Sometimes, trails are difficult to envision—you start asking yourself where to start and what the right time is to do so. Our 'Hospitality Trail' was born out of the idea that all you need is guidance. You might know the vision or how the trail has to be created within a particular environment—but what happens right after it? This is where we jump in, to be your compass across some of the main topics in the industry, from technology to operational excellence to strategy building.

So we ask you: how exactly should you do it if your hotel or apartment rental is already operating? Is it even possible to have a compass if the wheel is spinning 24/7, non-stop? The answer is an easy yes. Let’s start with facts!

In the most recent report from Cloudbeds (The State of Independent Lodging Report), it is estimated that between 28% and 30% of the hotel industry belongs to the independent market. Even if we are part of a market still dominated by branded giants, there is a lot of potential for having your own private investment. However, the ROI is not only a matter of the asset and the location you have chosen. In the long run, you need to ensure the right strategy to compete and stay relevant with a healthy operation.

 There are many ways to achieve this. However, the basics are to start with knowledge—and thus, to understand the most relevant KPIs that every hotel or apartment rental should track and sustain, and what healthy or unhealthy practices they can uncover so that we can redirect them toward better behaviours.

The Net Promoter Score (NPS) was popularized in 2003 and is measured by a simple yet powerful question: How likely would you recommend ‘X’ to a friend or colleague? It divides your customers into three groups: promoters, passives, and detractors. The final score is achieved by subtracting your total detractors from your promoters. In our experience, a healthy and stable NPS is between 62 and 70. Once achieved, it can become your next marketing strategy or your new loyalty program—as, in the end, a bed can be provided by anyone, but your authentic experience, by no one.
 

When it comes to room metrics, there are tons; however, this time we will stick with TRevPAR (Total Revenue per Available Room) as it provides a much wider perspective on your business, by comparing your monthly rooms revenue against your additional revenue streams (spa, retail, or tours). By doing so, it can help you strategize packages, promotions, and your overall pricing strategy more smartly by actively highlighting your strongest assets.

In general, a stabilized metric depends on factors such as the market you are located in, the size of the hotel, and, of course, which and how many additional services you provide. So check your figures and determine whether strategic changes should be made.

Commonly used in F&B, COGS (Cost of Goods Sold) provides a clear picture of a restaurant’s performance by including all direct costs and expenses involved in production (labour and supplies). It is directly linked to the gross profit of each of your F&B venues. Essentially, it’s more than a metric because it can directly indicate your inventory and stocking practices—good or bad—or your discount management policies, and how to reframe them, so you can rethink your team’s weekly or monthly patterns. Depending on each venue, a healthy parameter is around 28% to 32%.

If you thought we were going to leave the most important component behind when discussing room metrics, don’t worry. The ADR (Average Daily Rate) is one of those metrics that you should watch daily, as it indicates the average revenue generated per occupied room. You should aim to keep it as high as possible, especially by increasing it based on seasonality, implementing a dynamic pricing strategy, or pairing your room revenue with additional perks—from cross-selling to even last-minute room upsells.
 

Last but not least, it normally appears at the end of your monthly P&L: NOI (Net Operating Income). This is the most direct—and sometimes one of the most important—indicators of your business’s stability and overall profitability, as it deducts all your operating expenses from the total revenue generated in the given month. For businesses already operating, it’s considered the alarm that can trigger core changes within your daily practices and financial operations by working on decreasing your expenses (and yes, labour is included) while also propelling sales and marketing strategies using your current tools and capabilities.

To understand a more stabilized and ideal metric, we check either the upcoming or the past three months and ensure the levels are between 25% and 30%. But just like TRevPAR, it depends on your years in the market, the type of location (i.e. city versus beach), and even the economic impact of the country you are located in.

Long-term management of these metrics—and many more that we have excluded for now—allows us to look at your investment not only in terms of commitment to your loans or investors but, most importantly, in terms of a thriving or struggling business. We invite you to review these metrics, start tracking them if you haven’t already, and understand the changing parameters month over month so you can improve your management—and subsequently, your team’s knowledge and performance.

