KEY PERFORMANCE METRICS FOR HOTELS & HOW TO CALCULATE THEM | Six Star Hotel Equipment

KEY PERFORMANCE METRICS FOR HOTELS & HOW TO CALCULATE THEM | Six Star Hotel Equipment

In today’s business environment, it is more important than ever for entrepreneurs to keep a close eye on their performance and progress. With the rapid pace of change, it is essential to have a clear understanding of what indicators of success to measure yourself against. For hoteliers, some key performance metrics to keep an eye on include occupancy rate, average daily rate, and revenue per available room. While these are all important numbers to track, it is also important to remember that the most successful businesses are those that are able to adapt and change with the times. So while it is essential to stay up-to-date on industry trends and benchmark your performance against established indicators, always be prepared to adjust your strategy as needed in order to stay ahead of the curve.

1. Total Available Rooms

To calculate your hotel’s inventory turnover, you need to know the total number of available rooms for the month. You can get this number by multiplying the number of rooms in your hotel by the number of days in the month. For example, if you have a hotel with 100 rooms and you’re open 365 days a year, your total available rooms would be 36,500. To calculate your monthly inventory turnover, divide this number by the number of bookings you took in the month. So, if you took 1,000 bookings in the month, your inventory turnover would be 36.5. This metric is important because it tells you how efficiently you’re using your rooms. A high turnover is good because it means you’re not leaving money on the table by having unsold rooms. A low turnover is bad because it means you’re not generating enough revenue from your rooms. 

2. Average Delivery Rate (ADR)

There are a number of different performance metrics that hoteliers can use to measure and track the success of their business. One of the most important metrics is the Average Daily Rate ADR. The ADR is calculated by dividing the total room revenue for a given period of time by the total number of occupied rooms during that same period. So, if a hotel had 100 rooms occupied for a total of 200 nights in a month, and generated room revenue of $20,000 during that time, the ADR would be $100 ($20,000 / 200).

While the ADR is a simple metric to calculate, it can provide valuable insights into a hotel’s overall performance. For example, tracking ADR over time can help identify trends in occupancy and room rates. Comparing ADR between different hotels can also be helpful in benchmarking performance and identifying opportunities for improvement. Ultimately, the Average Daily Rate is a key metric that all hoteliers should keep an eye on.

3. Revenue Per Available Room (RevPAR)

Revenue per available room (RevPAR) is a key performance metric for hotels. It measures the revenue generated over a period of time, just through room bookings in a hotel. RevPAR is calculated by dividing total revenue by total rooms available. This metric is beneficial in predicting the average rate at which available rooms are being let out by your hotel, thereby providing a valuable understanding of your hotel’s operations. 

By monitoring your RevPAR, you can make informed decisions about pricing, promotional activity, and room inventory, which will all have an impact on your hotel’s bottom line. Therefore, if you’re looking to get a better understanding of your hotel’s performance, RevPAR is a metric you should be tracking.

4. Average Occupancy Rate / Occupancy (OCC)

There are a number of key performance metrics that hoteliers use to track the success of their business. One of the most important is average hotel occupancy. This figure is obtained by dividing the number of occupied rooms in a given period by the number of rooms available. By tracking occupancy rates on a daily, weekly, monthly, or yearly basis, hoteliers can get a good idea of how their business is performing. Generally speaking, a higher occupancy rate is indicative of a successful business. However, there are a number of factors that can impact occupancy rates, so it’s important to track this metric over time to get a clear picture of your hotel’s performance.

5. Average Length of Stay (ALOS)

A hotel’s average length of stay (ALOS) is a key performance metric that measures profitability. The metric is calculated by dividing the total number of occupied room nights by the number of bookings. A longer ALOS is generally considered better than a shorter one, as it implies reduced labor costs associated with room turnovers between guests. However, there are several factors that can affect a hotel’s ALOS, such as the type of property (e.g., resort vs. business hotel), seasonality, and location. 

Therefore, it is important to compare a hotel’s ALOS to those of similar properties in order to accurately gauge its performance. Additionally, the ALOS metric should be monitored over time to identify trends and make necessary adjustments to improve profitability.

6. Market Penetration Index (MPI)

Market Penetration Index or MPI compares your hotel’s occupancy rate to that of your competitors in the market. This index provides an encompassing view of your property’s position within the market and can be used to identify opportunities for growth. If your hotel has a low market penetration index, it may be indicative of a lack of awareness or an inferior product. In these cases, it is essential to take steps to improve your visibility and increase your bookings. By tracking your market penetration index and taking proactive measures to improve your position, you can ensure that your hotel is positioned for success in the competitive landscape.

7. Gross Operating Profit Per Available Room (GOP PAR)

This figure measures the overall profitability of a hotel across all revenue streams, not just rooms. It’s a key metric for hotels because it can help identify which parts of the business are bringing in the most revenue and also throw light on the operational costs incurred in order to do so. Dividing Gross Operating Profit by rooms available can give you your GOP PAR figure. Use this metric to track the success of your hotel and make sure you’re delivering the best possible experience to your guests.

8. Cost Per Occupied Room – (CPOR)

Cost Per Occupied Room (CPOR) is another metric that can provide valuable insights into a property’s profitability. CPOR takes into account both fixed and variable expenses, making it a helpful tool for evaluating a hotel’s overall efficiency. To calculate CPOR, simply divide the property’s total expenses by the number of occupied rooms. This metric can be further broken down to show costs for specific departments, such as housekeeping or food and beverage. By tracking CPOR on a regular basis, hoteliers can identify areas of opportunity and make necessary adjustments to improve profitability.

This article is reproduced from www.aolga-hk.com. We have full authority to do this as we are the designated Australian Agent for the full range of Aolga’s electrical appliances.

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