CHIA common mistakes
CHIA · Understand the traps and how to avoid them.
Calculating monthly occupancy as rooms sold divided by (total rooms × 365), or including out-of-order rooms in the denominator.
Candidates memorize an annual occupancy formula and reuse it for a monthly or seasonal question without restating the available-room base.
What to do instead
Write the period first, then compute available rooms as total rooms minus out-of-order rooms for that period. Occupancy = rooms sold / available rooms for the same dates; verify that numerator and denominator cover identical dates.
Using total hotel revenue (rooms plus F&B, banquet, and ancillary) in the RevPAR numerator, or dividing rooms revenue by total rooms instead of available rooms.
The phrase 'revenue per available room' sounds like an all-revenue measure, and total rooms is easier to find than available rooms.
What to do instead
RevPAR = rooms revenue / available rooms. If the question asks for TRevPAR, use total revenue; if it asks for GOPPAR, use gross operating profit. Label the numerator and denominator before dividing.
Computing ADR as rooms revenue divided by guests, by occupied rooms plus out-of-order rooms, or by available rooms.
Guest counts and total room inventory are prominent in the data, and ADR is confused with spend per guest or with RevPAR.
What to do instead
ADR = rooms revenue / rooms sold (occupied room nights). Keep guests out of the denominator and use available rooms only for RevPAR. If complimentary rooms are included in occupied rooms, state that policy.
Treating a reservation for a room with two guests as two room nights, or counting guests rather than rooms sold when building occupancy and segment demand.
Reservation and front-desk data show adults and children, so 'people' feels like the natural unit of demand.
What to do instead
Use room nights: one occupied room for one night equals one room night regardless of the number of guests. Convert group blocks to room nights by multiplying rooms by nights and applying the pickup or attrition assumption.
Forecasting next Tuesday's occupancy by applying the monthly or annual average occupancy to every day.
Aggregate STR or financial reports provide monthly averages, and day-of-week patterns are not visible in the total.
What to do instead
Build the forecast from day-of-week and segment-level history: compare the same weekday, adjust for seasonality, holidays, events, and current pickup or pace, then reconcile the daily forecast back to the monthly total.
Accepting a group or contract block by adding its full room revenue and F&B spend as incremental business without subtracting displaced transient rooms.
The group revenue is visible and easy to total; the transient business that would have been displaced is not on the same report.
What to do instead
Estimate displacement as displaced room nights × displaced segment ADR, plus any displaced ancillary spend. Compare net contribution (group revenue minus displacement) and consider day-of-week and space constraints.
Marking a positive expense variance as favorable, or a negative revenue variance as favorable, because the sign is positive or negative.
Candidates apply one rule ('positive is good') across both revenue and expense lines.
What to do instead
Define variance as actual minus budget (or actual minus forecast) and interpret by line type: revenue above budget is favorable; expense above budget is unfavorable. State the convention and check contra-revenue items separately.
Calculating flow-through as the change in GOP divided by total revenue, or as a percentage of total revenue rather than of the revenue change.
Flow-through is confused with GOP margin, and both use GOP and revenue in the same answer.
What to do instead
Flow-through = (current GOP − prior GOP) / (current revenue − prior revenue) when revenue is increasing; use the absolute revenue change as the denominator and report the percentage. If revenue falls, interpret the sign carefully. Distinguish this from GOP margin = GOP / revenue.
Reversing an index ratio-for example, calculating MPI as comp-set occupancy divided by hotel occupancy-or reporting an index of 1.05 instead of 105.
Index language is ambiguous, and spreadsheet ratios often display as decimals.
What to do instead
Use hotel performance / competitive-set performance × 100 for MPI, ARI, and RGI. Sanity-check that a hotel beating its comp set has an index above 100, and convert decimals to index points consistently.
Reporting a RevPAR index increase as proof of improved performance without decomposing it into occupancy and ADR index movements, or describing a move from 70% to 75% as a 5% increase rather than 5 percentage points.
Summary indexes and percentage-point changes are easy to quote, and mixed ADR/occupancy effects can mask share loss.
What to do instead
Decompose the index: RGI ≈ (MPI × ARI) / 100, and check segment mix and rate strategy. For occupancy changes, state percentage points; for relative changes, state percent change, using the same basis for hotel and comp set.