The Average Daily Rate is a hospitality industry indicator which allows to measure the average income per paid occupied room. It is not the rate at which a room is sold, but the average room rate across all rooms sold. This is one of the most important performance indicators because it provides insight into the revenue generated through room sales and the overall revenue. Although this is a major indicator, it cannot be the only indicator you look at to get an accurate view of your hotel’s business. The ADR must be viewed in conjunction with your occupancy rate and RevPAR, among others. All of these indicators will give the hotel manager a very precise understanding of the hotel’s performance.
How to calculate the ADR?
In order to calculate the ADR, you must have data on the total revenue generated by sold rooms as well as the number of rooms sold, no matter the room type or category.
The calculation of the ADR is therefore : ADR = revenue from rooms sold / total number of rooms sold
For example: the owner generated 1000$ of revenue and sold 8 rooms. The ADR can be calculated as follows: 1000/8=125$. Therefore, the average rate of sold rooms is 125$.
While the ADR can be calculated manually, in most cases it will be automatically calculated by your Property Management Software (PMS) as all the data required to calculate the ADR is continuously collected by your PMS.
How to increase your ADR?
You can increase your ADR through multiple strategies
Adjust your pricing
The ADR is proportional to the sale price, therefore pricing has a direct impact on it. A Yield management strategy could allow you to increase your ADR globally.
Increasing your pricing overall will also have a direct impact on your ADR. While this is not a strategy in of itself but rather a pricing policy, this increase can be normal and linked to inflation in which case it would not represent a real ADR increase.
Offer a unique experience
Guests who experience a unique stay are inclined to spend more. Based on this observation, offering a new experience or enriching your current offers are concise and direct actions which can help you increase your ADR.
One strategy could be to always offer a superior room. This has an immediate effect on increasing your revenue and your ADR as superior rooms will have higher rates. Therefore, you can ask your front desk staff to always offer the superior room if it is available, no matter if you offer it at its true or discounted rate. If the customer accepts the superior room, the additional amount they will have spent will have a positive impact on your ADR.
You can also implement this strategy in your online booking engine. At the time of booking, the customer can be offered the superior room by displaying only the difference in amount between the chosen room and the superior room.
Personalize your clients’ stay
Knowing the habits of your customers, particularly through your Property Management Software, will allow you to target your offers according to their needs and interests. Personalization also allows you to build customer loyalty and to always offer them the opportunity to discover your range of superior rooms using their stay history stored within your PMS.
Conduct regular competitive intelligence
Monitoring your competitors’ advertised rates will allow you to position yourself in relation to them and to offer a competitive rate. Your reputation and customer satisfaction will allow you to charge an advantageous rate in regards to your competitors. Indeed, you will be able to justify a higher rate using your hotel’s ratings, your customer reviews and your online reputation.
The ADR or Average Daily Rate is a key indicator for a hotel manager who wishes to analyze their hotel’s performance. Increasing the ADR of a hotel is a daily and long term work, which can be achieved by implementing some if not all of the strategies that we have previously mentioned. It is therefore crucial to involve your staff in order for them to have growth objectives and also to come up with multiple ideas that could increase your hotel’s ADR.
Your main priority is to maximize your profitability
To do this, you can use yield management by analyzing your data (occupancy rates, sales, types of clientele) from the current year and the previous year and adjusting your rates. This analysis can be performed by specialized software that can also facilitate decision making or speed up the decision. Yield management is primarily based on supply and demand forecasts. When demand is higher than supply, it is appropriate to offer higher prices in order to maximize your profitability. On the other hand, when demand is too low, it is advisable to lower your prices to avoid low occupancy. You must also take into account several factors such as seasonality, weather, holidays, events, length of stay, packages and services, and offers available at your competitors.
With these forecasts, you will be able to adjust your prices at the right time, better manage your room inventory while determining your booking limit and define pricing strategies and promotional offers relevant to your clientele. In addition, yield management systems are connected to your Property Management Cloud and distribution channels so that your hotel’s availability and inventory are updated in real time.
