The Calculation – the Merchant Model Effect on ADR, RevPAR & Profit
By Richard B. Evans, President of Revenue Report Card LLC & Author of “the Definitive Study of Vacation Rentals”
We adjust industry analytics and place all reservation-vendors on the same playing field by I grossing-up the Gross Reservation Revenues (for merchant model vendors) and then use that margin as a commission expense. The formula can be used in the hotel, airline or cruise ship industries. All engage Wholesaler / Receptive Operators and On-line Travel Agents (that use the Merchant Model).
Those whose total contribution to Gross Reservations Revenues, from mentioned sources, exceeding 5% would be interested in this adjustment analysis. As you can see, the deviation over your industry metrics in Average Daily Rate, RevPAR and profitability can be quite large. Based on the hotels channel mix, above this small hotel, of 118 units, shows a differential of 7% of Gross Reservation Revenues.
Channel mixes with a lower number of merchant model providers would create a smaller optimization score and, in turn, a less significant difference in ADR, RevPAR and profitability. I believe however that most in all industries contribute more than 5% in merchant model business.
Thank you all for the many nice notes and the high interest in the original article. The original article on HospitalityNet.Org can be found at http://bit.ly/1LrP8jZ
Richard B Evans
President of Revenue Report Card LLC
Phone: (954) 290 - 3567