Understanding Data Analytics Used in the Accommodation Industry

As an accommodation provider, analysing your business data and harnessing the insights it provides helps you to identify new opportunities, optimize your business operations and target your marketing strategy effectively. This helps you make confident business decisions which in turn can lead to happier guests and higher revenue. However hotel data analytics can be confusing, particularly if you’re unfamiliar with the industry jargon and terms.

Effective data analysis is often the “edge” you need to set you apart from your competition and maximise your profits.

New tools to the market will make accessing analytics insights much quicker and easier. The key will be understanding what each of the metrics means, and how to use these insights to benefit your business.

However, if you are new to hotel data analytics, the terms and acronyms used in the accommodation industry can be daunting, to say the least. To make it easier to understand ‘what is what’ going forward, we have compiled a list of basic terms, their meanings, why they are important and how to calculate these valuable KPIs used in the hospitality industry.

❖ RevPAR

• Stands for Revenue per available room
• Divide total room revenue by the total number of rooms available
• This can be calculated over a specific time period, to ascertain your peak periods, or for a specific room type, to highlight your most popular rooms.

❖ ADR

• Average Daily Rate also called Average Room Rate
• Divide the total room revenue by the total number of rooms occupied
• Calculates the average rate at which rooms are booked. Can also be calculated for specific room types. Allows you to make an educated comparison between current and previous periods, and between your performance and your competitors.
• Highlights opportunities to adjust your rates when compared with competitors
• Does not account for unsold or empty rooms, so it is not an exact indication of your property’s performance.

❖ OCC

• Average Occupancy Rate
• Divide the number of occupied rooms over a given period by the number of rooms available, and express as a percentage (x 100/1)
• Analyse your occupancy rate over a daily, weekly, monthly or yearly basis and use this to track your business performance, highlight your most popular room types and assess the impact of your marketing efforts.

❖ Available Room Nights

• Calculated by subtracting the number of booked rooms from the number of available rooms of a specific room type, for a given period.
• Helps to keep your occupancy rate maximised by determining the performance of each room type and whether a specific room type needs additional promotion/ rate adjustment.

❖ LOS

• Average Length of Stay
• Divide the total number of occupied room nights by the total number of bookings for a given period.
• Used to help measure the productivity of your business.
• A longer LOS is generally considered better than a shorter one, due to reduced costs in fewer room changeovers between guests.

❖ GOP PAR

• Gross Operating Profit Per Available Room
• Divide your Gross Operating Profit by Rooms Available
• Measures performance across all available revenue streams. Can be calculated for individual revenue streams and compared to assess the profitability and feasibility of each area. Will also highlight revenue streams that are impacted heavily by high overheads.

❖ Pick Up Analysis

• Indicates how many room nights have been booked during a specific period (today or this month, for example), for stays in the future
• Helps indicate how your property is tracking for future bookings
• An increase compared with the same period last year may indicate a successful marketing campaign.
• A decrease may indicate that your rates are higher than market value
• Multiple bookings for the same period may indicate that there is a special event in your area that you have not considered

❖ Booking Lead Time

• Calculates the average time between a guest booking and commencing their stay.
• Helps you to keep your occupancy on track by understanding how far in advance your vacancies should fill and spotlights when to take action via additional marketing, adjusting rates etc.

❖ Visitor Geo Status

• Helps you to understand where your guests are coming from.
• Allows you to strategically plan your marketing campaigns and target suitable areas to fill vacancies.

These, and other hotel metrics are invaluable in analysing your hotel business intelligence data. They provide invaluable insights to help you make informed, effective and efficient business decisions and in turn help you maximise your profitability.

Talk to the team at HiRUM about how we can help you access the most important hotel data analytics for your property.