It is also important to know these performance indicators when using yield management software: – The occupancy rate – ADR (Average Daily Rate) – REVPAR (Revenue Per Available Room) – NREVPAR (Net Rooms Revenue Per Available Room) – GOPPAR (Gross Operating Profit Per Available Room)
Using yield management techniques could be very beneficial for your hotel as it would help you to increase your revenue and margins by selling the right product or service, to the right customer, at the right time.
The way in which yield management stimulates demand is mainly based on predictions and on the flexibility of rates (including the variation of prices). It is a particularly relevant strategy if your hotel has several distribution channels and if you wish to improve the segmentation of your clientele.
In order to lead change in your hotel with ease, it’s important to carefully plan your change process ahead of time. During this preparation you will learn how to put things into perspective, how to involve all hotel staff together and finally how to make sure everyone feels supported throughout the change process. Moreover, the hotel manager is a key leader of the change process, and needs to be understanding and attentive with their staff.
Identifying the barriers to change
Identifying potential barriers to change will help you better manage them in the future. There are three main barriers to change: barriers directly linked to the individual’s way of work, their personality and their abilities, collective and organizational barriers associated with the company’ values, culture and social norms, and lastly barriers linked with change, which have to do with individuals doubting the changes’ usefulness. In order to convince people you work with, it’s crucial to avoid clouding your own conviction by other peoples’ discouragement. Do not lose sight of the benefits you will achieve with your desired change, and keep in mind the reasons that led you to this change.
Adopting the right methods to fight resistance to change
There is not a single right method but rather multiple different good methods which will allow you to fight resistance to change among your team. Start by proactively explaining the change process to your collaborators, being transparent and highlighting the advantages and weaknesses of this process. Also, mention that this project of change is flexible and can be modified.
Moreover, as an actor of change, you must be convincing but most importantly convinced that this change will be advantageous for your property. Make sure everyone involved in this project understands the benefit of undergoing change and prioritize active and constructive listening in order to spot those reluctant to change. It’s crucial to allow your collaborators to express their doubts and fears related to this change, to reassure and support them throughout the whole process. This will ensure they remain involved in the process at all times.
Viewing change management as a long-term process
Leading change in your property is a long-term process which requires an environment of trust. It’s important to communicate all the necessary information in a transparent manner, to avoid rushing those involved in the change process and to be an active listener. Moreover, identifying each person’s grief will allow you to help them see the added value brought by this change. You should convince them to see this change as an opportunity to live a new experience and to innovate in order to offer the best possible experience to your guests.
Leading change in your hotel will involve your staff, management and other stakeholders, and it is therefore crucial to involve them from the get-go. Additionally, preparing for change proactively, identifying the barriers to change, adopting the right methods and viewing change management as a long term process are principles to keep in mind in order to successfully lead change in your property!
Each person undergoes adjustment at their own pace
Change can have an impact that is organization-wide, team-wide, and individual. Indeed, each individual can react differently when faced with an unsettling and uncomfortable situation. It is natural to initially feel reluctant to change. Moreover, reluctancy reflects being afraid of risk, feeling uncomfortable, confused, worried or even having biases take control of our emotions.
We can take the example of a hotel which suddenly decides to use a new property management software, or other new technologies. This forces employees to learn how to use these technologies efficiently in order to save time and gain productivity on a daily basis.
Change can be a real challenge, so it is important to motivate and reassure your staff to encourage them to embrace the change, avoid getting tied to old habits, and overcome their fear of the unknown and insecurity.
Change is inevitable and necessary
Change is inevitable so why not prepare for it in proactively? Before initiating your change procedure, it’s vital to have a well thought-out and carefully planned management strategy. The manager’s role is extremely important as he or her has the role of leadership in change management. The manager is the one who supports, leads, listens, and helps their staff and collaborators throughout the process. Moreover, change is necessary for the growth of a property while it is normal to be reluctant at first, it is important to be able to keep things in perspective to welcome change with ease.
When it comes to using a new technology to improve your efficiency on a daily basis, your staff will often assume the additional utility of such technology is small to none and that this technology will not be required for your hotel in the long run. It is therefore your responsibility to persuade your staff of its value, and inform them that procedures will be modified in order to welcome and benefit from this new technology.
