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- 1. Total income
- 2. Revenue per piece
- 3. Average Daily Rate
- 4. Occupancy rate
- 5. Avg. Customer stay
- 6. Operating profit
- 7. Labor cost
- 8. Food and drink
Hotels are big business. It’s no surprise that hotels need to follow many different metrics to ensure their business is running smoothly. Knowing what metrics to track can help you measure and improve your own hotel’s performance.
Hotels are big business. Knowing what metrics to track can help you measure and improve your own hotel’s performance.
Hotels are big business. There are over a million hotels worldwide, and they represent around 10% of all commercial real estate assets. With so many hotels to choose from, finding one that meets your needs can be difficult. In order to make an informed decision on where to stay on your next trip, it’s important to know exactly what type of hotel experience you want, and then find the right hotel for that type of experience.
In addition to helping travelers select their accommodation based on price and location, we also help them find the best deals on hotels by providing our users with access to exclusive offers from hundreds of trip at a time. If you are planning a vacation or business trip soon and do not want to miss the promotions offered by these different companies, we recommend that you register today!
If you want to measure your hotel’s performance, look at these key metrics.
- Total income
- Revenue per available room (RevPAR)
- Average Daily Rate (ADR)
- Occupancy rate
- Average Guest Stay (AGS)
1. Total income
Total revenue is the amount of money your hotel earns during a given period. This metric can be broken down into several categories, such as room revenue, food and beverage sales, car rental transactions, and more.
Total revenue is a good way to gauge the health of your hotel, as it gives you insight into how much money you’re bringing in from all areas. If you notice that one area has increased significantly compared to another (such as room rates compared to food and drink sales), this could be an indication that there is something wrong with the situation. quality of service or pricing strategy for these products/services. In this case, it would make sense for you not to look into anything wrong with either before deciding if any changes need to be made, which helps keep things smooth knowing where your money is coming from!
2. Revenue per available room (RevPAR)
Revpar is one of the most important hotel performance metrics. It measures a hotel’s total revenue relative to the number of rooms available for sale. In other words, it’s how much money you make per coin. This metric can help you determine if your price is competitive and/or if there is room for improving occupancy levels.
For example, let’s say that over a three-month period in 2015, your hotel had an average occupancy rate of 60%, resulting in total revenue of 0,000; However, during this same period (same dates), another similar four-star hotel had an average occupancy rate of 70% and earned 0,000 less than you made a difference of ,000!
That might not seem like a lot at first glance, but if we assume that each night costs around 0 per night (which is pretty reasonable given today’s rates), then given that they hosted 20% more customers than you did yet only 10% more profit? That means they could afford to lower their nightly price by around 15%.
In summary: RevPAR helps identify areas where hotels can improve their pricing structure or attract more guests – and ultimately maximize profits
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3. Average Daily Rate (ADR)
To calculate your Average Daily Rate (ADR), divide the total income you have made during a given period by the number of occupied rooms.
This metric can be used to compare how your hotel is stacking up to others in the same area, as well as a benchmark for future projections. An increase in ADR is usually an indication of improved occupancy rates and higher room rates – both indicators that business is good at your establishment.
It is important to understand what other hotels charge for similar accommodations in comparable locations. As with any business, knowing where you stand against the competition is critical to success or failure.
The goal is to grow your business, but you can’t do that if you don’t follow the right metrics. Keep in mind that there may be other factors influencing your average daily rate, such as seasonal fluctuations and overall tourism levels in the area.
4. Occupancy rate
Occupancy is a metric that tells you how many rooms are occupied. The formula for calculating the occupancy rate is:
Occupancy rate = Total occupied rooms / Total available rooms
This metric is important to track because it shows the percentage of rooms booked and used, which can be an indication of how well your hotel’s marketing strategy is working. The higher the occupancy of your hotel, the better it means sales are going. If you see a drop in this metric month over month, there may be something wrong with your current marketing plan or pricing structure; You’ll want to review it ASAP so you can make adjustments before it causes lasting damage to your business!
The average occupancy rate is around 60%, but it will vary depending on the type of hotel and its location.
If your hotel is in a resort town, expect occupancy to be lower, as people travel there specifically to take advantage of the amenities available. On the other hand, if your hotel is in a big city where many types of businesses are vying for customers, expect it to be higher due to competition.
5. Average Guest Stay (AGS)
Average Guest Stay (AGS) is a metric that tells you how long your guests are staying at your hotel. It’s important for two reasons: 1) it shows you whether your hotel is meeting the needs of its guests and 2) it lets you know whether or not there are opportunities to increase revenue and drive growth.
There are many types of AGS metrics and they can be broken down into the following categories:
- Average Length of Stay (alos) – This measures the average length of stay across all reservations, regardless of reservation type; also known as “nights per booking”
- Group ALOS – This measures the average length of stay between groups booked with any combination of booking types; also known as ‘Nights by Group Group’
- ALOS Conference – This only measures conference bookings by calculating their total number against total room nights sold; also known as “booking nights by conference”
6. Gross operating profit per available room (GOPPAR)
Gross operating profit per available room (Goppar) is a key metric for hotels. It is profit per room per night and is calculated by dividing total revenue by total rooms available.
Goppar is a measure of hotel performance, as it determines how well each hotel performs against its peers in the same market. You can use Goppar as an indicator of overall financial health because it provides insight into the effectiveness of management being able to use resources to increase revenue and profitability.
7. Labor cost percentage of revenue
Labor cost percentage of revenue is a key indicator for running your hotel. It indicates whether or not staff are trained and also provides insight into employee morale and retention.
The target for this metric is 10% to 25% – if it’s too high, you may have a problem with employee morale or training. If it’s too low, you may need to rethink your business model (i.e. switch from independent contractors to employees).
The reason this metric is so important is that it can help you determine whether the hotel is running efficiently or not. If your revenue per available room (REVPAR) is too low, you may need to invest in marketing and sales training for your team members, as well as reducing room rates.
8. Food and beverage sales as a percentage of total revenue
Food and beverage sales as a percentage of total revenue is an important performance metric for hotels. This metric indicates how well the hotel is doing with its restaurant and bar, and it can be used to compare performance between different hotels.
If you have several properties that have similar offers, this is a good way to see how each is performing. It also gives you insight into the possibility of altering your food and drink strategy.
Conclusion
Knowing what metrics to track can help you measure and improve your hotel’s performance. This can be especially useful for owners who want to know how their business is doing and compare it to others.