Starbucks used to track average transaction value as their flagship metric for success. If the number went up, it meant customers were spending more and business was good. Except, they knew it wasn’t that simple, and they were missing out on key insights into spending habits, loyalty, and long-term value.
Tracking Metrics That Drive Success in Hospitality
They embraced new metrics like customer loyalty, engagement, and lifetime value, and the results speak for themselves. 40% of their US sales are made through their rewards program, with members spending 2-3 times more than non-members. Profit margins grew, wait times dropped.
This isn’t an advert for Starbucks (plenty of great coffee is available elsewhere), but rather an illustration of how tracking the right metrics is key to success for any ambitious business.
Hospitality is no different. General managers have the challenging task of managing complex operations, guest expectations, and staff happiness, and data holds the key to identifying efficiencies and improving performance.
10 Key Metrics that Every General Manager Should Be Tracking
This article covers 10 key metrics that every general manager should be tracking. If you’d like to delve deeper, be sure to read The New Era of Hospitality Metrics for General Managers.
1. Space utilization
Occupancy is a time-honored metric that measures the percentage of rooms booked, but it provides a limited view of overall performance. Occupancy doesn’t account for how efficiently your spaces are utilized throughout the day or the revenue potential of underused areas like lobbies, restaurants, or meeting rooms.
Utilization offers a more holistic perspective by considering the total amount of time that spaces are actively used. For example, a room left vacant between morning check-out and evening check-in represents untapped potential. By measuring utilization across all spaces – from parking lots to dining areas – you can identify inefficiencies and opportunities to optimize revenue.
2. Daily Guest Spend
Average daily rate (ADR) is a narrow measure that only reflects room rates, excluding additional revenue from services or experiences. It’s useful for benchmarking against competitors but doesn’t provide a complete picture of guest behavior.
Daily guest spending aggregates all revenue sources, including F&B, parking, and upsells. By understanding total guest spending patterns, you can uncover trends and opportunities. For example, you might notice higher ancillary spending during weekends or drops in midweek revenue, enabling more targeted promotions and pricing strategies.
3. Guest Lifetime Value (LTV)
LTV represents the total revenue a guest is expected to generate over their relationship with your property. Return guests often have higher average spending and lower acquisition costs, making them invaluable. Tracking LTV helps you prioritize loyalty programs, upselling strategies, and marketing campaigns that drive repeat bookings and long-term revenue growth. Just like Starbucks.
4. Guest Acquisition Cost (GAC)
GAC measures the cost of acquiring a guest through marketing, OTA commissions, and other channels. With acquisition costs comprising 15-25% of room revenue, tracking and minimizing this metric is vital for profitability.
Promoting direct bookings and increasing repeat guest rates are two effective ways to lower acquisition costs. Additionally, refining your marketing efforts to target high-value segments ensures a better return on investment.
5. Net Promoter Score (NPS)
Guest happiness is the cornerstone of hospitality, and NPS is a reliable way to measure it. This metric evaluates how likely guests are to recommend your property to others. Subtracting the percentage of detractors from promoters gives you a clear snapshot of guest satisfaction. A high NPS signals strong guest loyalty and a higher likelihood of organic growth through referrals.
6. Sustainability metrics
Sustainability is no longer optional; it’s a business imperative. Tools like the Hotel Carbon Measurement Initiative allow properties to track their carbon footprints, water usage, and energy efficiency. These metrics support not only eco-friendly initiatives but also highlight cost-saving opportunities through operational efficiencies.
7. Average Length of Stay (ALOS)
Tracking ALOS provides insights into guest behavior and revenue patterns. Longer stays generally reduce turnover costs and increase opportunities for upselling. By analyzing ALOS trends, you can tailor marketing campaigns and packages to encourage extended bookings, maximizing revenue per guest.
8. User disengagement
User disengagement measures the time savings achieved through automation and streamlined processes. By freeing staff from repetitive tasks like manual check-ins and reporting, you enable them to focus on delivering exceptional guest experiences. Metrics like time saved per task and reduced queue times highlight the tangible benefits of modern technology.
9. Staff Turnover Rate and Cost
High staff turnover is an ongoing challenge in hospitality, one that’s both costly and time-consuming. Tracking turnover rate alongside associated costs, such as recruitment and training expenses, reveals the financial impact of employee attrition. Modern, user-friendly operational systems can improve staff satisfaction and reduce turnover by simplifying workflows and enhancing daily operations.
10. Employee Net Promoter Score (eNPS)
Just as NPS measures guest satisfaction, eNPS gauges employee happiness. A high eNPS indicates a motivated and engaged workforce, which directly impacts guest experiences. Investing in staff well-being, offering competitive benefits, and providing intuitive tools can significantly improve this metric.
Tracking Metrics That Count
Tracking the right metrics is critical for staying competitive in today’s dynamic hospitality landscape. Metrics like space utilization, acquisition cost and daily guest spend provide a more comprehensive view of your property’s performance.
Meanwhile, lifetime value, net promoter score and sustainability metrics align your goals with guest satisfaction and environmental responsibility. By embracing these modern metrics, general managers can optimize operations, maximize revenue and deliver remarkable guest experiences in the present and long into the future.
Free Ebook: Discover 11 Must-track Metrics for Any General Manager
Modern hoteliers must expand their analytical toolkit to encompass emerging factors like guest acquisition costs, sustainability initiatives, and staff retention rates. By embracing these 11 must-track metrics, properties can gain deeper insights and adapt to changing guest expectations.
Click here to download “The New Era of Hospitality Metrics for General Managers“.
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