INSIGHTS · DANIELA DI MAIO
Revenue growth and sales quality: what is the difference?
Higher revenue is an important signal. Understanding how much value the hotel retains also requires a view of rates, distribution costs and booking conditions.
Make the periods comparable
Before reading percentages, I check room inventory, opening days, seasonality and the tax basis of revenue. More operating days can support turnover without proving stronger commercial effectiveness. Bookings for future stays must be distinguished from final realised results.
Read ADR, occupancy and RevPAR together
ADR measures room revenue per sold room night; RevPAR relates room revenue to available room nights. I read both with occupancy: none of these indicators alone measures hotel profit. A higher rate may also reflect a different mix of room types or guests.
Account for the cost of selling
Illustrative example only: a €700 room night with a 20% commission leaves €560 after that commission alone. A €650 room night with a 5% acquisition cost leaves €617.50. The second figure is higher, but it is not profit: other costs are excluded. Direct bookings also incur marketing, technology and operating costs.
Assess sales quality as a whole
I complete the picture with cancellations, payment timing, length of stay and the contribution of different markets. The objective is a mix suited to demand and the hotel’s operations, rather than raising one indicator at any cost. Reporting, revenue management and sales therefore need to inform one another.