Revenue

RGI

Revenue Generation Index

RGI (Revenue Generation Index) compares a hotel’s RevPAR with the average RevPAR of its competitive set. An RGI of 100 means the hotel is earning exactly its fair share of room revenue; above 100 it is outperforming the set, and below 100 it is losing share.

Formula

RGI = (Hotel RevPAR ÷ Comp set RevPAR) × 100

Equivalently, RGI = (MPI × ARI) ÷ 100.

RGI is also called the RevPAR index, and it is the headline number in most market benchmarking reports. It exists because raw RevPAR cannot tell a hotel whether a good month was good performance or just a good market. Indexing against the comp set strips out the market and leaves the hotel’s own performance.

Because RevPAR combines rate and occupancy, RGI splits into two parts: MPI, the occupancy index, and ARI, the rate index. An RGI of 100 can come from very different positions — winning on occupancy while discounting, or holding rate while running emptier — and the two component indices show which.

RGI is only as meaningful as the comp set behind it. A set chosen to flatter produces a high index and no useful signal, which is why owners and asset managers scrutinise the comp set as closely as the number itself.

Worked example

A hotel posts a RevPAR of €126 in a month when its comp set averages €120. Its RGI is 105: it captured 5% more than its fair share of room revenue.

Frequently asked questions

What is RGI in the hotel industry?

RGI, the Revenue Generation Index, measures a hotel’s RevPAR against the average RevPAR of its competitive set. A score of 100 means the hotel earns exactly its fair share of room revenue; above 100 it is outperforming its competitors, and below 100 it is losing share to them.

What does RGI stand for in hotels?

RGI stands for Revenue Generation Index. It is also called the RevPAR index, because it is the hotel’s RevPAR expressed as a percentage of its comp set’s RevPAR. It is the headline measure in most hotel benchmarking reports and is closely watched by owners and asset managers.

How do you calculate RGI in a hotel?

Divide the hotel’s RevPAR by the comp set’s average RevPAR and multiply by 100. A hotel with a RevPAR of €126 against a comp set average of €120 has an RGI of 105. The same result comes from multiplying MPI by ARI and dividing by 100.

Related terms

  • Comp Set — A comp set is the group of comparable, competing hotels a property benchmarks itself against — chosen to match on location, segment, quality and the demand they draw from.
  • MPI — MPI (Market Penetration Index) compares a hotel’s occupancy rate with the average occupancy of its competitive set. An MPI of 100 means the hotel is filling its fair share of rooms; above 100 it is taking more than its share of demand.
  • ARI — ARI (Average Rate Index) compares a hotel’s ADR with the average ADR of its competitive set. An ARI of 100 means the hotel is achieving the market rate; above 100 it is selling at a premium to its competitors.
  • RevPAR — RevPAR (Revenue Per Available Room) measures how much room revenue a hotel earns for every room it has available, whether or not that room was sold. It combines rate and occupancy into a single number, which is why it is the most widely used performance metric in hotel revenue management.