesday: There was a substantial growth in the MPI (7%) with the ABC recording 9.3% growth while the Compset grew by only 2.2%.

 

Thursday: The MPI grew by a small amount (1%) although both the ABC and the Compset went backwards. ABC did not decline as much (-1.6) as did the Compset (-2.5).

 

Friday: ABC outperformed with a growth of 24% compared with 1.4% for the Compset, resulting in an MPI of 22.3.

 

Saturday: Both ABC (-1.2%) and Compset (-5.1) fell back but ABC did not fall as much, resulting in a positive MPI of 4.1.

 

 

 

ADR – Average Daily Rate

 

  1. Looking at the graph Current Month ADR, evaluate and summarise how property ABC is performing by day of week for the month of April in relation to its competitive set.

 

An example for Sunday is below –

Sunday – Property ABC’s average rate is substantially lower than the competitive set

 

Note: when examining this bar chart it is important to keep in mind that the ‘zero’ level is actually 209. In other words, the chart is showing only the tops of each bar which makes the differences appear much greater than they are when one examines the actual figures in the spreadsheet.

 

Overall, ABC is performing less well than its Compset except for Friday when it is slightly overperforming.

 

Monday: ABC’s average rate is well below the Compset but better than Sunday.

 

Tuesday: ABC’s ADR is much closer to the Compset but still underperforming.

 

Wednesday: Both ABC and Compset have a higher ADR than on previous days but ABC is still lower.

 

Thursday: The ADRs are similar to Wednesday but ABC is still not quite matching the performance of the Compset.

 

Friday: This is the only day on which ABC outperforms the Compset but the advantage is small.

 

Saturday: ABC’s average rate is markedly lower than the Compset and its absolute ADR is a lot less than on Friday.

 

In summary, the weekday ADRs for all properties are a lot lower than the weekend figures but ABC is consistently underperforming compared to the compset.

 

 

  1. Check your average daily rate summary against the listed index figure for ARI. Does the ARI match up to your summary in terms of over or under-performing for each day of week in the current month? Describe your answer next to each day of week.

 

An example for Sunday is listed below and the data row is highlighted in green on the sheet

Sunday – index figure is 88.0 – Yes it makes sense reflecting under-performance

 

Monday: An ARI of 95.0 indicates a modest underperformance as illustrated in the bar chart and this is borne out by the ADR figures – 228.22 vs Compset 240.17.

 

Tuesday: The ARI of 98.6 is a reasonable result, but still indicates slight underperformance by ABC as is evident from the ADR figures – ABC: 240.81 vs Compset: 244.28

 

Wednesday: The ARI is 98.6, also a reasonable but slightly underperforming result with ABC at 245.69 vs Compset at 249.20

 

Thursday: The ARI of 98.9 indicates close parity with ABC at 247.56 vs Compset at 250.23.

 

Friday: The ARI is 100.6 indicating virtual parity with the ABC being slightly ahead on ADR ( ABC 257.24 vs Compset 255.63)

 

Saturday: The ARI is 88.7 indicating a substantial underperformance by ABC as indicated on the bar chart (ABC:  ADR 248.45 and Compset: ADR 279.97)

 

  1. Describe property ABC’s total percentage growth for ARI on each day of the week for the current month in relation to its competitive set and list the actual growth for both the property and the competitive set.

 

An example for Sunday is below and the data is highlighted in purple on the sheet

 

Sunday ARI percentage growth is -2.2% , this means Property ABC had a negative growth of 2.2% on a Sunday (year on year) in relation to available market share and its competitive set.

Property growth: -3.0%

Competitive set growth: -0.8%

The property had a negative growth and in comparison to its competitive set it also had a negative growth

 

Monday: The ARI percentage growth is -7.9 which indicates that ABC had a significant negative growth of 7.9% on Mondays year on year in relation to available market share and its Compset.

Property growth: -3.3

Competitive set growth: 5.0

The ABC property had a negative growth while the compset had a positive growth.

 

Tuesday: The ARI percentage growth is -5.8 which indicates that ABC had a negative growth of 5.8% on Tuesdays year on year in relation to available market share and its Compset.

Property growth: -0.6

Competitive set growth: 5.5

The ABC property had a negative growth while the compset had a positive growth.

 

Wednesday: The ARI percentage growth is -5.0 which indicates that ABC had a negative growth of 5.0% on Wednesdays year on year in relation to available market share and its Compset.

