2020 is shaping up to be a big year! Between industry trends, developments in technology and the marketing space, and the political climate around the globe there will be a lot to keep track of when analyzing at your hotel’s performance.
With so many factors yet to play out this year, it is vital that the revenue team, including anyone involved in Marketing, knows what they want to achieve and how to measure their success. Of course, there are the traditional metrics that you will measure on a daily basis like Occupancy, Average Daily Rate (ADR), and Revenue Per Available Room (RevPar) along with constant monitoring of the Forecast, Pace, Smith Travel Research (STR) data, and reach to Budget. On the Marketing front you will measure results of Search Engine Optimization (SEO), Search Engine Marketing (SEM), and Email Marketing; looking at open rates, click rates and revenue generated from your campaigns.
All that said, I would advocate using some additional metrics when looking at your Key Performance Indicators (KPIs) and pick a few to focus on each quarter. This will help you and the Revenue Team get a broader picture of your business and find areas for improvement in your Revenue Strategy, it can even expand your Revenue Management and Marketing knowledge in 2020. Think of using the below KPI’s and be sure to keep these tips in mind too:
1. Total Revenue Per Available Room (TrevPAR) – this takes into consideration guest’s additional spending outside of just the room rate (like Food and Beverage, Spa, Golf, etc.) and give you a better picture of how much revenue you can generate per hotel room. TrevPAR is a great metric to look at when the hotel is in a resort location.
TIP: This can help you with pricing and packages to entice even more guests to stay! Once those packages are set up, send out a Drip Campaign to drum up awareness of the new package and get those room nights on the books for need dates.
2. Net Revenue Per Available Room (Net RevPAR) – a similar calculation to TrevPAR, Net RevPAR takes out any cost associated with selling the room like Housekeeping Labor or Room Supplies. It is Net Revenue (total revenue minus costs, before EBITA) divided by total rooms. This gives the hotel a good picture at how successful they are at making money per room sold.
3. Website Conversions – Everyone wants to get more direct business, so understanding the effectiveness of your website is crucial. Remember the hotel’s website is going to provide the most profitable rates since you are not beholden to the OTA’s.
TIP: Make sure you have an Automated OTA Winback Campaign in place to get more direct bookings. Your Call to Action buttons should point guests back to the hotel’s website for their next reservation.
4. Cost Per Booking – To see how much it costs to generate a new booking for your hotel, take your marketing and sales costs and divide them by the revenue generated by new business. If you try a new marketing channel like AI voice box advertising or micro-influencers, it would be interesting to see if this metric changes quarter over quarter or year over year.
TIP: Monitor top channels contributing to your business mix and make monthly goals around increasing contribution from your most effective channels. Use Revinate’s Database Insights to see performance of the hotel’s top channels.
5. Make sure your Competitive Set (Comp Set) is up to date so that your STR data is accurate. This isn’t, strictly speaking, a KPI, but it is important. While STR will reach out with any big changes to your market that they are aware of (note: remember that Starwood Marriott merger that required several changes to the comp set back in 2015?), but it is still a good idea to take a look at any new properties in your area to see if they should replace any of the hotels currently in your comp set. Ensuring that your comp set is up today will ensure that your Market Penetration Index (MPI), Average Rate Index (ARI) and Revenue Growth Index (RGI) are accurate.
TIP: MPI, ARI, and RGI are really good metrics to analyze every month. They give you a look at how you are doing in the market and whether you are getting your fair share of business.
6. Have a strategy around Average Length of Stay (ALOS) – getting guests to stay longer can be great for your bottom line since you have already gotten them to book.
TIP: Try using day-of-week segmentation to reach out to guests checking out on Sunday night with an enticing offer to stay a little longer. Or offer a “stay four, pay three” package to extend the ALOS of your guests, fence it if you like so that you get business on the books outside of your usual booking widow.
Use the above KPI’s and tips to take your Revenue and Marketing strategy to the next level. Want to have a free consultation with our experts to discuss the best plan for your hotel? Book a meeting now.