7 + 2: The 9 essential KPIs to maximise your hotel's efforts and monetise your data
Without clear data, any hotel strategy becomes a gamble. KPIs (Key Performance Indicators) are the essential allies to understand how your business works and, more importantly, how to improve every aspect of your operation. From analysing occupancy to calculating profitability per room, these indicators provide a roadmap for turning numbers into smart decisions. In this article, we'll break down the 9 essential KPIs for hotels, explaining how to apply them effectively to maximise revenue, reduce costs and stand out from your competitors.
Pay attention to these 9 (Key Performance Indicators)
1. Occupancy (%)
The occupancy rate is the percentage of rooms occupied during a specific period. This KPI is one of the most basic but also one of the most important, as it indicates the demand for your services.
Formula:
Occupancy Rate (%) = (Occupied Rooms / Available Rooms) x 100
Practical example:
A hotel with 150 available rooms and 120 occupied rooms has an occupancy of 80%. While this seems positive, it is crucial to analyse other KPIs such as ADR and RevPAR to determine the quality of revenue generated.
Recommendation: Use this metric to identify seasonal patterns and adjust your rates dynamically.
2. ADR (Average Daily Rate)
ADR measures the average revenue per occupied room, excluding free or complimentary rooms. This indicator helps you understand the value you get from each guest.
Formula:
ADR = Total Revenue per Room / Occupied Rooms
Practical example:
If you generate €15,000 in room revenue and have 100 occupied rooms, your ADR will be €150.
Key: A high ADR is not always positive if occupancy is low. It is essential to balance this KPI with RevPAR.
3. RevPAR (Revenue per available room)
This KPI combines occupancy and ADR to evaluate the efficiency of your revenue strategies. A crucial metric to optimise your overall results.
Formula:
RevPAR = ADR x Occupancy Rate (%)
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RevPAR = Total Revenue per Room / Rooms Available
Practical example:
If your occupancy is 80% and your ADR is €150, the RevPAR will be €120. This indicates how much you are actually generating for each available room, occupied or not.
Differentiator: RevPAR is a key metric to compare your performance with competitors.
GOPPAR (Gross Operating Profit per Available Room)
Includes all income generated (restaurants, events, services), not just accommodation.
Formula:
GOPPAR = Gross Operating Profit / Rooms Available
Importance: This KPI allows you to identify areas where you can optimise your operation, such as reducing personnel or energy costs.
5. TRevPAR (Total revenue per available room)
TRevPAR extends RevPAR by including all revenues, such as food, beverages and additional services.
Formula:
TRevPAR = Total Revenue / Rooms Available
Practical example:
A boutique hotel that generates additional revenue from its spa and restaurant can have a significantly higher TRevPAR than one that relies solely on accommodation revenue.
6. Customer Satisfaction Index (CSI)
CSI measures how your guests perceive their experience at your hotel.
- Formula
CSI = (Survey Scores + Positive Reviews) / Total Number of Surveys
Key metrics:
Post-stay surveys, online reviews and ratings on platforms such as TripAdvisor.
Impact: A high CSI increases the likelihood of recommendations and repeat business. Active online reputation management is crucial.
7. Reserve Acquisition Cost (RAC)
This KPI measures how much it costs you to attract a booking, taking into account marketing campaigns, commissions and other distribution costs.
- Formula
CPA = Marketing and Distribution Expenses / Total Reserves
- Practical example: If you spend €5,000 on marketing and get 100 bookings, your CPA is €50. The goal is to keep this cost as low as possible without compromising the quality of the customers.
8. Cancellation Fee
This KPI measures the percentage of cancelled bookings, which can significantly impact revenue.
Formula:
Cancellation Rate (%) = (Cancelled Bookings / Total Bookings) x 100
Strategy: Implementing flexible cancellation policies can reduce the impact of last-minute cancellations.
9. Average Length of Stay (LOS)
LOS identifies the average length of stays at your hotel.
- Formula:
LOS = Total Nights Reserved / Total Reservations
- Utility: This KPI is useful for adjusting promotions aimed at longer stays and maximising the use of facilities.
Do you know why it is important to closely monitor KPIs?
Regular monitoring of KPIs is not just an operational task; it is the key to transforming your hotel into a more efficient, profitable and competitive business. Each KPI tells a story about the performance of different areas of your hotel, from revenue to guest experience. By monitoring these indicators, you can identify problems before they escalate, optimise your resources and make decisions backed by data rather than assumptions.
