THE KPIS KEY IN REVENUE MANAGEMENT AND HOW TO INTERPRET THEM

revenue-management-thinkin-kpis-claves

We know that there are several key indicators, also known as KPIs, fundamental on which the Revenue Management is based. KPIs are the indicators that help us assess whether we are meeting our objectives. It’s important to know your KPIs because the study of each of them helps us to mark the most appropriate strategy for our hotel. We detail those that for us are fundamental:

  • Occupation: It’s the relationship established between the rooms per night sold and the rooms per night available multiplied by 100.
  • ADR (Average Day Rate): It’s obtained by the quotient between our production per accommodation and the number of rooms sold for a certain period, that is, the average sale price of the room. It’s one of the most used indicators to compare our hotel with the competition.
  • ARR (Average Room Rate): It’s the average price according to the type of room by the number of nights of a specific period and includes, not only the price of the room but also of the different schemes that are offered.
  • RevPar (Revenue per Available Room): This is what is known as income per available room. It’s obtained by making the quotient between our production and the number of available rooms. This ratio doesn’t provide all the necessary information in order to evaluate our exploitation but it’s significant, especially to fine-tune our commercial strategies.
  • CostPar (Cost per Available Room): This is the ratio between the costs of a period and the rooms available per night of those same dates.
  • GopPar: (Gross Operating Profit per Available Room): These are the income minus the costs of a period between the rooms per night available for that duration.
  • Balance Point (Break Even): To determine the point of balance or also called “hotel deadlock” we must be clear about the fixed and variable costs of our accommodation. The deadlock allows knowing the volume of sales required and the minimum sale price to obtain benefits.
  • TrevPar: (Total Revenue per Available Room): This ratio indicates the total income of the hotel divided by the available rooms per night.
  • TrevPec (Total Revenue per Customer): We find here the relationship between the total income of a hotel during a period and the number of people staying in those same days.
  • ARI: (Average Rate Index): It helps us measure the performance of a hotel’s ADR with respect to our competitive set for specific dates.
  • Benchmarking: It consists of evaluating and comparing the products, services, and processes of the competition with ours.

kpis-claves-revenue-management-thinkin

These are the fundamental KPIs to be able to make a good analysis of our hotel. It’s easy to interpret each of them properly. In addition, we help ourselves with forecasts, where we want to arrive, and the closed data of previous years, in order to establish the match point. With these values and analyzing these indicators, we can mark the right strategy at each moment and improve the performance of our establishment.