At the MGM Grand Hotel & Casino in Las Vegas, VP of F&B David McIntyre oversees fine dining, casual, and quick-service venues, as well as booming banqueting services with yearly covers tallying into the mega-millions. With those kinds of numbers, average check and total covers data just don’t give him the exact figures he needs to analyze and exploit the daily, weekly, and yearly flow of business under his watch. With the help of state-of-the-art point-of-sale (POS) technology, McIntyre employs pinpoint accurate revenue management strategies to boost the total revenue of his operations, and RevPASH (Revenue Per Available Seat Hour) is the driving calculation.

In 1999, Sheryl Kimes, professor of operations management in the School of Hotel Administration at Cornell University, published a paper introducing RevPASH as the benchmark for optimal F&B success (“Implementing Restaurant Revenue Management: A Five-step Approach,” Cornell Hotel and Restaurant Administration Quarterly, vol. 40, no. 3, pp. 16–21, 1999). RevPASH was formulated to produce the same kind of precise, time-specific data for food and beverage operations that informs revenue management measures already in place in both the hospitality and airline industries. Hotels use RevPAR (Revenue Per Available Room), and airlines compute RevPSM (Revenue Per Seat Mile). Kimes deemed RevPASH as the “appropriate measure” for controlling the flow of business and maximizing profits because it considers the hourly revenue value of the operation and highlights the strengths and weaknesses of each hour of service.

As an example, a 100-seat restaurant that takes in $500 in one hour at full capacity has a RevPASH of $5.00, or $500/(100 seats x 1 hour). Meanwhile, if that restaurant can turn tables and move more clientele through in that one hour and increase its revenue to $600, its RevPASH becomes $6.00, or $600/(100 seats x 1 hour). Additionally, examine the same restaurant in a “shoulder” hour when capacity is at 60 percent and sales total only $300. That produces an average check equal to the full-capacity hour ($5.00) but a lower RevPASH of $3.00, or $300/(100 seats x 1 hour).

Since the number of seats is fixed, it becomes evident that the restaurant can only increase revenue by adjusting pricing or by increasing covers, which—in the case of busy, full-capacity periods—means accelerating the service cycle without sacrificing customer satisfaction. While the overall RevPASH number is viewed as a standard of performance, the true strength of RevPASH, especially when implemented with a sophisticated POS system, is the hourly flow of information that can isolate periods of opportunity for managers to concentrate on.

McIntyre recognized exactly the kind of statistics he needed in RevPASH summaries. “RevPASH made us look closely at production times and profitable items. We have one million [yearly] covers in one of our restaurants, so even small adjustments could make a substantial difference.” In the high-volume businesses McIntyre manages, full capacity is the status quo, and minutes and seconds truly do add up to very real, large dollar amounts.

McIntyre gathered 2007 RevPASH data from the MGM Grand dining establishments and began assessments to find revenue management opportunities in all of them. On January 1, the property’s nine fine-dining restaurants—Joël Robuchon, Fiamma, Pearl, Seablue, Shibuya, L’Atelier, Craftsteak, Diego, and Nobhill—began implementing measures to boost RevPASH, with the goal of a 12 percent increase for 2008.

To meet that goal, McIntyre followed the five steps to restaurant revenue management (RRM) prescribed in Kimes’ paper. He began the process by assigning his staff and his POS system to make close observations of “arrival times, meal durations, server procedures, and bussing times” to formulate a set of metrics as a baseline for improvement. Every aspect of business came under close scrutiny. Managers timed processes— from bringing bread to tables to clearing those tables—to discover areas that could provide opportunities for improvement.

“We looked at the time it took to bus a table,” McIntyre says. “Some tables might be reset three or four hundred times, and if we found that 30 percent of the time was spent in retrieving equipment or supplies, we knew we had to move those supplies closer to the job.”

McIntyre’s observation of business flow led him to a fuller understanding of the elements that control the tempo of service in the front and back of the house. He worked with food preparers to establish a “production line mentality” and took “more mundane” matters into hand as well. “We even looked at servers’ trays. Were the generally accepted trays for service the right size? The right shape?”

Managers came under the microscope also, to determine if the correct balance of hands-on attention, delegation, support, and oversight was in place to optimize their efficiency and effectiveness, rather than over-administrating, following unproductive methods and policies, or falling into “constant firefighting” mode.

The recommendations resulting from the RRM study ranged from the technologically advanced to low-tech minutia. POS systems were upgraded to present a more complete, up-to-the-second picture of business. McIntyre and managers arrived at the proper mix of tables and their configurations to accommodate the most covers in the least time. (According to McIntyre, idle time is the most urgent barrier to higher revenue.) Service equipment parts were increased where necessary to prevent interruption of flow. Table setting plans were revised to reflect the real needs of guests and to reduce setup time.

Bread baskets were prepped to shave seconds from service times. In the buffet, bussing cards (the signal from server to busser to clear a table) were enlarged to make them more visible to bussers. And even in full-capacity periods, incentive pricing or “value propositions” such as happy hours, kids-eat-free times, or beverage promotions could add quick-turnover covers to increase revenues.

The MGM Grand property is in the midst of implementing the recommendations set forward by McIntyre’s managers. McIntyre is dedicated to seeing those recommendations through and continually monitoring their progress and efficacy, and he stresses the importance of the hourly nature of RevPASH, even going so far as to advise employees to “concentrate on minutes.”

Recognizing the importance of the hour-to-hour shifts in business puts RevPASH assessments where they belong as a useful revenue management tool. McIntyre has asked that his restaurants raise their average RevPASH numbers from an enviable $244 to an astounding, only-in-Vegas $276 in this calendar year. Certainly other hotels can achieve the same results, at least in percentage terms. As for McIntyre, he knows that to reach that lofty goal, growth will have to be measured on an hour-by-hour—or minute-by-minute—basis.

Denny Lewis is a frequent contributor to HOTEL F&B.