Real Estate Investor · Nashville, TN · Member since 2014 · 78 posts · 44 votes
I'm a real estate investor, but this question is actually related to another business I'm in. We sell a green pest control product that, among other things, kills bed bugs. Since it's non-toxic there is no restriction on the time between the treatment and reentry for staff or guests, the treatment itself is also fast compared to other treatment methods. I want to create a website or app with form fills and a calculator that allows my pest control customers to show the financial impact of using their service vs. a competitor using alternative methods. Is there a standard metric that measures lost revenue due to a room being down for maintenance? I feel like there should be, but I can't seem to find one on Google.
From what I have found I would think it might be something like:
Average TrevPOR x Overbookings that took place while a room could not be occupied due to a pest control treatment.
Any feedback or input would be greatly appreciated. Thanks!
Investor · Schaumburg, IL · Member since 2015 · 219 posts · 104 votes
9y
The essential KPI is RevPAR, it can be calculatedby the following formula.
Average Daily Rate (ADR)
x Occupancy (Occ)
= Revenue Per Available Room (RevPAR)
ADR x Occ = RevPAR
As you can see RevPAR take the average the property earns per total rooms and the occupancy which takes into the number of rooms that are filled.
But from a sales perspective you may be better emphasizing the ADR because that number is higher it would reflect the loss revenue by not renting the room out. By not renting a room out it would reduce the RevPAR since the Occ would be lower. You should also factor in the cost of the service. These peat control companies charge anywhere from $250 -$750 per room being remediated. If the do it in house they can the can pay their in house maintenance guy 15.00-25.00/hour. That is where the true savings are.
Investor · Schaumburg, IL · Member since 2015 · 219 posts · 104 votes
9y
David,
You should look into exisiting peat control companies like EcoLab, Terminex, or Orkin use in their propaganda. There are also diy companies that offer similar products that you mentioned. I am not sure if your product is proprietary or if you are pushing a white label product. But if you look into trde magazines
It's a patented technology and we have relationships with some of the companies you mention. This is primarily a value add service for my customers. I'm mostly trying to get a handle of the kind of KPI's that might be related to lost revenue due to maintenance.
Investor · Schaumburg, IL · Member since 2015 · 219 posts · 104 votes
9y
The essential KPI is RevPAR, it can be calculatedby the following formula.
Average Daily Rate (ADR)
x Occupancy (Occ)
= Revenue Per Available Room (RevPAR)
ADR x Occ = RevPAR
As you can see RevPAR take the average the property earns per total rooms and the occupancy which takes into the number of rooms that are filled.
But from a sales perspective you may be better emphasizing the ADR because that number is higher it would reflect the loss revenue by not renting the room out. By not renting a room out it would reduce the RevPAR since the Occ would be lower. You should also factor in the cost of the service. These peat control companies charge anywhere from $250 -$750 per room being remediated. If the do it in house they can the can pay their in house maintenance guy 15.00-25.00/hour. That is where the true savings are.
Real Estate Investor · Nashville, TN · Member since 2014 · 78 posts · 44 votes
9y
Thanks for the information. I've sold to hotels before, but it's generally to owner operators. Most larger hotel organizations are wary of the liability if they take on responsibility for treatment themselves, especially if they want to use a pesticide as a residual.