The OnRes Blog

7 Essential Hotel KPIs for Sustained Growth and Success

By: Steve Behrisch , President & CEO

In the competitive world of hospitality, tracking the right Key Performance Indicators (KPIs) is crucial for the sustainable growth of any hotel. These hotel KPIs help hoteliers gauge their performance, identify areas for improvement, and make data-driven decisions. 

In this blog, we will delve into essential hotel management KPIs, discussing their importance and how they can be effectively measured.

Table of Contents

Hotel KPIs to Keep Track for Sustainable Growth

Let’s dive deeper into the common hotel industry KPIs for a more comprehensive understanding.

Hotel KPIs to track for sustainable growth

1. Average Daily Rate (ADR)

ADR gives an idea about the average price guests pay per room at your hotel. It reflects your pricing strategy effectiveness and helps in understanding market positioning.

How to Measure ADR: Calculate ADR by dividing the total room revenue by the number of rooms sold (excluding complimentary stays).

It’s a vital metric for understanding your pricing strategy’s effectiveness. A higher ADR indicates the ability to command higher prices. You can also use this metric to compare your hotel’s performance against competitors and industry benchmarks.

2. Occupancy Rate

This hotel KPI measures the percentage of available rooms that are occupied. 

The occupancy rate is a straightforward indicator of the hotel’s ability to attract guests. It’s a direct reflection of your marketing effectiveness and market demand. They provide insights into your hotel’s demand, seasonality effects, and operational success.

How to Measure Occupancy Rates: Divide the number of occupied rooms by the total number of available rooms, then multiply by 100 to get a percentage.

Understanding occupancy trends helps in managing staffing requirements, planning for renovations or maintenance, and strategizing marketing efforts during different seasons.

3. Revenue Per Available Room (RevPAR)

RevPAR, one of the most common hotel industry KPIs combines ADR and occupancy rate to provide a snapshot of revenue generated per available room. 

It’s used to assess the hotel’s ability to fill its rooms at an optimal rate. It’s a critical metric for evaluating overall financial and operational efficiency.

How to Measure RevPAR: Multiply ADR by the occupancy rate or divide total room revenue by the total number of available rooms.

RevPAR is a key hotel KPI for investors and managers to gauge the hotel’s revenue-generating capability. A low RevPAR indicates either low room rates, low occupancy, or a combination of both.

4. Gross Operating Profit Per Available Room (GOPPAR)

GOPPAR measures the profit made per available room, considering both revenue and operational costs.

Unlike RevPAR, GOPPAR considers the hotel’s operational efficiency by incorporating costs, giving a clearer picture of the hotel’s financial health.

How to Measure GOPPAR: Subtract operating expenses from total revenue (excluding fixed expenses like rent), then divide by the number of available rooms.

It’s an essential hotel management KPI for understanding the balance between revenue generation and cost management. Effective cost control strategies directly impact GOPPAR.

5. Customer Satisfaction Score (CSAT)

CSAT is a measure of how satisfied customers are with their stay. The CSAT scores are direct feedback from guests about their experience. 

This hotel metric can be broken down into various aspects of the guest experience like service, cleanliness, amenities, etc.

How to Measure CSAT: Typically obtained via post-stay surveys where guests rate their satisfaction on a scale.

This hotel KPI is crucial for guest retention, loyalty, and brand reputation. It also helps in identifying areas for service improvement, staff training needs, and can influence customer loyalty and repeat business. 

6. Online Reputation Score

This KPI aggregates ratings from various online platforms like TripAdvisor, Google, and booking sites to gauge the hotel’s reputation. 

How to Measure the Online Reputation Score: Use reputation management tools like GuestRevu and Revinate to monitor and average scores across different online platforms.

Online ratings significantly influence booking decisions and brand perception. A strong online presence and positive reviews are pivotal in attracting new guests and retaining existing ones.

7. Employee Satisfaction

Employee satisfaction is one of the hotel KPIs that reflects the overall satisfaction and morale of hotel staff. Factors like work environment, recognition, career growth, and compensation contribute to this KPI.

How to Measure Employee Satisfaction: Conduct regular employee surveys to gauge satisfaction levels and areas for improvement.

Employee satisfaction is directly linked to customer service quality. Satisfied employees are more likely to provide exceptional service, leading to higher guest satisfaction.

#OnResTips: Here are some best practices to improve hotel guest experience

Conclusion

Monitoring these KPIs offers valuable insights that guide strategic decisions for sustainable growth in the hotel industry. By understanding and improving these metrics, hoteliers can enhance guest experiences, optimize operations, and ultimately drive profitability.

Remember, the key to successful hotel management lies in the effective interpretation and action based on these KPIs.

Steve Behrisch, President & CEO

Steve joined the OnRes Team as an account rep in 2008 and was promoted to VP of Operations a short time later. In 2011, Steve agreed to purchase OnRes and became President and CEO, and has been steering the ship since; achieving significant milestones such as rebuilding the reservation software from the bottom up, forging new partnerships, doubling the revenue, and much more…
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