Dear WuBookers, KPIs are fundamental indicators for understanding the health of your hotel and making informed decisions about rates and investments. But navigating numbers and acronyms can be difficult, especially at first. That’s why we’ve decided to explore the topic in this article dedicated to the main KPIs for hotels and accommodation properties.

What are KPIs and what are they for?

KPIs are used in various sectors because they translate business performance into numbers, providing an objective overview from which to assess the present and make future projections. KPI is short for Key Performance Indicators.

In our case, these are metrics relating to hotel performance (in various areas) and are used by those involved in revenue management to better manage resources in order to achieve higher revenues.

Without clear and measurable data, there is a risk of proceeding on the basis of subjective feelings and intuitions, which are not always correct. On the contrary, knowing exactly how sales are going, how many rooms are occupied, how much revenue is generated from each individual service, and so on, helps to set growth targets and necessary activities in a consistent and sustainable manner.

Which KPIs should be considered in hotels?

KPIs are useful for everyone, but not everyone needs the same KPIs. The level of detail or relevance of certain metrics may vary depending on the type of property, its commercial strategy, and its potential. However, there are some parameters that, with due consideration, are essential for everyone: let’s take a closer look at them.

1. Occupancy rate (OCC)

Occupancy is a key indicator for hotels because it gives an instant overview of the situation. This KPI refers to the number of rooms occupied, as a percentage of the total number of rooms available during a certain period of time.

To calculate it, simply divide the number of occupied rooms by the total number of rooms and multiply by 100.

A high percentage is typically a good sign because it indicates that sales have been good. Conversely, few occupied rooms means that the property’s capacity is not being fully utilized and that some action needs to be taken (e.g., on prices or promotion strategies).

On the other hand, however, it cannot be ruled out that a low OCC may depend on seasonality (it is normal to have fewer guests at certain times of the year); while even a high occupancy rate may not be entirely positive: if your rates are too low, you may have many guests but they may not be spending much.

For this reason, it is important to consider this parameter in relation to others, particularly ADR.

2. ADR

ADR is the Average Daily Rate and corresponds to the average price paid by guests per night over a given period of time. Again, the calculation is quite simple: total room revenue / number of rooms sold (meaning the number of nights). For example, a hotel that sold 200 nights in a month and earned €30,000 will have an ADR of €150. This is the amount that, on average, a customer is willing to pay to stay at your property for one day.

But what does this mean in practical terms? As with the occupancy rate, it depends. A high ADR but with few rooms occupied, for example, could indicate that the selling price is too high, which inhibits reservations.

The average daily rate is used to analyze not only your pricing strategy, but also guests’ perception of the property: is it considered too expensive, too cheap, or just right?

3. RevPAR

Unlike ADR, which is limited to rooms sold, RevPAR considers Revenue Per Available Room, i.e. for all available rooms. This is essential data for evaluating the absolute performance of the property over a defined period of time.

There are two ways to obtain it:

• occupancy rate × ADR;
• total room revenue / available rooms.

In both cases, the result will be the same and will help you understand how you are doing and whether your management is really effective. By directly comparing occupancy and ADR (or revenue and available rooms), you will know whether your prices are competitive and meet demand.

4. GOPPAR

The fourth KPI we suggest you keep an eye on during your strategic and commercial assessments is GOPPAR, or Gross Operating Profit Per Available Room. This indicator refers to the gross operating margin per available room. Therefore, unlike RevPAR, it is not limited to turnover but goes into the specifics of profitability. How? By subtracting operating costs from total revenue and dividing the result by the number of available rooms. In other words: (total revenue – operating costs) / available rooms. Operating costs include, for example, personnel expenses, supplies, and utilities. Knowing the GOPPAR therefore provides accurate information on the actual economic profitability of the property, net of the costs of maintaining its “products” (i.e., the rooms).

5. TrevPAR

However, a hotel does not only offer rooms, but also ancillary services, such as a restaurant, room service, a wellness area, and more. TrevPAR is used to measure the economic performance of each room, also in light of ancillary services. The acronym stands for Total Revenue Per Available Room. While RevPAR is based solely on room revenue, TrevPAR includes all hotel departments, giving you an even more comprehensive overview of the property’s performance.

When this KPI is low, it may mean that the services are not very attractive to guests, and you could take action by updating your offering, creating new packages, or making them more accessible. A high TrevPAR, on the other hand, is generally positive and could help you discover which services are most profitable so you can enhance them further.

Other important KPIs for the hotel industry

These are just the main hotel KPIs, but they are not the only ones. Many additional metrics can be tracked to improve overall performance, such as:

• ALOS (Average Length of Stay): Calculated by dividing the total number of nights occupied by the total number of reservations. It can be applied to the entire property, specific room types, or even individual boards or sales channels.
• CostPAR (Cost per Available Room): Similar to RevPAR but focused on expenses. This KPI indicates the average operating cost of each available room and helps identify management inefficiencies. Formula: total operating costs ÷ available rooms.
• Cancellation Rate: The percentage of reservations canceled compared to those received. Although often underestimated, it is crucial for optimizing strategy. It can vary by season and sales channel, and when predicted accurately, it supports planned overbooking—the controlled sale of more rooms than are available.
• No-Show Rate: Unlike cancellations, a no-show occurs when a guest does not arrive without canceling or modifying their reservation. Monitoring this KPI helps identify trends by customer type, sales channel, or promotion.
• Booking Window: The lead time between booking and check-in. This metric provides valuable insights into booking patterns and the effectiveness of promotional campaigns.

Other KPIs to consider include RevPOR (Revenue per Occupied Room), NRevPAR (Net Revenue per Available Room), ARPA (Average Revenue per Account), EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and RFM analysis, which segments and interprets the property’s audience. However, as mentioned, not all properties need to track these in detail.

Finally, what tools are available to calculate hotel KPIs quickly and automatically?

Zak by WuBook for data analysis

The hotel industry offers numerous tools for those who want to work well and in an optimized manner. Among these, RMS (Revenue Management System) software is certainly worth mentioning: advanced systems that, starting from data transmitted by the hotel’s management software and other parameters, are able to predict market trends and demand.

PMS is therefore essential for obtaining the necessary information, but some PMSs do even more. This is the case with Zak, the hotel software by WuBook, which integrates an entire area dedicated to trend statistics into its basic features. Depending on the period of interest, hoteliers can analyze all of the following KPIs with just a few clicks: ADR, available rooms, sold rooms, closed rooms, total revenue, room revenue, occupancy rate, RevPAR, TrevPAR, TrevPOR (Total Revenue Per Occupied Room), RevPOB (Revenue Per Occupied Bed), RevPAB (Revenue Per Available Bed). Zak also keeps track of the cancellation rate, no-shows, and booking window, allowing you to always keep an eye on the performance of your property.

Now that you know what the essential KPIs are and what technological solutions exist to measure them, all you have to do is analyze them and get the most out of them: good luck!