# Reverse Engineering Hotel Industry Ratios

• Mar 15th 2011, 11:35 AM
Dingus
Reverse Engineering Hotel Industry Ratios
Hello Everyone. This is a problem that has been bothering me for a while and I'm hoping that there is a math instructor out there with a quick answer.

Heres the dilemma,

In the hotel industry there are 3 ratios that are used to measure performance.

Revenue per Available Room (R)
Occupancy (O)
and Average Daily Rate (A)

R = Revenue/Available Rooms
O = Sold Rooms/Available Rooms
A = Revenue/Sold Rooms

If I know all three of these ratios for a property, is there a way to multiply, divide, or tease these ratios out so that I can isolate the components, such as Revenue? I've tried to approach this but with no luck. At this point I'm more interested in IF it can be done and if so how than anything.

History: Me educated up through Calc 3
• Mar 15th 2011, 12:18 PM
dwsmith
Quote:

Originally Posted by Dingus
Hello Everyone. This is a problem that has been bothering me for a while and I'm hoping that there is a math instructor out there with a quick answer.

Heres the dilemma,

In the hotel industry there are 3 ratios that are used to measure performance.

Revenue per Available Room (R)
Occupancy (O)
and Average Daily Rate (A)

R = Revenue/Available Rooms
O = Sold Rooms/Available Rooms
A = Revenue/Sold Rooms

If I know all three of these ratios for a property, is there a way to multiply, divide, or tease these ratios out so that I can isolate the components, such as Revenue? I've tried to approach this but with no luck. At this point I'm more interested in IF it can be done and if so how than anything.

History: Me educated up through Calc 3

$\displaystyle\text{Revenue}=R\times\text{Available Rooms}$

$\displaystyle\text{Revenue}=A\times\text{Sold Rooms}$

You need to know either sold or available rooms to solve for revenue.
• Mar 15th 2011, 12:24 PM
Dingus
Quote:

Originally Posted by dwsmith
to know either sold or available rooms to solve for revenue.

Thanks DW, I know that much. Looking or a solution that doesn't require any of these pieces of information.

-D.
• Mar 15th 2011, 12:27 PM
dwsmith
Quote:

Originally Posted by Dingus
Thanks DW, I know that much. Looking or a solution that doesn't require any of these pieces of information.

-D.

Unfortunately, you are going to need more information.