Hotel KPI

Top 7 KPIs every hotelier must track

Prabhash Bhatnagar
Prabhash Bhatnagar

Hotel KPI or Hotel Key Performance Indicator is the value that can be measured and which lets you set a standard to measure the success rate of your hotel business as to how is it faring in the market. KPI in hospitality industry is also used to find out if or not you are on the right track to meet the targets set.

Similar to any other business, even hotel businesses have a group of Key Performance Indicators which help the decision makers to evaluate how their hotel’s performance.

Hoteliers across the world, in order to optimise their operations and enhance their profits, closely monitor their KPIs.

Now there are many ways to measure the growth and success of a hotel with newer metrics frequently replacing the older ones. That being said, there are a handful of KPIs for hotel general manager which help hoteliers meet the benchmarks set. These core KPIs are basically the fundamental indicators of how profitable the hotel property is.
These KPIs range from the daily operations to financial performance to sales and marketing and customer service.

Let us now look at the Key Performance Indicators or KPI in hospitality industry which can make your hotel business successful when monitored closely by hoteliers :

1.Total Available Rooms
Total Available Rooms are the number of rooms which are readily there to be booked in the hotel. In order to compute the Total Available Rooms, you need to sum up the Available Rooms and also the number of Occupied Rooms.

Now, the difference between the Total Available Rooms and Total Rooms available at the hotel is that the Total Available Rooms does not include rooms which aren’t in working condition or are undergoing maintenance.

This metric in kpi hospitality needs to be monitored as it is essential for the proper planning of your inventory which would further lead to proper number of room bookings.

2.Average Daily Rate or ADR
The Average Daily Rate or ADR is a popular KPI for hotel industry. The ADR is the average rate at which each room at the hotel was sold on a given day. It is calculated by taking the Average room revenue and dividing it by the total number of rooms sold.
This, however, does not include rooms that are occupied by staff, under maintenance of the ones that are.

3.Revenue per Available Room or RevPAR
RevPAR or Revenue per available room is another metric to measure the performance of the property in the hotel business which is very popular. The RevPAR metric helps in evaluating the hotel’s operational performance. This measure can further be used as a coach to make good future investment resolutions and meet the targets set. By finding out the RevPAR, the answer devised could act as a productivity indicator for a hotel investor. This also reflects how much a hotel can charge for its rooms and how successful it is at selling the inventory which is available.

4.Occupancy Rate
This term known as occupancy rate is used to express a percentage of rooms which are occupied for a particular period of time. The occupancy rate is found out by dividing the number of occupied rooms with the total available rooms. It helps to know how the property is performing in different seasons and time periods. This metric of kpi for hospitality industry tells how full your hotel is.

The rate of occupancy is crucial to plan the operations of the hotel business. This also helps in proper planning of your staff, the food and beverages as well as the hotel’s cleaning supplies.

5.Online reviews
It is a proven fact that people g9 through the published reviews and feedbacks before they make a hotel booking. On websites like Tripoto or Make My Trip people put their good or bad reviews which are very helpful to judge the property, there are pictures which you can see and then decide to book the property or not. Online feedbacks and reviews can break or make your reputation and also your prompt replies to your hotel’s reviews can show the customers that you care for what they think about your property and you take their bad reviews in a sporting way.

6.Average Length of Stay or ALOS
The Average Length Of Stay is a kpi for hospitality industry metric which helps in making it easy to find out the length of stay of guests which are booked at your hotel. The ALOS metric is calculated by dividing the occupied rooms by a number of bookings. So if the number is high it means greater profit with requirements of very less labor. While if the number of the computed ALOS is low, it obviously results in lesser profit.

7.Market Penetration Index or MPI
In order to compete in the market with your hotel property and services it is very important for a hotelier to find out how their hotel stands in the domestic market. This MPI metric can serve as a perfect way or assistance to map your hotel’s market share within comparison with your competitors. This metric assists the hotelier to know the number of guests that are going ahead and booking with your hotel in comparison to other hotels which share the same location. The MPI metric of hotel key performance indicators is calculated by dividing your hotel’s occupancy by the hotel market’s occupancy and then multiplying the figure by 100. The result you obtain : if it is more than 100 this shows that you have a dominance on the market. Otherwise if the result comes out to be less than 100, it means your hotel’s performance is not good and people are choosing your competitors instead of your hotel.

Types Of KPI Reports

Analytical Reports: these types of reports offer a detail on the KPIs that need to be tracked. Analytical reports can be made use of through all the business departments. These reports are curated with the main aim to answer questions which follow the peaks and troughs in the KPI data. Analytical reports’ static version bring out historic values, on the other hand the interactive reports help users to go deep into the data by dividing the metrics into single parts.

Operational Reports: these reports pay attention to the day-to-day activities of the business. These reports are helpful in providing assistance to the decision makers to help them take profitable actions.

Strategic Reports: are created with an aim to guide the hoteliers where their business is heading and whether they are able to meet the set targets or not.

KPIs or hotel key performance indicators are not that much effort and time consuming that hoteliers might think, in fact when done appropriately and with the correct system the authorities and decision makers can automate the KPI and simplify their work to stay ahead of their competitors and also earn maximum revenue and the trust of their potential customers. Hotel Key performance indicators are definitely important for hoteliers to track and make most of.

kpis for hotel general manager

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