Revenue blog · Benchmarking
RGI vs MPI vs ARI: how to read the three competitive indices properly
An RGI above 100 can hide very different occupancy and rate positions. For example, MPI 116 and ARI 88 produce RGI 102.08, or 102.1. The hotel is above the competitive set on occupancy and below it on average rate. The headline revenue index alone does not explain the reason or whether the business is profitable.
Read the three indices together, using the same reporting period and comparable source definitions. They help frame the next question; costs, mix and hotel-level evidence are needed to answer it.
What RGI, MPI and ARI actually mean in 2026
MPI — Market Penetration Index. Your occupancy divided by the comp-set's occupancy, times 100. It is the demand-share story — given how full the market is, how full are you?
ARI — Average Rate Index. Your ADR divided by the comp-set's ADR, times 100. It is the rate-share story — given what the market is charging, what are you charging?
RGI, MPI and ARI compare different parts of performance
RGI — Revenue Generation Index. Your RevPAR divided by the comp-set's RevPAR, times 100. It is the revenue-share story — given how much the market is earning per available room, how much are you earning?
The math: how the three indices fit together
| Index | Formula | What it measures |
|---|---|---|
| MPI | (Your occupancy ÷ comp-set occupancy) × 100 | Share of demand |
| ARI | (Your ADR ÷ comp-set ADR) × 100 | Share of rate |
| RGI | (Your RevPAR ÷ comp-set RevPAR) × 100 = (MPI × ARI) ÷ 100 | Share of room revenue |
Worked example. Your hotel runs 78% occupancy this month at an ADR of A$210. The comp set runs 75% occupancy at an ADR of A$220. Your RevPAR is A$163.80. The comp-set RevPAR is A$165.00. MPI = (78 ÷ 75) × 100 = 104. ARI = (210 ÷ 220) × 100 = 95.5. RGI = (163.80 ÷ 165.00) × 100 = 99.3. Check: (104 × 95.5) ÷ 100 = 99.3. The two paths to RGI return the same answer because they are the same answer.
The number that matters is not 99.3. The number that matters is the gap of 8.5 points between MPI and ARI. The hotel is winning the occupancy race and losing the rate race. RGI looks like parity. The strategy is anything but.
One index never explains the full comp-set story
Where each index breaks down
Each of the three indices lies in a specific way. The job is knowing the lie.
Where MPI breaks down
MPI compares occupancy. It does not care how much you charged for those rooms. A property running 12% above the comp-set occupancy level can be discounting hard, paying for room-nights with cash. MPI will reward the behaviour by climbing toward 110, 115, 120. The owner will read the index and conclude the hotel is winning. The hotel may be winning the occupancy column and losing the contribution column at the same time. MPI also moves with channel-mix decisions — a wider OTA allocation may change occupancy and commission costs, but the index alone cannot establish that relationship or show the cost.
Where ARI breaks down
ARI is rate, and rate is the easiest of the three to mislead with. ARI compares your ADR to the comp-set ADR, but it has no idea what is inside each rate. Breakfast-included rates inflate ARI on the way in and deflate the F&B margin on the way out. Package allocations move rate revenue into other revenue lines and tug ARI around like a kite string. Resort fees and destination fees, where they are present, are treated differently by different reporting standards — different accounting treatments can affect the comparison. ARI is a rate-positioning signal. It is not a rate-quality signal.
Where RGI breaks down
RGI is the headline number, which is why it is the most over-read. RGI compresses the rate story and the occupancy story into a single index and then politely refuses to tell you which of the two stories did the work. An RGI near 100 can be MPI 100 / ARI 100 (genuine parity), MPI 115 / ARI 87 (occupancy above set, ADR below set), or MPI 87 / ARI 115 (ADR above set, occupancy below set). Three different hotels. Three different strategies. One RGI. If the only number on the slide is RGI, the slide is not telling you what the hotel is doing — it is telling you the maths of the comp set. There is a separate piece I wrote on ADR vs RevPAR vs GOPPAR that walks through how the same shape of trap shows up when revenue indices are stripped of their cost layer. The same logic applies here: any single index, on its own, is a story with the middle pages missing.
RGI is the answer to a question MPI and ARI have already asked. Read in that order. Read in any other order, and the conversation goes sideways.
The right reading order: MPI, then ARI, then RGI
I read the three indices in the order they should be read, which is the opposite of the order most decks present them in. Most owner slides put RGI at the top because RGI is the summary. I open the conversation at MPI for one reason: MPI is the only index of the three that is harder to game with internal policy. Occupancy is occupancy. Once you have read MPI, ARI tells you the rate posture you ran while you were filling those rooms. RGI then becomes a check on whether the two stories added up to fair share. RGI never opens the conversation. RGI closes it.
The reading order in practice:
- MPI first. Did we get our share of demand? If MPI is materially above 100, we filled more than fair share. If materially below, we did not.
- ARI second. What did we charge while we were filling? An MPI of 110 paired with an ARI of 86 is a different hotel than an MPI of 110 paired with an ARI of 102.
- RGI third. Does the combined story produce fair share of revenue? If RGI is sitting near 100 with MPI and ARI moving in opposite directions, the strategy is doing one job at the expense of the other. That is not failure; it is a deliberate posture or an accidental one, and you need to know which.
Reading the indices in the wrong order — RGI, then MPI, then ARI — is how a hotel team ends up arguing about a number that was never the question. RGI is the consequence. MPI and ARI are the cause.
What to do about the gap — an operator playbook
The fix for misread indices is procedural, not analytical. Five steps close the gap permanently.
