When offering a service, it is very common to be asked to provide an estimated return on investment. Oftentimes we will estimate based on industry standards, for example, revenue management systems are said to have an ROI between 5% and 20%. However, given the volatility in recent years, it is difficult to attribute growth in occupancy or ADR solely to an RMS. And since it is impossible to measure the success of an RMS in a vacuum, Rate Yield has studied the performance of their clients in Montreal as a weighted average against the STR data for the same market. Using this data set, we can establish the variation in performance of Rate Yield hotels against a widely accepted benchmark.
To say that the Montreal market is experiencing high ADR is an understatement. When comparing ADR growth on a monthly basis, the market experienced an average growth of 18.42% for August 2022-July 2023 as compared to August 2021 – July 2022. Rate Yield clients located in Montreal saw an average ADR growth of 32.22% for the same period. Rate Yield clients recorded an average ADR $14.12 higher than their market benchmark.
When looking at occupancy rates, it is important to note that Rate Yield’s algorithm is not consistently designed to maximize occupancy. Rate Yield’s revenue management team works with client hotels to define strategies that are in line with their own business needs. Given the difficulty in staffing experienced by the market, many clients have opted to increase ADR over occupancy, resulting in slightly lower growth than the benchmark (47% average occupancy growth vs 49% for the benchmark).
These winning strategies are ultimately reflected in the revPAR, where we see an average increase of 32.22% year-on-year for Rate Yield clients as compared to 18.42% for the benchmark. Rate Yield clients boasted an average revPAR of $10.98 higher than the market at $123.76 vs $112.78.
This analysis shows us that within the same market, Rate Yield clients are outperforming the benchmark. From growth metrics to performance metrics, Rate Yield clients are seeing great results and are happy to know that they have the flexibility to achieve different goals according to their needs and budgets.
