hotel performance metrics ebook
DESCRIPTION
An introduction to the management and operating performance metrics used in hotel, resort and motel businesses. Learn about average daily rates, occupancy, market penetration and other statistics.TRANSCRIPT
© 2014 Hoteliyo E-Book
Hotel Performance
Metrics
an introductory guide to the key operational performance metrics of the hotel industry and
how hoteliers and managers can use them
LOGO
© 2014 � Hoteliyo.Com
CONTENTS
Introduction 1. Occupancy
2. Revenue per Available Room
3. Average Daily Rate
4. Market Occupancy
5. Market Penetration Index
6. Average Rate Index
7. Revenue Generation Index
© 2014 METRIC
3 Average Daily Rate
ADR is the average price paid per room. It
assesses the total guest room revenue for a specific period versus the total paid rooms.
Importantly, the ADR only focuses on paid rooms. It might sometime be labeled the ‘Average Room Rate’ or ARR for short.
ADR
=
Total Room Revenue Paid Rooms Occupied
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© 2014 INTRO
How do you measure your hotel’s performance?
What drives your financial results? How are nearby competitors doing? Is your operation efficient? Does your
hotel achieve budgeted results for the market?
For hoteliers and hospitality professionals, these are critical questions. You must understand hotel metrics.
When you say ‘hotel industry’, many people first think about
great locations, rooms, F&B and services. Yet ultimately, hotels exist to generate profits and capital.
Focusing on your hotel metrics will help drive results.
© 2014 INTRO (cont.)
It’s easy for independent hoteliers and single asset owner-operators to be distracted by daily operations. Hotel strategy, metrics and budgets often receive less
attention versus daily operations and visible issues.
For hoteliers and hotel asset owners, working ‘on the business’ and not solely ‘in the business’ is important.
This Hoteliyo E-book introduces the most important
‘hotel performance metrics’ to be utilised by hoteliers, their calculation formula and how to analyse results.
© 2014 METRIC
1 Occupancy
Occupancy is a percentage of the available
rooms occupied for a specific time period (i.e. annual, quarterly, monthly, daily, summer)
OCC
=
Paid Rooms Occupied Rooms Available
or
Revenue per Available Room Average Daily Rate
© 2014 METRIC
2 Revenue per Available Room
RevPar measures hotel utilisation or the
average daily rooms revenue per available room. This metric doesn’t account for other profit areas like F&B, retail or conferencing.
This metric will always differ by market, quality segment and timing. It’s a time based snapshot
of your hotel’s performance.
RevPar
=
Total Room Revenue Total Rooms Available
You can use services like HotStats and STR Global
© 2014 METRIC
3 Average Daily Rate
ADR is the average price paid per room. It
assesses the total guest room revenue for a specific period versus the total paid rooms.
Importantly, the ADR only focuses on paid rooms. It might sometime be labeled the ‘Average Room Rate’ or ARR for short.
ADR
=
Total Room Revenue Paid Rooms Occupied
© 2014 METRIC
3 Average Daily Rate
ADR is the average price paid per room. It
assesses the total guest room revenue for a specific period versus the total paid rooms.
Importantly, the ADR only focuses on paid rooms. It might sometime be labeled the ‘Average Room Rate’ or ARR for short.
ADR
=
Total Room Revenue Paid Rooms Occupied
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© 2014 METRIC
4 Market Occupancy
Subject to data available, a hotelier can
measure their performance against the local market average supply and demand data.
You need to benchmark competitor hotels.
Market OCC
=
Market Room Night Demand Market Available Room Nights
© 2014 METRIC
5 Market Penetration Index
MPI measures how your hotel occupancy
compares to competitor hotels. It measures your ‘piece of the pie’. Every hotelier should want to increase their hotel’s market share.
MPI
=
Hotel Occupancy % Market Occupancy %
A result above 1 indicates that your hotel is
outperforming the overall market occupancy.
© 2014 METRIC
3 Average Daily Rate
ADR is the average price paid per room. It
assesses the total guest room revenue for a specific period versus the total paid rooms.
Importantly, the ADR only focuses on paid rooms. It might sometime be labeled the ‘Average Room Rate’ or ARR for short.
ADR
=
Total Room Revenue Paid Rooms Occupied
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twitter.com/hoteliyo
© 2014 METRIC
6 Average Rate Index
ARI measures how your hotel average daily rate compares to competitor hotels. An ADR index of 100 means you have a fair share of your local competitive market ADR results.
It is often difficult to obtain this market data.
You should always strive for ARI above 1.
ARI
=
Your Hotel’s ADR Hotel Market ADR
© 2014 METRIC
7 Revenue Generation Index
RGI measures how your hotel RevPar rate
compares to competitor hotels. Most of the international and branded hotel operators use
RGI as their major performance measure.
Increasing your RGI means increased profits.
You should always strive for RGI above 1.
RGI
=
Your Hotel’s RevPar Hotel Market RevPar
“ RGI results should exceed 1, otherwise hotels in your market competitive set are converting more business and bookings than you are. Look at the daily RGI result and analyse any trends and revenue management rules.
”
© 2014
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© 2014 METRIC
3 Average Daily Rate
ADR is the average price paid per room. It
assesses the total guest room revenue for a specific period versus the total paid rooms.
Importantly, the ADR only focuses on paid rooms. It might sometime be labeled the ‘Average Room Rate’ or ARR for short.
ADR
=
Total Room Revenue Paid Rooms Occupied
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