Revenue management involves setting key performance indicators to track success, and adjusting strategies to optimize revenue. Some of the more common metrics that hotel managers use to measure success are RevPAR (Revenue per Average Room) and Average Daily Rate. However, focusing solely on these metrics can paint an incomplete picture of your revenue—there are several others that should not be overlooked.
We’ve put together four additional metrics you will want to consider as part of your success measurements.
1. Total Available Rooms
You may have 100 rooms in your hotel, but how many of them are actually operable and how many are out for maintenance, servicing, etc.? Tracking available rooms not only allows you to manage how many bookings you can take, but also impacts how you calculate your RevPAR.
Total available rooms can help you to identify where you are potentially missing out on bookings. Do you consistently have a high number of rooms unavailable? What would be the cost of making them available for bookings sooner? Is that cost less than the potential profit you could make by filling them? If rooms are down due to regular housekeeping and repairs, consider adjusting your maintenance schedule to ensure that a higher number of rooms are consistently available.
2. Average Occupancy Rate
Of your total available rooms, what percentage of them are occupied throughout a given period? Having a high percentage of occupied rooms is a great indicator that your marketing efforts have been successful. If your occupancy rate is consistently high, you can implement a slight price increase and test whether or not your occupancy rates remain stable.
If your average daily rate is too low, or you’ve cut prices just to raise your average occupancy rate, you may be missing out on revenue opportunities. Are your occupancy rates only high when you offer a promotion? This can help you reevaluate your marketing strategy and determine whether you need to find other ways to increase occupancy.
3. Marketing Cost per Booking
How much did you spend to acquire each guest? Determining your marketing cost per booking can seem a little bit tricky but your first key is knowing where your customers are discovering you. This way, you can start to focus on the channels that generate bookings for you and alter strategies for those that don’t.
If you place an ad on Facebook that costs $50 and you gain two guests from it, the marketing cost per booking is $25. If a guest comes to you because of a referral, your marketing cost is $0. You want to ensure that you are creating a balance between exposure and affordability.
4. Website Conversion Rate
We know that keeping guests on your website can be a challenge, but it’s a metric that you want to pay particular attention to. The longer a guest stays on your site, the more likely they are to make a booking. Your conversion rate is the percentage of users who make a booking before navigating away from your website.
While the average hotel site bounce rate is 43%, a well-designed Online Booking Engine (OBE) will have a higher conversion rate. You can keep visitors from navigating away from your page by taking actionable steps to improve your site’s usability, such as providing tailored offers or suggesting valuable content. Determine your website conversion rate and start setting goals to increase that percentage each month.
Your Average Profit per Available Room and Average Daily Rates are important metrics when calculating revenue. However, to make fully-informed decisions, it is important to look at other metrics that help indicate how your room management, marketing efforts and website strategy are contributing to your bottom-line. These metrics will help you to track your success in order to optimize your bookings and revenue.
Learn how you can use RoomKeyPMS to track real-time data for revenue management.
Featured Photo: Shutterstock.com