Property growth: -0.5

Competitive set growth: 4.6

The ABC property had a negative growth while the compset had a positive growth.

 

Thursday: The ARI percentage growth is -5.1 which indicates that ABC had a negative growth of 5.1% on Thursdays year on year in relation to available market share and its Compset.

Property growth: 0.5

Competitive set growth: 5.9

The ABC property had a positive growth although still lower than the positive growth of the compset.

 

Friday: The ARI percentage growth is -0.8 which indicates that ABC had a negative growth of 0. 8% on Fridays year on year in relation to available market share and its Compset.

Property growth: 5.0

Competitive set growth: 5.9

The ABC property had a positive growth although still lower than the positive growth of the compset.

 

Saturday: The ARI percentage growth is -7.0 which indicates that ABC had a negative growth of 7.0% on Saturdays year on year in relation to available market share and its Compset.

Property growth: -0.7

Competitive set growth: 6.8

The ABC property had a negative growth while the compset had a positive growth.

 

 

RevPAR – Revenue per Available Room

 

  1. Looking at the data on sheet C for RevPAR, list property ABC’s RGI on each day of the week for the current month in relation to its competitive set, and explain what the figure indicates.

 

An example for Sunday is below and the data is highlighted in grey on your sheet

 

Sunday – RGI is 77.5 which means property ABC under-performed in market share on a Sunday

 

Monday: The RGI figure for Mondays is 89.5 indicating an underperformance relative to the Compset. This is borne out by the RevPAR figures of 168.08 (ABC) vs 187.76 (Compset).

 

Tuesday: On Tuesdays the RGI is 101.7 indicating a better performance by ABC (206.51) relative to the Compset (203.00)

 

Wednesday: RGI on Wednesday was also good (101.8) with ABC (211.47) outperforming Compset (207.67)

 

Thursday: The RGI was below 100 (98.2) with ABC performing less well (201.69) than Compset (205.48)

 

Friday: The RGI was 97.9 which indicates underperformance – ABC (222.91) relative to Compset (227.65).

 

Saturday: The RGI of 87.5 indicates poor performance of ABC (228.18) relative to Compset (260.83).

 

 

  1. Looking at the data on sheet C, list property ABC’s RGI percentage change for each day of the week and explain what this indicates. Also list the property growth and the competitive set growth.

 

An example for Sunday is below and the data is highlighted in red on the data sheet

 

 Sunday RGI percentage growth is -3.1% , this means Property ABC had a negative growth of 3.1% on a Sunday (year on year) in relation to available market share and its competitive set.

Property growth: 5.2%

Competitive set growth: 8.5%

 

Although the Property itself had positive growth, growth was negative in relation to its competitive set.

 

Monday: RGI percentage growth is -5.5%, this means Property ABC had a negative growth of 5.5% on Mondays (year on year) in relation to available market share and its competitive set.

Property growth: 3.2%

Competitive set growth: 9.2%

 

Although the Property itself had positive growth, growth was negative in relation to its competitive set.

 

 

Tuesday: RGI percentage growth is -5.8%, this means Property ABC had a negative growth of 5.8% on Tuesdays (year on year) in relation to available market share and its competitive set.

Property growth: 4.5%

Competitive set growth: 10.9%

 

Although the Property itself had positive growth, growth was negative in relation to its competitive set.

 

Wednesday: RGI percentage growth is 1.7%, this means Property ABC had a positive growth of 1.7% on Wednesdays (year on year) in relation to available market share and its competitive set.

Property growth: 8.7%

Competitive set growth: 7.0%

 

The Property and the compset both had positive growth although the growth of the property ABC outperformed that of the compset.

 

Thursday: RGI percentage growth is -4.2%, this means Property ABC had a negative growth of 4.2% on Thursdays (year on year) in relation to available market share and its competitive set.

Property growth: -1.1%

Competitive set growth: 3.2%

 

The ABC property had a negative growth while the compset had a positive growth.

 

 

Friday: RGI percentage growth is 21.3%, this means Property ABC had a positive growth of 21.3% on Fridays (year on year) in relation to available market share and its competitive set.

Property growth: 30.3%

Competitive set growth: 7.3%

 

The Property and the compset both had positive growth although the growth of the property ABC outperformed that of the compset.

 

 

Saturday: RGI percentage growth is -3.2%, this means Property ABC had a negative growth of 3.2% on Saturdays (year on year) in relation to available market share and its competitive set.

