Excelling in revenue management requires selling the right packages, to the right guest, at the right cost. With the extensive set of variables that determine your hotel’s performance, almost all hotels establish KPIs. Key performance indicators help hotels measure their progress and stay on track with their goals. Hotels that ignore critical KPIs struggle to operate efficiently and get dominated by competing hotels that garner a higher profit.
Obviously, as a hotelier, you’re always striving to improve your property. The idea of sifting through stacks of reports may be unappealing. However, if executed properly, you can streamline your KPIs and track the most valuable ones.
There are hundreds of KPIs to go through. However, you should only truly focus on a few. Here is a list of the 5 most important KPIs:
1. Average Daily Rate (ADR)
ADR measures the average income per paid room. This data reveals how your hotel is performing on a day-to-day basis while allowing you to adjust to maintain profitability. This is one of the most useful KPIs because it allows you to compare to competing hotels.
How to calculate:
Rooms Revenue / Paid Rooms Occupied
2. Revenue Per Available Room (RevPAR)
This KPI helps you track the overall revenue-generating performance of every room in your hotel. This doesn’t account for other sources of revenue, like restaurants.
How to calculate:
Total Room Revenue / Rooms Available
3. Occupancy
This is the number of occupied rooms at any given time. This reflects the efficiency of the space available and can be used in conjunction with other metrics like ADR and RevPAR.
How to calculate:
Occupied Rooms / Rooms Available = Occupancy %
4. Gross Operating Profit (GOPPAR)
Another important KPI because it tracks the overall gross operating profit across all rooms, regardless of their occupancy.
How to calculate:
GOP / Rooms Available
5. Customer Satisfaction Rating
It’s important to use a reputation/social media monitoring tool to track your reviews. Guests will check sites like TripAdvisor before booking, so you want to make sure you’re at a satisfactory rating.
How are your KPIs? If you’re struggling to find talent to track these metrics, JDI can help. Joseph David International is regularly ranked among the top hotel recruiters because we work hard to find the ideal fit for your operation as well as the needs and wants of the candidate. For more information about our hospitality recruiting services, please click here.
