Which equation is used to calculate IPC?

• A. IPC = (ADR * Days of the Month)
• B. IPC = (ADR * Days Earned % * Days of the Month) + Net Other
• C. IPC = (ADR + Total Revenue) / Days of the Month
• D. IPC = (Average Revenue * Days Earned)

Answer: (B)

The equation that calculates IPC, or Income Per Available Room, is best represented by the formula that includes the Average Daily Rate (ADR) multiplied by the percentage of days earned and the total number of days in the month, along with any net other revenue. This formulation provides a comprehensive view of a hotel's revenue performance by integrating key components that contribute to overall income.

In this context, ADR reflects the average income earned from each room sold, while Days Earned % accounts for the occupancy level, indicating how many of the available room nights were sold. Including the total days of the month allows for a standardized calculation that represents the revenue potential over the entire period being analyzed. Adding Net Other captures additional revenue sources outside the room sales, thereby enhancing the accuracy of IPC as it encompasses all income-generating aspects of the hotel operation.

This multi-faceted approach enables a clearer picture of a hotel's financial performance, making it easier to assess operational efficiency and revenue management success. The other options fail to incorporate this combination of variables or modify them in ways that do not align with the recognized method for calculating IPC.