Optimism and mutual support are your biggest strengths
In order to lead your change management successfully, it’s imperative to focus on the benefits that change may bring instead of fears and potential losses that may arise. Do not forget that strength lies in numbers: you are not alone as all the staff is together with you in this process. Prioritize active and constructive listening in order to spot those affected by this difficult situation and do not hesitate to reassure them. Help them perceive change as an opportunity to live a new experience which will allow you to innovate and offer a memorable stay to your guests.
The hospitality industry is facing many uncertainties, forcing properties managers to adapt despite their reluctances to face new challenges. Whether it be structural changes or strategic changes, changes are inevitable and necessary for a property’s evolution. Most importantly, optimism and mutual support will be key for overcoming your comfort zone to better perceive the benefits of change.
The quieter periods is also a great opportunity to review your internal procedures. Whether it is your check in procedures, your internal communication or communication with your customers, these can always be improved. For example, ask yourself the following questions: Are the items or packages correctly setted up to reflect in the correct department? How does it reflect? Do other departments know exactly what to do with this information? Thereby, your property management software becomes your link between all these interdepartmental communications since it holds all the guests’ stay information.
Also, these calm periods could also be a good time to review your tools in order to improve them, to add elements that can help you in your daily tasks or to avoid manual actions. For the front desk or for the entire property, the off-peak season is always an excellent time for the implementation of new processes or new technologies, giving to your staff, time to accept, adapt and get into the habit of using them. Therefore, when the first customers will comeback to your property, your hotel staff will not be caught off guard.
The marketing department of a property is often the busiest department during an off-peak period. It must take several actions during this time but also prepare for the upcoming season. It can start with actions that requires low resources such as updating your website especially with photos, information about your establishment, packages and their components, types of room and services offered, while remaining uniform overall. Thus, a complete review of your website can be an undeniable advantage for the high season.
In addition, your online booking engine must also be up to date, while ensuring that images and descriptions used are similar to those of your website. Optimizing your online presence can go further than simply updating information. The optimization of the online browsing and optimization for conversion purposes are also to be taken into account. The final goal of your website is that the visitor can easily access to your online booking engine and that he ends up making his reservation. It is important that your website is efficient and that buttons, also called “call to action”, are visible and accessible. Furthermore, it would be relevant for you to test or have your website tested by several people in order to know if your browsing path is clear and well perceived by your visitors. Its efficiency can really make a difference, if your visitors can’t find the button to book quickly, then there are only few chances that they make a booking at your property. They will prefer to make their reservations via a distributor site, called online travel agency or to choose your competitor.
As any hotelier, it is difficult to see your establishment empty and without customers. Yet these moments are often beneficial for performing several tasks and will also allow you to improve your future performance, especially when guests will be back and in a large number.
Your front desk should be one of the most efficient services at your hotel, as your guests’ satisfaction will depend on it from their arrival until their departure. The main reason for a client to be dissatisfied with their experience at the front desk is the time spent waiting. Managing your staff is therefore crucial to optimizing your front desk’s efficiency. The PMS will allow you to get occupancy forecasts for any given period of time. These forecasts are crucial, but you will also need to know which type of clientele is planning on staying with you as you may welcome them differently. For example, if you are welcoming a group with a tour guide, checking-in could be easy as tour guides usually hand out the keys to each individual in the group themselves. Your occupancy forecasts will eventually change between the time you decide on your staff’s shifts and the actual day. However you can always use the occupancy recorded the previous year for that day in your hotel PMS. This will allow you to better decide on the number of employees needed at the front desk. These forecasts can also be used by any of your staff affiliated with your front desk, such as your valet parking and concierge staff.
The housekeeping department
Housekeeping also depends on your occupancy. To better predict your housekeeping needs, you can follow the same method as your front desk. However, there exists many staff management or performance models when it comes to housekeeping. Whether using the number of rooms, points, hours or type of housekeeping, your final calculation will always depend on your occupancy. It is therefore important to have accurate occupancy forecasts on which to calculate your housekeeping needs. You will need to study the data in your hotel PMS such as the number of bookings made but also the type of rooms booked. This is particularly important, as your housekeeping needs are different depending on the type of rooms booked. Your biggest room will definitely need more time to be cleaned than your smallest room. In addition, according to the season, some parts of your hotel may not be occupied. Your hotel PMS will then tell your housekeeping staff which building or floor has not been booked so that they do not have to clean the common areas as often. Your hotel PMS can also indicate how long each one of your clients are staying. You can therefore forecast your staffing needs according to your housekeeping policy.
