Next-Gen Revenue Management KPIs Hoteliers Should Track

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Key Performance Indicators, better known as KPIs, are touchstones used to measure progress towards a desired result. For hotels and hospitality organizations, these are key metrics that can shed light on specific operations within your properties to analyze their performance. KPIs are not a new concept in hotel revenue management, but as revenue strategies continue to evolve, there are now more KPIs to choose from when developing revenue management plans.

Imagine a revenue manager who uses KPIs as levers that he can activate or deactivate on a control board, as needed. When revenue managers find the right combination of KPIs, they can determine clear ways to increase hotel revenue for their properties, helping them stand out from competitors and optimize profitability.

KPIs to measure for hotel revenue management

There seems to be an almost endless amount of KPIs to track as part of the hotel revenue management strategy. Knowing which are the best ones to watch can be tricky, especially since the list is constantly changing within the industry.

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Key KPIs already established include Revenue per Available Room (RevPAR), Average Daily Rate (ADR), Occupancy, Market Penetration Index (MPI), Net Revenue and Average Length of Stay ( ALOS). While each of these KPIs are essential, there are new ones that aren’t as well known but are worth looking into. Less established, new, or emerging KPIs worth noting are average room upgrade, revenue per incentive booking, late check-out upgrades sold, and exposure rate. Let’s explore them a bit more.

Average room upgrade

Determining the average room upgrade is done by taking a property’s total room upgrade revenue and dividing it by the number of room upgrades that have been sold to guests. Measuring this KPI is a great way to highlight how much revenue a property may be missing, which is important to track. However, the trick with room upgrades is that they are largely based on established rate and level of occupancy, although room upgrades are a great way to supplement room price increases.

Revenue per incentive booking

Incentive room revenue is the average amount of revenue generated by bookings that are incentive. An example of this is that a guest has booked a standard room with a king bed, and when they go to check in, your front desk staff sells the guest, so they stay in a deluxe sea view suite the skyline for an extra $40 per night.

Late check out upgrades sold

When one of your clients requests a late checkout, it’s the perfect opportunity to accommodate their needs while getting an easy upsell for your property.

Exposure rate

This KPI tracks the percentage of upsell offer emails that are sent to your future customers. Powered by marketing automation campaigns, an exposure rate of 80% or higher is recommended to maximize upsell conversion opportunities. Since you are sending offers to customers who already have a confirmed booking, conversion rates are often very high. However, like other upsell opportunities, your established rate and occupancy level affect the upgrades you can offer.

Evolution of Food and Beverage KPIs

For a long time, most of the KPIs used to measure whether hotels were meeting their financial goals were structured around analyzing room data. Although room data is crucial, revenue managers are now seeing the value of developing KPI strategies for food services as well. Let’s take a look at some important KPIs for F&B outlets.

RevPASH

This is equivalent to analyzing RevPAR, and this KPI allows revenue managers to optimize labor costs to meet peak demand while not overstaffing during slower times. RevPASH also lets you develop marketing plans to help fill seats during slower times.

Profit versus popularity menu item

It is essential to increase revenue for hotels and restaurants because it thoroughly examines the popularity of items ordered against the costs associated with producing those items. Tracking this KPI allows you to remove unpopular menu items that are cost-prohibitive and instead offer mass-ordered items that have a better profit margin.

Average check size

The formula for average check size is simple: total sales divided by the number of covers in a given time period. It’s a good way to forecast sales because you can isolate the data to look at specific times of the day and you also get insight into the perceived value of your point of sale. For example, if the costs are high and the check amounts are low, the benefits are likely minimal and there is work to be done.

IDeaS Solutions for KPI Hotel Revenue Management

It is difficult to determine which KPIs to monitor. Achieve increased productivity and profitability with software solutions from IDEaS that enable automation and optimization. Our all-in-one, robust revenue management solutions will accelerate the data you collect, more accurately, allowing you to strategize faster and better. Contact us to learn more about how we can help you optimize your revenue performance

About Ideas

IDeaS, a SAS company, is the world’s leading provider of revenue management software and services. With over 30 years of expertise, IDeaS provides revenue science to over 18,000 clients in 145 countries. Combining industry insights with innovative data analytics technology, IDeaS creates sophisticated yet simple ways for revenue managers to make accurate, automated decisions they can trust. Results delivered. Income transformed. Discover greater profitability on ideas.com.

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