In the dynamic realm of revenue management within the hospitality industry, there has been a significant shift in the emphasis on key performance indicators (KPIs). This evolution aims to more accurately reflect the intricate aspects of profitability and guest experience. Here we explore the key developments in KPIs that are currently transforming the landscape:
1. From RevPAR to GOPPAR.
RevPAR (Revenue per Available Room) was the industry standard, primarily measuring top-line performance.
GOPPAR (Gross Operating Profit per Available Room) emerged to provide a clearer picture of profitability by factoring in operational costs.
2. From RevPAR to TRevPAR (Total Revenue per Available Room).
Hotels are now looking at TRevPAR which includes all revenue streams like food and beverage, spa services, and other ancillary income. This helps in understanding the total revenue generated per available room, especially in the “Resorts or All-Inclusive” type of accommodation.
3. From RevPAR to NRevPAR (Net Revenue per Available Room).
With increasing distribution costs, NRevPAR adjusts RevPAR by subtracting customer acquisition costs, giving a more accurate measure of revenue after these expenses.
4. From RevPAR to RevPAG (Revenue per Available Guest).
To align revenue strategies with guest-centric approaches, RevPAG looks at the revenue generated per guest. This encourages strategies focused on enhancing guest spend and satisfaction.
5. RPI (Revenue Penetration Index)
Often used in competitive benchmarking, RPI compares a hotel’s RevPAR to the average RevPAR of its competitive set, providing insights into market share and performance relative to competitors.
We interviewed Chema Herrero Hernández, CEO & Founder at Bedsrevenue.com, and asked him:
Drawing from your extensive experience as a Revenue Manager, could you share the key performance indicators (KPIs) you monitor on a daily basis and why?
6. EBITDA per Available Room
Moving further into profitability, some hoteliers are focusing on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) per Available Room to understand bottom-line performance.
7. CostPAR (Cost per Available Room)
As cost management becomes critical, CostPAR tracks the total costs associated with running an available room, helping to identify and control operational efficiencies.
8. Guest Satisfaction Index
Integrating guest satisfaction scores (e.g., NPS - Net Promoter Score) with financial KPIs is becoming more prevalent. This helps correlate guest experience with financial performance.
9. Sustainable Revenue Metrics
With sustainability becoming a key focus, metrics like SRevPAR (Sustainable Revenue per Available Room) are emerging, which adjust revenue figures to account for sustainable practices and their financial impact.
Certainly, numerous KPIs exist, and not all types of accommodations adopt the same ones. The choice largely depends on variations in product offerings, services, destinations, and seasonality. Identify the KPIs that align best with your strategy, and you should see an improvement in your performance.