The catering department
The restaurant services are also influenced by the number of people staying at your hotel. However, the magnitude of this influence is different for your catering department as forecasts are often far from the truth and there are significant fluctuations. Some elements, such as breakfast, remain predictable, but your client retention rate for other restaurant services is not so predictable. However, some information in your hotel PMS can be useful, such as how many packages including meals are booked. This can give a general idea of how many customers are expected across your different restaurant services. You can also use your restaurant’s average retention rate to infer your catering staff needs and shifts.
Events at your hotel
Events also require a significant amount of staff. However, as everything is usually planned in advance, managing these staffing needs across your different departments is easier. Keep in mind that every event is unique and thus has different staffing needs. The group module of your hotel PMS will provide each department with specific details concerning each group, such as the number of people in the group, the number of rooms booked, the type of group and the services booked. You will therefore be able to plan the optimal amount of catering and housekeeping staff, along with any other services or activities you provide and the staff they require.
Your hotel PMS should be your main source of information when the time comes to manage your staff, as your staff represents a large portion of your expenses. The balance between the lack and the surplus of staff can have a great impact on your clients’ satisfaction and your hotel’s profitability. In addition, recruiting and training your staff takes a lot of time, so it is important to be able to build optimal schedules to avoid your staff feeling under pressure or useless. It is up to you to find the right balance using your best friend: the PMS!
As the welcoming manager, you can easily check the guests’ arrival times via your hotel management software. You will be able to predict trends and prepare for these specific peak times. These predictions will allow you to, for example, move your employee’s break accordingly so that they are available during peak hours. Arrival times can fluctuate depending on several variables, such as the weather. On a nice day, most of your guests will plan on arriving early in order to enjoy your facilities as much as possible. Therefore, by being aware of this trend in advance, you will be able to recruit more staff to welcome your guests earlier in the day, and let some of your staff go in the evening. With this information, as trivial as it may seem, you can manage your staff costs more efficiently, but most importantly, you can prepare for peak arrival times at your front desk. This can significantly help you avoid negative online reviews.
Saving arrival times in your hotel management software allows you to detect general trends. You could therefore identify seasonal trends or daily trends. During the week, you may welcome a lot of corporate clientele, which can make it seem like your arrival times solely correspond to the end of the business day. However, by having your data compiled in your hotel management software, you are able to verify if this observation is accurate or not. By having concrete data, you have a better idea of how to create a schedule for your front desk staff, such that every employee is busy and the waiting time at the front desk is significantly reduced.
Your housekeeping staff will also benefit from this information. They will be able to prioritize their tasks according to the arrival times. Whether you pre-assign rooms or not, the different types of rooms you offer also have priorities. For example, guests who book a more luxurious room tend to arrive earlier. Therefore, the amount of luxurious rooms that need to be available earlier in the day is greater than that of more standard rooms. You can thus plan your housekeeping timetable accordingly in order to have many luxurious rooms cleaned and ready in advance.
By being aware of your guests’ arrival times, your housekeeping staff will also be better prepared to equip a specific room with gifts. For example, if one of your guests has requested a bouquet of roses and you know their arrival time, you can set a deadline for when the flowers need to be delivered to the room. Similarly, your catering staff can also exploit the guests’ arrival times stored in your property management software. According to the guests’ requests and/or packages booked, your staff can prepare in order to deliver bottles of wine or delicious welcoming treats.
For many hotels, late night front desk opening hours can be limited, which is why it is important to set up a welcoming procedure so that the guest can still check-in and access their room. This procedure allows your hotel to gather all the information you usually get upon your guest’s arrival, while allowing them to check-in outside the opening hours.
By knowing in advance that a guest is planning a late arrival, your hotel can prepare for such a situation according to its policy. You can communicate with your guest all the information they need in order to check-in. This often happens for condo or chalet rentals, for which arrival times can vary quite a lot. It is not unusual for a guest to arrive in their condo or chalet without having physically checked-in with a front desk staff member. This can be done effortlessly if the guest has been given the correct instructions in order to check in in advance. Do not try to reach them last minute in order to give them this information if they have previously informed you of their arrival time.
