Revenue Management KPIs for Hotels

Discover some of the most important KPIs to track when developing a revenue management strategy

Hotel pricing is definitely not a “set it and forget it” matter. It takes a lot of effort to sell the right room to the right guest at the right time and the right price. This effort is called revenue management.

When it comes to developing a revenue management strategy—and adjusting it to keep it optimized—you’re going to need lots of data. To get that data, you’re going to want to track some key performance indicators or KPIs. Here are some of the KPIs that will be the most relevant to your revenue management strategy.

Occupancy

Dividing the number of occupied rooms by the total number of rooms in the hotel will give you the occupancy rate. Tracking the occupancy rate can help identify opportunities to adjust room prices. Prices can be increased on nights when the hotel tends to be almost fully booked, since there is high demand for rooms. And prices can be decreased on nights when the hotel is nearly empty to help boost occupancy rates.

Average Daily Rate (ADR)

The ADR will tell you the average amount that a room in your hotel is selling for during a given period. When calculating ADR, you will want to separate out different categories of rooms such as suites, double rooms, and single rooms.

Revenue per Occupied Room (RevPOR)

This metric tracks how much revenue is being generated by the average occupied room. RevPOR includes not only the cost of the room, but also various additional sources of revenue such as room service, laundry service, etc.

Net Revenue per Available Room (NRevPAR)

Selling a room may come at a cost if you are using online ads or a third-party service. NRevPAR is calculated by subtracting these costs from room revenue, before dividing that number by the total number of rooms in the hotel.

Gross Operating Profit per Available Room (GOPPAR)

Even when rooms aren’t occupied, they are costing you money in terms of overhead. That’s why it’s important to calculate the GOPPAR by subtracting your gross expenditures from your gross revenue. If your GOPPAR is low, you either need to increase the number of rooms you sell or get more revenue from each room. Of course, doing both would be ideal. GOPPAR can be calculated on a daily basis or an annual one.

Average Revenue per Account (ARPA)

This metric is helpful for assessing the value of repeat customers as well as new customers. ARPA is typically calculated on a monthly or yearly basis. It can be helpful when making decisions regarding loyalty promotions.

Track and Analyze Your KPIs with MyFieldAudits

MyFieldAudits is an excellent analytics tool for hotels to use to track all kinds of KPIs, including revenue management KPIs. Because it is a cloud-based tool that can run on just about any computer, smartphone, or tablet, there is no need for expensive new hardware or specialized IT staff. Instead, any hotel owner or manager can use MyFieldAudits to collect data, run reports, and generate actionable insights into the state of their business. To learn more, contact us at info@MyFieldAudits.com today.