Are You Reviewing Financial KPIs For Your Hotel Regularly?

by Casey Dill, Chief Financial Officer of Staypineapple Hotels

Do you know if your hotel is performing at the highest level? Are you missing out on opportunities? Are there changes that can be made that will quickly improve the bottom line?

During uncertain economic environments such as inflation, rising interest rates and global unrest, it’s imperative that you are reviewing the right Key Performance Indicators or KPIs. This will help ensure you’re positioned for sustained growth and the highest level of performance.

Identifying the right KPIs for your business is key. There are KPIs that can be applied to all business and industry sectors, as well as KPIs specific to the hotel industry. Each KPI should give you valuable insight and useful data that you can use to analyze performance, track progress and make changes if needed.

KPIs to consider:

• The Cash Flow Model reveals how much cash your hotel generates and how much money is flowing through your bank accounts. The model should track incoming and outgoing funds on a daily, weekly and monthly basis. This will in turn help you project future cash flow for operations, reserves and capital projects.

• Actualized revenue reports showing Occupancy, ADR and RevPAR are of course very important. But these reports should each detail out sales segments for better revenue tracking and evaluation. Direct vs indirect, Transient, group, corporate or OTA. Reviewing these details will tell you if your marketing and sales efforts are moving your business in the right direction and lowering your cost of revenue (i.e. commissions, reservation fees, etc.).

• Forecasted occupancy is key to managing costs and keeping your guests happy. Is there an upcoming event that is going to fill the hotel? What group is coming in the door? Is there a slowdown in the coming weeks? Accurate and timely occupancy projections will help your General Manager and Supervisors plan schedules to ensure the hotel is appropriately staffed for the highest operational efficiency and keep costs in line with the occupancy.

• Cost per occupied room (CPOR) is an essential KPI helping monitor the hotel’s profitability (cost / occupied rooms). CPOR for each line item of expense should be calculated and reviewed monthly. Tracking this cost vs budget, vs last year, and on a trend report are critical to a hotel’s success.

Evaluating and tracking these key KPI metrics doesn’t just help the accounting and finance departments, each one inevitably will trickle down to all other departments to ensure appropriate YOY goals are made, budgets are aligned and expenditures are strategically assigned.

Staypineapple is a hotel corporate premier-plus member of BLLA – view their listing here!