hotel digitalisation laptop mobile and revenue graphs reflecting key metrics and measurements for hotels

Measuring RevPAR helps hoteliers identify areas for improvement, compare performance across properties or segments, and adjust their strategies.

NB: This is an article from Otelier

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Calculated by multiplying occupancy and ADR, RevPAR provides valuable insight into revenue generation during specific time periods. However, RevPAR has limitations – it only measures top-line room revenue and ignores expenses and ancillary income sources.

Modern hotel operations demand a broader set of metrics to assess profitability and long-term growth. Today’s advanced measurements take into account both operational costs and revenue streams beyond rooms. Innovative business intelligence tools like Otelier IntelliSight that centralize both revenue and expense data allow hoteliers to track these key metrics in user-friendly dashboards.

Below, we highlight 10 essential metrics that provide hotel operators with a more comprehensive view of their business performance.

TRevPAR and Ancillary Revenue Metrics

For a holistic view of property performance, many hoteliers are adopting Total Revenue Per Available Room (TRevPAR), which accounts for all revenue streams, including food and beverage (F&B), spa, golf, parking, and more. By analyzing TRevPAR, operators can uncover opportunities to boost revenue, such as promoting F&B offerings or increasing spa and other amenity sales.

“TRevPAR is critical for full-service properties and resorts,” says Sudharshan Chary, GM of Otelier’s Resorts Division. “Beyond RevPAR, luxury properties benefit from understanding how ancillary revenues like spa, golf, and retail contribute to total profitability.”

For example, a golf resort in Florida found that bundling golf packages with rooms increased TRevPAR significantly. Other properties track retail revenue to better align operations with guest spending patterns. By integrating General Ledger data with revenue metrics, hoteliers can analyze profitability at a departmental level and better manage total profitability.

Additionally, metrics like Total Revenue Per Guest (TRevPOG) or Revenue Per Square Foot are also gaining popularity, particularly in event spaces or resorts. These measurements help identify which areas of a property generate the most revenue and guide decisions to optimize underperforming assets.

Forecast Accuracy

Accurate forecasting is essential for allocating resources, managing expenses, and making operational decisions. Successful hotel operators like Johannes Semere, Corporate Director of Revenue Strategy at Peregrine Hospitality, aim for a system-wide forecast accuracy of less than 3%.

“Forecast accuracy is really important. We work hard to achieve a system-wide forecast accuracy of less than 3%,” Semere said on a recent webinar with Otelier and HOTELS Magazine. “This allows stakeholders to understand their leeway for spending resources and making adjustments. We also provide weekly 21-to-28-day forecasts and daily pickup reports to keep stakeholders informed of booking trends.”

Cost of Acquisition

Understanding the Cost of Customer Acquisition is key to optimizing profitability. Net Revenue after commission costs is a key metric, and Kalibri Labs has introduced more bottom-line metrics such as COPE %, which shows Contribution to Operating Profit and Expense percentage, or the proportion of room revenue after commissions, transaction and channel costs are removed. These profit metrics allow hoteliers to calculate the true profitability of their bookings by factoring in costs such as commissions, transaction fees, and sales and marketing expenses.

“During the pandemic, our analytics team analyzed every channel’s cost of acquisition,” Dana Cariss, Senior VP of Revenue Optimization at Coraltree Hospitality, said during the webinar. “By grossing up net business and segmenting channels, we found that OTA bookings were 6-8x more expensive than direct bookings. Understanding this financially helps develop strategies that improve profitability while managing channel mix.”

Read the full article at Otelier