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September 23, 2014
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Americas: Beyond RevPAR—Here Comes ProPAR!


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Just when you thought you’d learned all about what revenue managers are thinking when your RFPs land on their desks, along comes an article titled "Sea Change" in the September issue of Hotels magazine that turns the topic on its head.

Hotel ownership groups, the article states, “are dissatisfied with seeing more revenue but less profit as customer acquisition costs have increased at a higher rate than revenue.” A major contributor to customer acquisition costs are commissions, both wholesale (those paid to online travel agencies) and retail (those paid to travel agents or third-party intermediaries).

The challenge for revenue managers is that their traditional target metric, revenue per available room (RevPAR), does not take acquisition costs into account. Metrics that would come closer are ProPAR, or profit per available room, or Net RevPAR, which is Revenue minus (commissions plus total sales and marketing) divided by available rooms. 

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