yes, occupancy could be one criterion to measure hotel performance. however, there are many other parameters to check the performance of the hotels like guest feedback on quality of service and other facilities in the hotel.

Hello Exner. I believe this article ( 7 Key Performance Metrics for every Hotel ) might help: https://qloapps.com/7-essential-key-performance-metrics-hotel/#:~:text=Revenue%20per%20Available%20Room%20(RevPAR,the%20time%20period%20being%20measured.

Hello Mr Olutayo Kadmiel Osunsan,

Thank you very much for your support.

It will for sure help us.

Reputation / ratings / customer satisfaction is the greatest success indicator.

Dear Maximilien,

the financial success of hotels is traditionally measured first and foremost by the OR (occupancy rate) as the pricing policies of the hotel are based on it.

As you may know the selling price of a particular room depends on a few factors such as the concept of perishability of the rooms occupation, the inventory of the hotel, booking horizon and the occupancy rate.

This means that if a hotel has 20 rooms left vacant at 8 am on the day, it will probably start providing some discount on the room rate. If it has 20 rooms left vacant by the early evening, it could very well mean that price will be slashed. This is the same system the Airline industry uses to set up the price of their seats. You could pay £20 return or £300 return for the same flight.

So, this is why the OR is a crucial KPI when assessing the financial success of the hotel. At the same time, it is important to measure success because bedrooms are the main source of income for hotels as well as the main cost (capital investment). Lastly , the OR has a direct impact on the financial success of the other departments such as the F&B, sport, hairdresser, shop, concierge, etc. If a hotel is full then the other department have more potential customers at their doorstep. This is where the internal merchandising matters.

But it is not the only one, the ARR (average room rate), the REVPAR (Revenue Per Available Room) and the ASR (Average sleeper rate) are important too.

Now this is for the financial success.

In terms of overall success, I think it really depends on the management team believe and culture. The old school of thought such as Frederick W. Taylor, Max Weber and especially Elton Mayo believed that the human relationship was the most important character of a business.

This means that the staff would be managed in a certain way and that the customer satisfaction rate would be the most important indicator of success as it influence the ratings, especially the online ratings and reviews, the reputation and probably the most important of all, the loyalty of customers which in turn trigger repeat business and creates higher profit margins.

The more modern management methods favourise more an analytical approach with data and numbers being used to assess success.

The magic measure is the REVpar. It takes both the occupancy and the ADR into consideration.

Of course, hotels can be full all the time and still make a loss if the average rates are not high enough.

Thanks

Dear Maximilien ,

Have you considered a balanced scorecard perspective?

Article: Measuring hotel performance: Using a balanced scorecard perspectives’ approach

Article Measuring hotel performance: Using a balanced scorecard pers...

yes, occupancy could be one criterion to measure hotel performance. however, there are many other parameters to check the performance of the hotels like guest feedback on quality of service and other facilities in the hotel.

Don't forget the "RR" (return rate) or the "PR" probable return. It's a very powerful important indicator!