How to gather this information
At Hotello, we have developed an online guest profile form which allows guests to confirm their information a few days before their arrival. On this guest profile, clients are able to indicate a precise arrival time, which you can later exploit to improve your guests’ overall satisfaction. This simple way to gather information straight into your Hotello PMS is a significant advantage. You could also ask your guest their arrival time when they book over the phone, or pick a booking engine which allows guests to indicate this information, which will then be transferred to your hotel management software.
When a guest is planning their stay at a hotel, you usually already know what is happening during the day. Make sure to ask for their arrival time so that you can give them an outstanding customer experience, and that your staff is ready to welcome them.
Do not forget that you serve as a role model for your employees, whether you like it or not. Your hotel staff is constantly observing you and replicating your actions, so why not use this to your advantage? Offer positive and constructive feedback to your hotel staff whenever you can. Additionally, give your staff the opportunity to ask you questions by being approachable and available. By becoming your employees mentor, you will inspire your team’s leaders to serve as role models too..
Ask for feedback
When evaluating your staff, you must keep in mind that your work can also be improved as a boss and it is important that you stay humble. Allowing your staff to express their opinions can be just as beneficial to you as it is for them. The best way to receive feedback is through an anonymous online survey, so that you cannot recognize their handwriting. Nothing can be more frustrating than being hesitant to voice an honest opinion, as employees may fear what the boss will think. By giving your staff the opportunity to give you some anonymous feedback, you allow them to freely express their opinion, while showing them that their opinion matters and that you care about their well-being.
Invest in your staff
Do you pay your hotel staff enough? If not, do not be surprised if they leave your hotel to take a job at one of your competitors, where they are likely to be better paid. It is crucial to pay your staff a competitive and fair salary in order to retain them. In addition, if you recognize one of your employees to be particularly hard-working, or to have a significant amount of seniority, you could consider raising their salary. This will have a direct impact on their self-esteem as well as on their motivation. If you pursue this kind of rewarding behaviour, you will very rapidly see the return on your investment. Salary is obviously not the only way to invest in your hotel staff. You can offer your employees group insurances, refunds for their commute costs or even gym memberships. This will show that you care about them. Giving them the opportunity to participate in regular trainings to acquire new skills or update their current skills is another way to value your employees and invest in them. You can also set up casual meetings so you can discuss their professional development and their career plans. This way you will be able to determine what you can do for you employees in order for them to reach their goals. If you do not provide the opportunity for your staff to learn and improve, they will seek another job where they will be able to do so. By investing in your employees, you give them a reason to stay.
Don’t be afraid to promote the employees who deserve it. Of course, promotions come with a raise in salary, but it does not necessarily mean that the monetary aspect is what motivates the promoted employee the most. In management positions, it is often recognition and respect from the boss, or the ability to make important decisions on their own or within a committee that motivates employees. If a member of your hotel’s staff seems ready to take on that position, understands your hotel’s operational features, and is well respected by his or her peers so that being promoted will not negatively impact the rest of your team, do not hesitate to promote him or her.
Trust your employees
Even if you are unable to promote or raise your staff’s salary, you can motivate them by trusting them. For example, cease any micromanagement where you would want to control every single one of your staff’s actions. Instead, show them that you trust them and that you do not doubt the quality of their work. Your hotel staff will improve their self-esteem and thus will be motivated to continue working hard. To motivate your employees on a daily basis, you can also remind them that they are part of your company and explain to them how much their work can make a difference in allowing the company to reach its goals.
Many of us have already heard of that one boss who is mean and not understanding, and who makes his employees sad and miserable. Obviously, being understanding is not always easy, but as a boss, you must try and be as understanding as possible. If you see that one of your hotel employees seems particularly sad or troubled, ask them what is going on and try to give them some advice instead of worsening the situation by asking them to smile. Try to step inside your employees’ shoes and to show them as much empathy as possible. If one of your employees shows up late to work due to a flat tire, you do not need to add to their trouble with a snarky comment. Also try not to get too involved in your staff’s personal life. Each person is different and some of your employees might prefer coming home to their family rather than accumulating extra hours. As a boss, it might be hard to accept, but then again try to understand your employees and to show empathy.
