How to manage your hotel’s most important performance metrics

Managing an independent hotel is a challenging, but rewarding endeavor.  Operators get into the hotel business for various reasons – they come from a family of hoteliers, are passionate
about delivering hospitality or simply thrive in its fast pace.  But regardless of what brought operators into the industry, a key to career longevity is learning how to successfully manage a hotel’s most important performance metrics: Occupancy Rate, Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR).  A hotel can look great from the outside, but if it’s not performing at a high level, it’s unlikely it or its operator will survive over the long-term.

Let’s look at these three performance metrics in greater detail:

1)    Occupancy Rate
Achieving the “perfect” occupancy rate is like balancing on a circus tightrope.  If occupancy is too high, rates may be too low, so the property is unable to maximize its revenue because it has no inventory to sell.  And on the other hand, if occupancy is too low, rates may be too high for the market or perhaps travelers are failing to see the value in booking with that hotel.  Occupancy rate is impacted by numerous factors, so it’s critical that operators thoroughly understand the conditions that generally affect their property.  To do this, hoteliers can:

•    Regularly analyze historical booking data and trends
•    Stay up-to-date on local tourism trends and market-impacting events, like conferences and trade shows
•    Monitor competitor activity throughout the local market

2)    Average Daily Rate (ADR)
Managing room rates is one of the most challenging tasks in the hotel industry.  As noted above, a property’s rates directly affect booking patterns and, of course, its revenue.  To accurately set rates that are attractive to travelers, competitive in the local market and robust enough to meet revenue goals, operators must have a strong grasp on the value their property delivers to guests and how it stacks up against their competitors.

To help independent hoteliers gain a competitive advantage, we’ve launched the innRoad Hotel Grader.  By providing custom, local market competitor reports, including rates, online booking channels and consumer ratings, we can help ensure daily rates are set accurately and revenue potential is fully maximized.

3)    Revenue Per Available Room (RevPAR)
RevPAR is generally regarded as the metric that best determines the health of a hotel’s operations.  At the most basic level, RevPAR is the product of “Occupancy x ADR.”  Consistent and sustainable RevPAR growth is the goal of every hotelier, but, similar to balancing Occupancy Rate and ADR, achieving this requires hands-on management.

In a previous blog post, Steps Every Hotel Owner Should Follow to Prepare for RevPar Growth, we outlined steps operators can take to boost RevPAR over the long term.  From improving their online profile to presenting up-sell opportunities to guests, independent hoteliers can implement various enhancements that will allow for incremental RevPAR growth on a year-over-year basis.

Managing Occupancy Rate, ADR and RevPAR will always be a primary responsibility of independent hoteliers, so this is why we’ve designed our cloud-based hotel property management system to make this process easier and more efficient.  Sign up today for a free trial and let us show you how innRoad can help position your hotel for long-term success.