What is the RGI in the hotel industry?
RGI stands for Revenue Generating Index (an alternative definition for RGI in hotels is “RevPar Index”) and is used to measure the financial performance of a hotel. It is calculated by dividing a property’s RevPAR by the aggregate RevPar of other comparable hotels in the local market. The higher the RGI, the more profitable a hotel is.
How do you calculate RGI in the hotel industry?
A hotelier can determine where their property lands in the RGI by comparing their Revenue per Available Room (RevPAR) against the average RevPAR in their local compset.
The formula for RGI is: RGI = RevPAR / Compset’s aggregate RevPAR
To find information on your compset’s RevPAR, you can work with a hotel performance intelligence engine that provides quick access to this and important other metrics.
How do you improve RGI for a hotel?
Improvements can be made in a hotel’s place in the revenue generation index hotel by following many of the same practices used to improve their RevPAR.
These include focusing on driving more revenue through individual channels of income, such as:
- Room Rates: Increasing room rates is one of the most direct ways of increasing RevPAR. By raising prices, hotels can increase their revenue per available room and improve their bottom line.
- Occupancy Levels: Increasing occupancy levels can also have a significant impact on RevPAR. When occupancy rates increase, there are more rooms available to be filled, and thus more potential revenue. This can help to offset the cost of increasing room rates and result in higher RevPAR.
- Ancillary: Ancillary services are services provided by a hotel that are not included in the room rate. Examples of ancillary services include room service, spa treatments, and parking. Increasing the availability of these services and charging for them can help to increase a hotel's RevPAR. By encouraging guests to purchase additional services, hotels can generate more revenue and improve their RevPAR.