By taking these six pieces of advice, you will certainly become a better boss. This way your hotel staff will gain motivation on a daily basis, and more importantly, they will be motivated and they will enjoy working for you.
These are also often called “performance indicators”. However, some of the more complex aspects of these indicators may remain unclear.
Although your hotel management software remains a vital ally when it comes to collecting information for data calculations, it is also useful to be aware of how these calculations are carried out in order to use the results to make adequate decisions and to efficiently analyze a given situation. Here are the eight key metric indicators that a competent hotel manager should know.
Your hotel’s occupancy represents the percentage of occupied rooms relative to the number of rooms available in your hotel. Thus, if your hotel has 100 rooms and 65 of them are occupied, then your occupancy is 65%. This data is particularly relevant, as it allows you to precisely analyze your hotel’s current situation and to see which elements are attracting clients to book at any given time. This idea can also be useful to you in terms of your hotel organization. It can provide you with some forecast data in many different departments. When you reach high occupancy, it is important that each service you provide meets your clients’ expectations. Occupancy has a significant influence on your human resource needs. It is thus essential to have a wide panorama of your occupancy in order to ensure that in periods of high occupancy, each department has enough employees to maintain a standard level of services. By knowing how to compute your occupancy rate, you can access and utilize an analytic element in relation to your hotel’s profitability. Your occupancy can vary depending on a number of different factors, such as your room rates. For example, if your rates are low, you might have a high occupancy, but this does not necessarily equal optimal profitability. In other circumstances, your occupancy alone can be of very small significance when indicating your performance. For example, if you have a high occupancy, you will probably need to hire more staff, for housekeeping amongst others, which will inevitably have a negative impact on your profitability.
ADR (average daily rate) is your rooms’ average daily rate. It is computed by adding the rates of all your occupied rooms, and then dividing this sum by the number of occupied rooms. This indicator is interesting to look at, especially in order to compare your current average daily rate to that of the previous year. You can also analyze the impact of your mean ADR on your occupancy. The ADR will provide you with some ideas and possibilities concerning your occupancy. It is obvious that the more you want a high ADR, the bigger the challenge for high occupancy will be and vice versa. It is by your pricing policy that you can find the right equilibrium between ADR and occupancy in order to maximize your income. Thus, the question becomes: Could I have had a better ADR with the same occupancy? If you are able to offer some discounts, your ADR will be directly affected, as discounts often influence room rates. This is why it is essential to be aware of each discount and event happening at your hotel. With this knowledge you will be not be surprised by a considerable ADR gap between the current and previous year.
The REVPAC metric indicator (revenue per available customer) represents the total revenue generated by a single customer. The REVPAC is computed by taking the total revenue generated by all the customers and then dividing that sum by the total number of customers staying at your hotel. This computation yields the average revenue per hotel guest. This is useful when it comes to making predictions according to your occupancy and time of year. The REVPAC is often an easily improved element as it acts on clients that are already staying at your hotel. A small number of actions can be taken in order for to generate additional revenue. Why not offer a superior room (upsell) upon your client’s arrival for a small additional fee? Offering a superior room can have a wide variety of outcomes. First, your client will be pleased as they will believe they benefited from an advantageous rate. Then, the standard and vacant room will be available for another client who may want to book the room at a lower price. Improving your REVPAC is an overall goal that can be taken into consideration by all the different departments in your hotel. You might want to include other hotel amenities, for example, bringing a bottle of wine from the hotel bar to the room (crossell), or other options, when you give your clients the opportunity to enjoy the experiences offered by your hotel. The front desk plays a key role given that it will present to your clients all the different available offerings, such as early check-in or late check-out. If you fail to improve your REVPAC, you need to keep in mind that you can still act on a number of factors in your hotel, and that, sometimes, you just need to remind your staff of the numerous different sales opportunities your hotel offers.
