ARG - Average Rate per Guest (2024)

FAQs

ARG - Average Rate per Guest? ›

What is the meaning / definition of Average Rate per Guest in the hospitality industry? Total room revenue divided by the number of guests. As hotels often have double rooms, triple, quadruple or even more occupancies per room, this ratio allows an insight into exactly what rate is payed on average.

Average rate per guest (ARG)

The formula to calculate it is dividing the daily room revenue by the total guests: daily room revenue / number of guests.

In the F&B industry, average sales per guest is a critical metric that measures the average amount a guest spends during a single visit. This is calculated by taking the total sales and dividing it by the total number of guests served during a specific period, usually a day, week, or month.

The average daily rate (ADR) is a metric widely used in the hospitality industry to indicate the average revenue earned for an occupied room on a given day. The average daily rate is one of the key performance indicators (KPI) of the industry.

Generally speaking, a 3-star hotel may have one staff member for every 10-15 guests; a 4-star hotel may have one staff member for every 8-10 guests; and a 5-star luxury resort could potentially have as many as 1:1 or even 2:1 ratio of staff to guest.

For many hotels, an ideal occupancy rate is between 70% and 95% - though the sweet spot depends on the number of rooms, location, type of hotel, target guests, and more.

One common question that arises is whether hotels charge per room or per person. The answer to this question can vary depending on various factors, including hotel policies, occupancy limits, and the number of guests involved. Generally, hotels charge per room rather than per person.

Add the total cost of the food, venue, entertainment, and misc. expenses together and divide that number by the amount of people you want to attend. That will tell you the average cost for each attendee.

ARPU = Total Revenue / # of Users

This will give you an average revenue per customer. If your company offers different products or services, you can calculate the ARPC for each one to determine which is the most profitable. It's important to note that different types of companies need to calculate different metrics.

There really is not a difference. While referenced less frequently around the hospitality industry, average room rate (ARR) is another metric in measuring average price. The formulas for ADR and ARR are the same, but ARR might be preferred for reporting on average rate over longer periods of time.

What is a good occupancy rate for a hotel? ›

What is the average hotel occupancy rate? For the most part, between 2022 and 2023, global hotel occupancy rates have remained between 50% and 65%, with peaks and troughs in line with seasonality. However, there have been some occasions where occupancy has drifted outside these margins.

The average daily rate (ADR) is a performance indicator used in the hospitality sector to measure the strength of revenues generated. It is measured as the total revenues generated by all the occupied rooms in a hotel or lodge divided by the total number of occupied rooms over a given time period.

ADR (Average Daily Rate)

ADR is used to calculate the average rental revenue per occupied room at a given time. To find ADR, divide your total room revenue by the number of rooms sold. For example, if you sold 5 rooms out of your 10-room hotel and your total revenue was $2,000, then ADR would be $400.

Guest-to-staff ratio: Aim for 1 staff member per 10-15 guests. This includes kitchen staff and FoH personnel like cashiers and food runners.

To illustrate an occupancy rate, if an apartment building contains 20 units, 18 of which have renters, it has a 90% occupancy rate. Similarly, a 200-room hotel with guests in 150 rooms has a 75% occupancy rate.

For rooms exceeding the standard occupancy, an extra person fee is charged to cover the additional costs of amenities and services.

Pricing per guest is a pricing strategy that allows you to set different rates for the same room or unit based on the number of guests staying.