6 Key Performance Indicators for Hotels

What gets measured gets done – an old adage that is more relevant today than it ever has been. Managing a successful hotel has to be one of the most challenging jobs due to the sheer volume of responsibilities required. With so many departments and so many people that you have responsible for it can be very difficult to find the time to review your performance. Key Performance Indicators for hotels are select measurements that really matter for lasting success and we examine a few of the most important ones below.

Online Rating

It is very much in your interest to get as many online reviews as possible – good and bad. Reviews are not only valuable in the way that guests select hotels based on the quality of the review, but they are also useful critical feedback that you can base improvements on. Negative reviews while having an initial negative impact give you the opportunity to take corrective action so that the next time the review will be better.

Occupancy %

The most critical and simplest measure of performance for hotels in the occupancy rate. Measured as the percentage of available rooms occupied over a specific period of time.

Occupancy % = Rooms Occupied / Rooms Available

ADR – Average Daily Rate

Measured simply as the average price paid per room on a given day. Works well in isolation as an ongoing performance metric.The ADR is most useful when compared to previous periods or seasons to identify performance.

Average Daily Rate = Total Room Revenue / Total Rooms Occupied

REVPAR – Revenue Per Available Room

REVPAR is a very useful measure of performance and it is also one that needs to viewed in the correct context. Measured by the average daily room revenue generated by available room, it can differ significantly based on industry specific factors

REVPAR = Total Room Revenue / Total Rooms Available

Customer Satisfaction

It may be more of a challenge to measure but without satisfied customers you will find it difficult to challenge for business against competitors, especially when online ratings are the currency of choice for potential guests. It is possible to develop a process with which to measure customer satisfaction and you can incrementally improve your offering over time based on the results.

Advertising ROI

Calculating your Return on Investment (ROI) from your advertising and promotions will save you from wasting money on ineffective advertising and promotion. How much revenue does you local city magazine ad bring hotel? Maybe lots, maybe little – either way you need to know and you need to track and measure it. With online advertising this task should be somewhat easier but make sure you have your systems set up in your hotel so that you can measure the effectiveness of you advertising spend.

Key Performance Indicators for Hotels

These are only a few metrics out of many that can be applied to your business but we feel they are the most relevant in the current age of connected customers. Measuring your performance is only the first and easiest part of the continual improvement process but without knowledge there can be no purposeful action.