Effective KPIs for hotels

09 June 2022
Once in a while, hotel industry vendors or hospitality experts compile lists of the top KPIs for hotels. These KPIs are always general, such as RevPAR, Occupancy, ADR, etc. However, the hotel industry has worked with the same KPIs for so long that every hotel company nowadays follows these KPIs without questioning their actionability.
Unfortunately, many hotel companies get their KPIs wrong by measuring too much or not what's helpful or copying the metrics other hotel companies use. But for KPIs to be effective, it's essential that hotels consider what they need to know and then set business KPIs to measure their specific strategy. So let's dig into some details.

Effective KPIs

Here are some features that make an effective KPI.

Relevant

A KPI must be relevant to a specific team or strategy. Relevance ensures the right decision-makers are responsible for measuring specific KPIs — increasing the likelihood of a successful outcome. The relevance is the starting point when deciding which KPIs to follow. For example, in hotels, KPIs about guest satisfaction, market share, operational efficiency, and profit are all critical for success.

Aligned

KPIs should always trickle down from the overall strategic goals of a hotel company. As a result, they need to be aligned and not unintentionally undermine each other. Make sure that KPIs are always supporting the overall strategy of the hotel company. Many hotels experience problems with silo thinking in commercial roles where role-specific KPIs create conflicts between the team members.

Actionable

It does not make sense to build or use KPIs for its sake. Hoteliers should want to build business KPIs that positively affect the business. They should be easy to understand, but employees should also know how to achieve an effective outcome. Setting unachievable goals can be a big de-motivator for employees. The more accurate the purpose of a KPI is, the more likely teams are to reach it.
 
Instead of setting significant, complex goals, a hotel might want to start small. By setting short-term goals that challenge employees but don't overwhelm them, a hotel can track the progress of a business KPI and boost morale.

Measurable

It might seem obvious, but a KPI should be easy to measure. An effective KPI avoids generalized goals like, "Make guests satisfied." Instead, hotels should base the KPI on a well-defined goal with clear objectives to create an effective KPI. In addition, the KPI should be able to provide qualitative and quantitative measures.

Simple

A KPI should also be simple, straightforward, and easy to measure. An effective KPI prompts decisions, not additional questions. Everyone involved in a goal should be able to recognize their role in enacting a KPI. If a goal is clear, team members can make practical decisions to achieve the desired outcome.

System to track KPIs

An excellent way to align the team and measure KPIs is by collecting and storing all information in one system that gives the hotel team easy access and a single source of truth. As a result, the progress towards goals will be easier to analyze, and hotels can make many decisions based on facts and gut feelings, which is a perfect combination for hotels. Hotels need one tool to collect data, analyze, and take action. Demand Calendar collects all data into one place, pre-analyze and visualizes vital KPIs for hotel business, lets the hotel team take action, and measures the outcome of the activities.