1. Identify areas for improvement and prevent problems
Constant monitoring allows you to detect negative patterns early.
- Practical example: A hotel detected an increase in the Cancellation Fee during weekends. In analysing the data, they found that the cancellation policy was stricter than that of their competitors. They adjusted this policy to offer reusable credits and reduced cancellations by 15%, recovering significant revenue.
2. Make strategic decisions based on concrete data.
KPIs eliminate guesswork by providing a solid basis for key decisions.
- Practical example: Analysing the RevPARone resort found that their occupancy was high, but ADR was below the market average. They adjusted their rates to take advantage of seasonal high demand and increased revenues by 20% in one quarter.
3. Continuously improve your business offerings
By knowing your guests' preferences and patterns, you can tailor your services to meet their needs.
- Practical example: An urban hotel found that guests staying more than 3 nights had a higher than average CSI (Customer Satisfaction Index). They implemented a promotion for long stays, which not only increased the number of guests staying more than 3 nights, but also Average Length of Stay (LOS)but also income from additional services.
4. Optimise working times
KPIs can also reflect internal inefficiencies, helping you to improve operational processes.
- Practical example: A chain hotel used internal metrics to analyse the average time its housekeeping team took to prepare rooms. They found that premium rooms took 20% longer due to redundant processes. By training staff and optimising their tools, they reduced times by 15%, saving working hours.
5. More active return on investment
Knowing the real return on your investments allows you to maximise your return.
- Practical example: A boutique hotel invested in a new reservation system. By monitoring its Cost per Reserve Acquisition (CPA)The study identified that direct bookings increased by 30%, significantly reducing commissions to OTAs. This allowed a return on investment in less than a year.
Which KPIs will make you better than your competitors?
The RevPAR (Revenue per Available Room) is undoubtedly one of the most powerful and strategic KPIs in the hotel industry. This indicator combines the occupancy rate and the ADR (Average Daily Rate)The hotel's revenue generated from each available room, regardless of whether it is occupied or not, provides a comprehensive view of your hotel's performance in terms of revenue generated per available room.
Why is RevPAR so important to stand out in the market?
Balance between occupancy and average fare:
Unlike other indicators such as ADR (which only measures revenue per occupied room), RevPAR reflects the efficiency of your overall strategy, considering both occupancy and average rate.
Direct comparison with competitors:
In the hotel industry, RevPAR is a widely used standard to evaluate your hotel's position in the market. If your RevPAR is higher than your competitors, it means that you are making better use of your resources, even if your occupancy is similar.
Improved strategic decision-making:
RevPAR helps identify opportunities to maximise revenue, such as adjusting rates based on demand, optimising promotions or identifying low occupancy seasons.
How to optimise RevPAR to outperform your competitors?
Implement dynamic pricing:
Adjust your fares in real time based on factors such as demand, local events and competition. For example, during a local festival, increase fares to capitalise on high demand.
Segment your market:
Analyse who your most profitable customers are (corporate, families, international tourists) and focus your efforts on attracting more bookings from these segments.
It offers customised packages:
Combine accommodation with additional services such as meals, tours or activities. This not only increases your revenue, but also enhances the perceived value of your guests.
Optimise your distribution strategy:
Identify the sales channels that generate the highest RevPAR and prioritise these, reducing dependence on high commission OTAs.
Why Lean Hotel System helps you to improve your KPIs?
Lean Hotel System is a tool designed specifically for the challenges of modern hotel management. In an environment where data is the key to success, this system acts as a strategic co-pilot, allowing you to monitor, analyse and optimise all your hotel management processes. KPIs in an efficient and centralised manner.
1. Monitoring of KPIs from a centralised dashboard
Lean Hotel System integrates data from all operational areas, from reservations to finance, into a single dashboard. This allows you to:
- See in real time critical metrics such as RevPAR, ADRand % Occupancy, without the need to consolidate information manually.
- Detect trends or anomalies before they affect your operation.
2. Generation of customised reports
The ability to create reports tailored to your team's needs makes Lean Hotel System a flexible and powerful tool:
- Customise reports for different roles within your hotel (management, marketing, operations).
- Compare performance by season, customer segment or distribution channel.
3. Automation of key processes
Lean Hotel System automates repetitive tasks, reducing human error and freeing up staff time to concentrate on strategic activities.