Property growth: -1.8%

Competitive set growth: 1.4%

 

The ABC property had a negative growth while the compset had a positive growth.

 

 

  1. Do you think it is valuable in the evaluation of revenue and yield management strategies to consider the property performance, index figure performance and index percentage growth figures? Explain why.

 

It is obvious that a comparison of the property performance against a benchmark such as the Compset is fundamental to developing strategies to optimise performance and revenue. The particular indices give insights into the performance of different revenue management variables and it is by comparing and correlating them that the strengths and weaknesses of the current management strategy can be exposed and appropriately modified.

 

It is important to remember that the Compset is not always a perfect match for the hotel. It is a cohort of properties with as many similarities as possible to the hotel in question but there may be enough differences that the indices are not entirely reliable indicators of benchmarked performance.

 

Using the current set of figures for property ABC one can observe that its overall performance is below that of the benchmark. To ascertain where the weaknesses lie, one must examine how the difference indices interact with each other.

 

For instance, when comparing April 2014 with April 2013, the RevPAR increased from 184.91 to 197.91 but the RGI remained at 94.1 for both years indicating that the hotel did not actually do any better than its competitors. The occupancy increased from 76.5 to 81.9 with the ADR unchanged. It may be that there were external factors driving a better market in 2014. So, with the RGI stuck at 94.1 there must be strategies for improving the occupancy beyond 81.9 and it may be that a modest reduction in ADR could drive more business, increasing occupancy and offsetting the loss of ADR.

 

 

 

Total performance

 

  1. Looking at the totals data box at the bottom of the data sheet, what is the total RGI percentage growth for property ABC year on year and describe what this indicates.

 

The RGI growth year on year is 0% which indicates that property ABC and the compset are growing at the same rate (7.0%). While ABC has grown by 7% it still is underperforming (RGI = 94.1) relative to its competitive set.

 

  1. Looking at the Weekday/Weekend summarised section near the bottom of the data sheet, what has been the total RGI percentage growth for property ABC year on year for weekends and describe what this indicates.

 

The RGI percentage growth for weekends year on year is 7.4% which indicates that, although the ABC RGI is still below the compset at 92.3, the property ABC is growing its share of the market better than its compset competitors.

 

  1. Looking at the Weekday/Weekend summarised section near the bottom of the data sheet, what has been the total RGI percentage growth for property ABC year on year for weekdays and describe what this indicates.

 

The RGI percentage growth year on year for weekdays is -3.0% which means a negative growth of 3% in relation to available market share and its competitive set. The RGI underperformed compared to the compset (94.9). Although ABC had a positive growth of 5.1%, it was well below the positive change registered by the compset at 8.4%.

 

 

  1. Where did property ABC have the strongest RGI growth?

 

Wednesday had the strongest RGI growth of all the weekdays with a positive growth of 1.7%

 

 

  1. Reflect back at the weekend RGI growth figure, is there a day of week that stands out over the others in terms of percentage growth? Note which day and its results.

 

On the weekends, Friday was the best performing day in terms of growth with a positive growth of 21.3% in relation to available market share and its competitive set.

 

  1. Focusing on the index figures and index percentage change figures in the totals box across the three KPI areas MPI, ARI and RGI, describe how property ABC is performing year to date and determine what the main driver of the results are (occupancy and/or average rate).

 

The YTD figures for all three KPI indices are below the benchmark levels of the Compset.

( MPI=95.9     ARI=96.2     RGI=92.3 ).

 

Nevertheless the MPI shows a 7.4% increase over this time period compared with a decline in the ARI (-1.9%) indicating that, while the ABC property is underperforming against the Compset benchmarks, it is making gains and this is due to improving occupancy. The RGI is also improving (5.4%) suggesting that the low ADR is being offset by higher occupancy and this is reflected in the improving RevPAR figures.

 

  1. Identify which days of the week are helping to drive the year to date results and describe why.

 

The indices show that Tuesdays and Wednesdays have the best performances and are helping to drive the results although Friday has the best growth in RGI at 21.3% which will help future outperformance of the weekends.

 

  1. What days of the week do you feel could have opportunity for improvement and describe whether the strategy should focus on average rate, occupancy or both.

 

The focus of attention should be to increase ADR throughout the entire week and to increase occupancy on Sundays.

Sunday occupancy is consistently low and the ADR for Sunday is comparable with that for other days. Occupancy could be encouraged by offering weekend packages that include Sunday and adjusting the Sunday rate to make the overall package attractive.