Sometimes, trails are difficult to envision—you start asking yourself where to start and what the right time is to do so. Our 'Hospitality Trail' was born out of the idea that all you need is guidance. You might know the vision or how the trail has to be created within a particular environment—but what happens right after it? This is where we jump in, to be your compass across some of the main topics in the industry, from technology to operational excellence to strategy building.

So we ask you: how exactly should you do it if your hotel or apartment rental is already operating? Is it even possible to have a compass if the wheel is spinning 24/7, non-stop? The answer is an easy yes. Let’s start with facts!

In the most recent report from Cloudbeds (The State of Independent Lodging Report), it is estimated that between 28% and 30% of the hotel industry belongs to the independent market. Even if we are part of a market still dominated by branded giants, there is a lot of potential for having your own private investment. However, the ROI is not only a matter of the asset and the location you have chosen. In the long run, you need to ensure the right strategy to compete and stay relevant with a healthy operation.

 There are many ways to achieve this. However, the basics are to start with knowledge—and thus, to understand the most relevant KPIs that every hotel or apartment rental should track and sustain, and what healthy or unhealthy practices they can uncover so that we can redirect them toward better behaviours.

The Net Promoter Score (NPS) was popularized in 2003 and is measured by a simple yet powerful question: How likely would you recommend ‘X’ to a friend or colleague? It divides your customers into three groups: promoters, passives, and detractors. The final score is achieved by subtracting your total detractors from your promoters. In our experience, a healthy and stable NPS is between 62 and 70. Once achieved, it can become your next marketing strategy or your new loyalty program—as, in the end, a bed can be provided by anyone, but your authentic experience, by no one.
 

When it comes to room metrics, there are tons; however, this time we will stick with TRevPAR (Total Revenue per Available Room) as it provides a much wider perspective on your business, by comparing your monthly rooms revenue against your additional revenue streams (spa, retail, or tours). By doing so, it can help you strategize packages, promotions, and your overall pricing strategy more smartly by actively highlighting your strongest assets.

In general, a stabilized metric depends on factors such as the market you are located in, the size of the hotel, and, of course, which and how many additional services you provide. So check your figures and determine whether strategic changes should be made.

Commonly used in F&B, COGS (Cost of Goods Sold) provides a clear picture of a restaurant’s performance by including all direct costs and expenses involved in production (labour and supplies). It is directly linked to the gross profit of each of your F&B venues. Essentially, it’s more than a metric because it can directly indicate your inventory and stocking practices—good or bad—or your discount management policies, and how to reframe them, so you can rethink your team’s weekly or monthly patterns. Depending on each venue, a healthy parameter is around 28% to 32%.

If you thought we were going to leave the most important component behind when discussing room metrics, don’t worry. The ADR (Average Daily Rate) is one of those metrics that you should watch daily, as it indicates the average revenue generated per occupied room. You should aim to keep it as high as possible, especially by increasing it based on seasonality, implementing a dynamic pricing strategy, or pairing your room revenue with additional perks—from cross-selling to even last-minute room upsells.
 

Last but not least, it normally appears at the end of your monthly P&L: NOI (Net Operating Income). This is the most direct—and sometimes one of the most important—indicators of your business’s stability and overall profitability, as it deducts all your operating expenses from the total revenue generated in the given month. For businesses already operating, it’s considered the alarm that can trigger core changes within your daily practices and financial operations by working on decreasing your expenses (and yes, labour is included) while also propelling sales and marketing strategies using your current tools and capabilities.

To understand a more stabilized and ideal metric, we check either the upcoming or the past three months and ensure the levels are between 25% and 30%. But just like TRevPAR, it depends on your years in the market, the type of location (i.e. city versus beach), and even the economic impact of the country you are located in.

Long-term management of these metrics—and many more that we have excluded for now—allows us to look at your investment not only in terms of commitment to your loans or investors but, most importantly, in terms of a thriving or struggling business. We invite you to review these metrics, start tracking them if you haven’t already, and understand the changing parameters month over month so you can improve your management—and subsequently, your team’s knowledge and performance.

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