Hotel Bookings Are Slowing, Avoid an Unpleasant Surprise With These 7 Key Metrics

Occupancy rates are worse than 2019. Don’t watch your numbers dwindle without warning. These metrics will help you stay on top.

Success in hospitality depends on your ability to monitor and adapt to always-changing circumstances.

CBRE Group, a real estate and investment firm, released its quarterly report. In it, they note that Q2 of 2023 shows that industry growth is slowing. There has been a 1.5 percent year-over-year drop in hotel occupancy. The average daily rate (ADR) increased by 2.6 percent year-over-year – the smallest increase since 2021. And occupancy rates for hotels were below 2019 rates this.

You don’t want to be caught surprised by any potential downturns your hotel faces. Stay ahead of the curve so you can pinpoint any issues before they affect your overall success.

Here are a few key metrics to keep an eye on.

1. Occupancy rate

The occupancy rate is an essential point in hotel management. This metric shows the percentage of rooms that are occupied at any given moment. It can be calculated with this formula:

Occupancy Rate = (Number of Occupied Rooms / Total Number of Available Rooms) x 100

A high occupancy rate indicates your hotel is in strong demand, while a low rate can show there’s a problem with your marketing or pricing strategies. You should find a balance that optimizes revenue while still maintaining customer satisfaction.

2. Average daily rate (ADR)

The ADR represents the average income generated from each room per day. This is the formula:

ADR = Total Room Revenue / Total Rooms Sold

To increase ADR, you can use strategies like dynamic pricing, upselling, and discount packages.

3. Revenue per available room (RevPAR)

RevPAR is an important metric that looks at both occupancy and ADR. It’s usually seen as one of the best indicators of a hotel’s performance:

RevPAR = ADR x Occupancy Rate

A higher RevPAR indicates that you’re efficiently filling rooms and generating the maximum possible revenue from them.

4. Customer satisfaction

Satisfied guests are more likely to return and recommend your hotel to others. Surveys, reviews, and feedback play a significant role in measuring this metric. Managers should focus on guest reviews on platforms like TripAdvisor and Yelp as well as customer complaints and resolutions.

5. Employee satisfaction and turnover

Happy employees tend to provide better service and create a more positive guest experience. High employee turnove r can have a devastating effect on your revenue, affecting time dedicated to training and overall productivity. Regular surveys and feedback from staff can help monitor employee satisfaction and address any issues as soon as possible.

6. Website conversion rate

Online booking is a method that’s sure to keep rising.

Monitoring your website’s conversion rate is exceptionally important because of this. It tells you what percentage of your website visitors actually make a reservation. Your site should not only be visually appealing but also user-friendly.

Take into consideration that many guests are using third-party sites to book, but making your site appealing and just as easy, if not easier, can draw them to you instead. If possible, allow guests to make one-click payments through organizations like PayPal while booking.

7. Customer churn rate

This measures the percentage of customers who don’t return to your hotel. A high churn rate may indicate issues with service quality, pricing, or competition.

Churn Rate = (Number of Lost Customers / Total Customers) x 100

Don’t let go of the data from your “lost” customers. Use that data to continue reaching out to them. You can try win-back email campaign  offering special deals, advertising amenities the “lost” guest may have used, or any other information from their data you can use to entice them.