The REVPAR (revenue per available room) is another key performance indicators. This means that a particular room can be rented during the observed period of time. This metric indicator is computed by multiplying the ADR by occupancy. It is used to determine the average rate displayed for the available rooms. Let’s take an example over a month: If, during one month, you rented your rooms at an average rate of $100 and your monthly occupancy was 75%, then your revenue per available room was $75. With this analysis, you can then adjust your rates and lower them to $75 in order to reach a 100% occupancy. On the other hand, if you realized that you had not reached your budgetary equilibrium point during the month, the solution would not necessarily be to lower your rates, but rather to find out which department had not been profitable. If it was that your housekeeping department hadn’t cut down on its expenses despite an occupancy of 75%, your loss of profitability could have possibly come from this department.
The GOPPAR is perhaps the trickiest indicator to compute. It represents the gross profit per room. This metric indicator reflects the performance of the different departments of your hotel. It takes into account the overall profits generated by your hotel, including food and drink related sales. This amount is then divided by the number of rooms in your hotel to yield your GOPPAR. It allows you to have a clear view of your average profits generated when you rent a room. Thus, the closer to your mean ADR that your GOPPAR is, the less performant your departments will be, and vice versa. The GOPPAR is a profit indicator as its computing is solely based on them. This means that it relies on the revenue minus the costs associated to generate that revenue. However the yielded result cannot precisely point out where the performance was better or worse. It is only an overall daily indicator.
Customer acquisition cost
Customer acquisition cost is a metric indicator which represents the cost invested for each “acquired” customer, meaning, for each additional client who books at your hotel. The customer acquisition cost can be computed by summing the total amounts invested in sales and marketing, and then dividing that sum by the number of new clients acquired by the investment made in these departments. In order to make a profit on the invested costs, you can establish loyalty programs for your new clients, and, at the same time, improve your retention rate. For this to happen, you need to rely on customer experience, maintain a good level of satisfaction and try to target a clientele that is likely to become loyal, like the business clientele for example. That way, you can compute the average amount of money you need to invest in order to attract new clients and entice them to book at your hotel. Depending on your loyal clients and your goals concerning new clients, these computations can give you a clear idea as to the degree of investment needed for the future.
The ROI corresponds to the profitability efficiency of an investment. It represents the percentage of revenue you collect on the overall original investment. For example, if you invest $100 in a project, and, if after a year this project has generated $120, you will have made a total of $20 profit and thus a 20% return on investment. The ROI is a significant indicator to analyze in order to evaluate whether the amounts you invest in your hotel are worth it or not.
In the hospitality industry, the retention rate represents the proportion of clients that remain loyal from time to time. Often, we consider a period of time of a year when analyzing the retention rate as it highly unlikely that a client would stay at your hotel every month. By being aware of the retention rate, you are able to adjust your strategy when it comes to retaining clients, and at the same time, improve their overall level of satisfaction. The retention rate can also be used when analyzing what your clients have consumed during their stay at your hotel. You can look at which proportion of your clients dined at your restaurant, which proportion took a spa package, which proportion took part in activities, etc. You can then compute your retention rate by an expenditure source and thus improve your REVPAC. With all these metric indicators within your reach, you can analyze your performance in a precise and efficient manner. However, it is important to keep in mind that these indicators must be used in a defined framed context and often combined with other indicators. When they are well analyzed, these eight key indicators will precisely represent your hotel’s performance to keep you competitive and help you achieve your hotel’s full potential.
If your hotel is open during the winter, the holidays might be your busiest time of year and require sophisticated management. It is also possible that you experience low occupancy rate if the Winter is a rather quiet period of the year for your hotel. In order for you to manage this holiday season confidentially and efficiently, no matter what your situation is, we have gathered you a little practical guide.
Manage your conference rooms efficiently
The holiday season is an ideal time for family or corporate gatherings where groups of clients will look for rooms to book and host events. If your hotel has conference or reception rooms, it is wise for your PMS software to be equipped with a room management software to ensure an efficient event management for the holidays.
With a good room management software integrated into your hotel’s PMS software, all the information is centralized, which makes coordination and the exchange of data quick and efficient. The software prevents you from making mistakes and losing important information when planning these events. If you usually experience peak occupancy during the holidays, you do not want to mix up bookings or misjudge the amount of food you need for a particular group. This is why it is crucial for you to be well organized and a PMS software equipped with a room management module is your best ally when it comes to planning events during the holiday season.
