What is the meaning / definition of Average Rate per Guest in the hospitality industry?
ARG stands for: Average Rate per Guest
Total room revenue divided by the number of guests.
As hotels often have double rooms, triple, quadruple or even more occupancies per room, this ratio allows an insight into exactly what rate is payed on average. Knowing the average rate per guest can help hotels compare the different rates customers pay with the average. Too much dispersion in a hotel may cause some customers to feel as if they have been overcharged, if some customers were able to purchase rooms at much lower rates than average.
How to calculate the Average Rate per Guest (ARG)?
Formula: Average Rate per Guest = Total Room Revenue / Total Number of Guests