- Always report the three indices on one row. One row, three columns: MPI, ARI, RGI. Same period. Same comp set. Same denominator. Reading any of the three alone is reading the report wrong. The dashboard I run for our customers shows the three indices next to each other on the snapshot line, with a one-line caption that names the posture (occupancy-led, rate-led, balanced, ramp).
- Add a 12-month trend line. A single month of indices is noise. The decision-grade signal is the rolling 12-month trend in each of the three. If MPI is drifting up over six months while ARI is drifting down, you have a discount habit forming. If the reverse, you have a rate-hold posture maturing. Neither is visible in a single snapshot.
- Audit the comp set annually. The comp set is the denominator of all three indices, and a stale denominator quietly distorts every reading. New supply opens, a competitor repositions, a property changes brand — all of these alter what your hotel is being measured against. Without a comp-set audit, the indices keep moving while the reasons go un-named. We wrote this up at length in the piece on hotel revenue management strategies for 2026; the comp-set audit sits at the top of the annual list.
- Name the posture every month. When you publish the indices, write a one-line caption that says what they describe — "occupancy-led, ADR 4.2% below set" or "rate-held, occupancy 6% below set". That sentence makes the indices legible to a non-RM reader. Owners do not need to learn what MPI is; they need to know what the three numbers, together, mean for the hotel. The caption is the bridge.
- Tie the indices to forecast. A standalone index is a rear-view. An index laid over the demand forecast is a steering signal. If the next 14 days look like a high-occupancy period in your demand calendar, the comp set will likely lift on occupancy too, and your MPI will only move materially if you out-fill them. Reading indices against expected market shape is the difference between a benchmark and a decision.
Illustrative scenario: a similar RGI, a different commercial position
Consider hypothetical figures of MPI 117 and ARI 88. RGI is (117 × 88) ÷ 100 = 102.96, or 103.0. Occupancy is 17% above the competitive-set level and ADR is 12% below it. These are relative differences, not 17 occupancy percentage points. The figures describe a position; they do not prove that discounting caused it.
In a second hypothetical period, MPI 108 and ARI 96 produce RGI 103.68, or 103.7. RGI rises by 0.72 index points while the occupancy/rate gap narrows. The comparison is meaningful only if the periods, competitive set and accounting definitions remain comparable.
Before describing the second result as commercially better, examine room revenue, distribution and operating costs, available inventory and business mix. These indices cannot establish a profit improvement or a monetary return on their own. This is an illustrative calculation, not a customer case study.
How the three indices read across different postures
Five common postures, the indices each one tends to produce, and what the reading order tells you. None of these are good or bad in isolation — each one is the right or wrong answer depending on the hotel's stated strategy.
| Posture | MPI | ARI | RGI | What the indices are saying |
|---|---|---|---|---|
| Balanced parity | 100 | 100 | 100 | Hotel is tracking the comp set on both dimensions. |
| Occupancy-led | 113 | 92 | 104 | Occupancy above set; ADR below set. |
| Rate-led | 91 | 112 | 102 | ADR above set; occupancy below set. |
| Ramp | 85 | 96 | 82 | New build or reposition; both indices trail by design. |
| Compression win | 106 | 108 | 114 | Genuine outperformance; demand and rate both above set. |
FAQ
What do RGI, MPI and ARI stand for?
MPI is the Market Penetration Index — your occupancy ÷ comp-set occupancy × 100. ARI is the Average Rate Index — your ADR ÷ comp-set ADR × 100. RGI is the Revenue Generation Index — your RevPAR ÷ comp-set RevPAR × 100. All three are fair-share indices, normalised so that 100 is parity with the set.
How is RGI calculated?
RGI = (your RevPAR ÷ comp-set RevPAR) × 100. Mathematically equivalent to (MPI × ARI) ÷ 100, because RevPAR is itself ADR × occupancy. Most operator decks show the RevPAR-ratio version; the decomposition is what makes the index diagnostic rather than ornamental.
What is a good RGI for a hotel?
There is no universal target. RGI sitting near 100 is parity with the set, which is the right outcome for a balanced posture and the wrong outcome for a property positioned above set. The honest benchmark is direction of travel against the same comp set over a rolling 12 months.
Can MPI and ARI move in opposite directions?
Yes, and the divergence is usually the most useful signal in the report. An occupancy-led posture pulls MPI up and ARI down; a rate-led posture does the opposite. Both can sit on top of an RGI near 100 — same headline, different hotels.
How big should a hotel comp set be?
Four to eight properties is the workable range. Fewer and a single outlier dominates; more and the average smooths out the signal. The members should be genuinely substitutable — guests choosing between them on the same booking — not picked for flattery.
How often should I review the three indices?
Monthly, with a rolling 12-month trend behind each one. Weekly is too noisy for a multi-property benchmark; quarterly is too slow to catch comp-set drift. The monthly cadence sits where the signal-to-noise ratio is best.
What is the difference between RGI and fair-share index?
RGI is the revenue-fair-share index. MPI and ARI are the occupancy- and rate-fair-share indices respectively. All three are the same idea — your slice of the comp set's per-room performance, normalised to 100 — applied to three different layers.
The honest summary
MPI is the room-share story. ARI is the rate-share story. RGI is the revenue-share story. Read in that order, the three indices are the cleanest competitive diagnostic a hotel has. Read out of order, or read in isolation, RGI is just a number that flatters or punishes the property for reasons the slide does not explain. The hotels that use the indices well are not the hotels with the highest RGI — they are the hotels whose MPI and ARI are pointing where the strategy said they would.
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