A hotel general manager only needs five essential metrics

Happy employees make guests happy. Happy employees also make the hotel attractive to work at, which is crucial now when it is challenging to find the employees the hotel needs to deliver a consistent guest experience. Hotels have a lot to win by ensuring their employees are happy with the leadership, company culture, colleagues, working conditions, systems and tools, scheduling, compensation, and many other things. If you think that some of these things are to be too soft, then think again. How much do you think that employee turnover costs, a poorly treated guest, or a workplace accident? Ask all your employees in an employee survey at least once a year. Once a month would be too often, but maybe once a quarter or twice a year would be just right. The key here is how to ask the questions and what the answer options are.

Hotels are in business to serve their guests. They generate revenue for the hotel and are, therefore, vitally important. A hotel cannot become successful without happy guests. There are many ways to measure guest satisfaction. The lazy hotel looks at the review scores from all over the internet. In contrast, the proactive hotel measures guest satisfaction sometime during the stay (to recover a guest that is not 100 percent happy) and upon check-out to ensure that no guest leaves the hotel unhappy. Select a method, such as NPS or a third-party guest review score like Tripadvisor, and focus on achieving a high response rate. Without a high response rate, the few responses will be anecdotal.

Hotels are in a specific destination with a well-defined (actual outcome) demand for room nights. STR and Benchmarking Alliance (BA) track the performance of all hotels at a destination, so hotels supplying information to STR and BA can calculate their fair share of the market daily. There is no good reason that hotels should give away market share to their competition, so measuring market share helps hotels focus on capturing at least their fair share of the market. The KPI is Revenue Generation Index (RGI), calculated daily.

GOP or EBITDA, in percent of total revenue, shows how productive the hotel is in converting revenue to profit. There are benchmarking for this too, but it might not be fair to compare hotels with other hotels unless they have the same configuration of rooms, meeting space, restaurants, bars, spas, parking, golf courses, etc. The benchmark can hint at the KPI's industry level, but more important is to have a continuous improvement plan.

Net profit is the amount. Compare the actual outcome with the budget and previous years. Ensure that the net profit is large enough to reinvest in rooms, meeting spaces, restaurants, bars, spas, buildings, gardens, etc., to keep providing quality. On the other hand, a too-low net profit that will not even give a reasonable return on investment is not good and need action on probably all the four KPIs above.

Without a high net profit, there is no money to invest in reinforcing the physical product. That will bring the hotel into a downward negative spiral resulting in fewer guests, lower market share, lower productivity, and fewer happy employees.

 

Without happy employees, the guests will not be satisfied and will give bad scores. Bad reviews will give a wrong impression, and the hotel will lose market share. A loss in market share means less revenue and a lower net profit.