Use a yield management module
With high occupancy during the holiday season, it is important to be take advantage of a yield management module. This module allows you to fluctuate your rates in order to maximize your occupancy and your income. During this time of year, you can raise your rates because of the increase in demand for your rooms. It is therefore important to have a high-performance PMS software equipped with a yield management module to carry out these computations according to the right criteria.
Do not worry if your hotel does not reach its full capacity
Most clients, in anticipation of the holiday season, prefer to book in advance to guarantee a room. Other clients, however, show up without having booked. During this time of year, clients are more likely to book a room at the last minute. Therefore, if you still have some rooms available, you need to use a good strategy to attract those undecided clients who will book at the last minute.
Some clients might choose to book a room at the last minute seeing how they are far from home during Christmas dinner. Additionally, for hotels located in snowy regions during the winter, clients might be inclined to book a room late at night when they cannot go home due to unfavourable weather conditions. So do not panic if your hotel seems quiet at the beginning of the day, as some clients may arrive later without a booking.
In order to accommodate these late clients, make sure you have enough rooms heated and clean, ready to welcome clients for the evening. Especially if you are a small hotel or a regional motel, it is likely clients will come to you first before seeking accommodation in the nearest bigger town. It is therefore wise to keep a few rooms ready for these clients who will require a heated room to sleep in on Christmas Eve, even if the rest of your hotel has not reached its full capacity.
Establish a multi-step sales strategy
Even if the holiday season only stretches across a few number of days, the business opportunities can stretch over a longer period of time. This results in sales opportunities for a couple of months.It is not rare during the summer for some corporate or private groups to start thinking about hotel availabilities and room openings for upcoming events. The holidays attract a wide variety of clients at the same time so if a group would like to be certain of having a room for a precise date, they need to book in advance. Additionally, if some groups are able to anticipate and book months in advance, some are not. You need to stimulate those forgetful groups by different marketing actions that can be put in place during the summer. It can be very beneficial for you to remind them that they should consider booking soon if they want to be given priority the holidays come.
It is important to frequently update your room availability to remind your clients about holiday season offerings and packages. This creates a sense of urgency which activates the booking process for those interested by your offers. For the clientele whom do not belong to any particular group, the earlier you can provide information about your holiday offers to your booking agents, the easier it will be for them. This will allow your booking agents to answer any questions the clients may have and provide them with all the necessary information they require to book. More often than not, having precise information when your clients asks for specific details will give you a competitive advantage. Indeed, your competition might not have launched their holiday offers as early as you.
Once the holiday season is over, you still have some business opportunities. Some groups who were unable to book for their chosen dates will want to book as soon as the holiday season is over. The period following the holiday season is usually an off-season time of the year characterized by a low occupancy for some hotels. It is thus the perfect time to take the opportunity to offer these groups the possibility of booking for the following year the room they had in mind. However January can still be a month full of celebration so these groups could also choose to come and celebrate after the traditional holiday season ends. This is a good way of filling rooms in January, a month that can be particularly quiet. You can also perhaps offer them an advantageous discount as they are occupying rooms during an off-season time of year.
Prepare your PMS for the holidays
Even though the holiday season comes by every year and you think you are used to it, some work needs to be done in preparation for this peak occupancy season. This is to ensure everything goes smoothly and in the best manner possible. First, it is important to have a good overview of the previous years’ performance in order to establish an efficient strategy. This overview, which you can see on your PMS software, is a basis on which you can build your strategy for the holidays. Secondly, creating packages in your PMS software is the essential element which will allow your booking agents to rapidly inform clients who are calling them and start taking bookings with these complete packages.
Once all the packages are entered in your PMS software you need to ensure that they show up on your booking engine so that clients wishing to book online can do so. In order to avoid losing time, a booking engine that can intake the packages entered into your PMS software is crucial. Do not forget to take notes on your PMS software of all the planned activities in your hotel so that you can provide as much information as possible to your potential clients.
With all these tricks and ideas for the holidays, you are more than ready to get through the winter with confidence and efficiency.