Five essential hotel metrics and how to calculate them
Tracking your hotel metrics involves gathering vital data and interpreting it in order to gain valuable and actionable insights into the performance of your business. With accurate and thorough metrics, you have a solid base from which to set your goals and KPIs. With regular monitoring, you can compare them over time, and see how you are performing compared to your competitors or to average hospitality standards.How to decide which data is most important to keep track of? Let us guide you through the five essential hotel metrics to track that can add value to your hotel data analysis.Occupancy rateWhat it is: Occupancy rate is the percentage of rooms that are occupied at your properties.Why it is useful: Monitoring this metric and comparing it to the industry average can help to highlight particular times when there may be a peak or a drop in expected bookings so that you can plan for making the most out of the situation. For example, if you know you have a lull on weekdays in March, you can launch a targeted campaign with discounts for that period. This metric also helps you to fine-tune your staffing levels and resources.How to calculate it: OCCUPANCY PERCENTAGE = OCCUPIED ROOMS / AVAILABLE ROOMS. For example, if 176 of your 250 rooms are occupied, then your occupancy rate is 176/250, which gives you 0.704, or 70.4%.Average daily rate (ADR)What it is: The average daily rate refers to the average price paid per room in your hotel.Why it is useful: Many hotels do not have set rates for rooms, and instead, the rates change according to the time of year, day of the week, and other factors such as projected occupancy rate. When rates regularly change, it can be useful to compile all this data into one single figure, the ADR, to ensure your prices remain overall competitive, while still being profitable. How to calculate it: ADR = TOTAL ROOM REVENUE / NUMBER OF OCCUPIED ROOMS. For example, if you have 60 rooms occupied with a total revenue of €18,543 then your ADR is €18,543/60, which gives you an average daily room rate of €309.05. Revenue per available room (RevPAR)What it is: RevPAR is a different take on the ADR. This metric takes the overall room revenue into consideration but disregards how many rooms are occupied or vacant. Why it is useful: This figure, which amalgamates the occupation data with the revenue data, offers good insight into the overall profitability of the hotel at current occupation levels. How to calculate it: RevPAR = TOTAL REVENUE FROM ALL ROOMS / TOTAL NUMBER OF ROOMS.For instance, if your hotel has 120 rooms, and you have received €23,500 in total from letting out some or all of these rooms, the calculation is €23,500/120 which gives a RevPAR of €195.83.Gross operating profit per available room (GOPPAR) What it is: GOPPAR gives us another vital view of the per-room finances. Why it is useful: This metric focuses not on the rates but on the profit, instantly showing you how much profit you are making for each room you have available. This figure will include all revenue streams, rather than simply just the room rate, so it will take into account extra services such as restaurant meals, drinks at the bar, and spa treatments. How to calculate it: GOPPAR = GROSS OPERATING PROFIT / NUMBER OF ROOMS. For example, if you add together all the profits of the business from all areas of the hotel and it comes to a figure of €165,543 and you have 92 rooms, your GOPPAR is €16,5543/92 = €1799.38.Customer satisfaction score (CSAT)What it is: This score is a method of measuring customer satisfaction levels.Why it is useful: Measuring customer satisfaction is a many-faceted technique that gives incredible insight into how your customers perceive your business. We explore the importance of the CSAT score in hospitality in a dedicated article.How to calculate it: There is no simple equation to calculate your CSAT score, but systems can be implemented, and software utilised to gather the right data and give you a reliable CSAT score. This is a potentially complex process that needs to be done right in order to extract the most valuable data, but it can be simplified and automated.Metrics can be easy to monitor with the right toolsMonitoring hotel metrics can add significant value to your business intelligence. Benchmarking against industry standards or your competitors can help you identify priorities and areas of improvement. In order to make the metrics as useful as possible, you should calculate and monitor them on a regular basis, extracting actionable insights.However, measuring hotel performance metrics can be complicated and time-consuming. When choosing your tools and systems, look out for which metrics they can monitor for you. HiJiffy’s Guest Communications Hub uses conversational AI to effectively and efficiently automate your CSAT calculations, providing clear metrics and putting them in the context of wider insights from your guest communications.For more hotel metrics and explanations of hotel industry jargon, take a look at our glossary page.
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