Top 12 hotel metrics every hotelier needs to know (Part 2)

The hotel business performance is measured and reflected in the revenue management indicators. Continuing the previous article about “The revenue management metrics every hotel owner needs to know (Part 1)”, we will go through the remaining 06 key revenue management metrics.

7. Direct Revenue Ratio – DRR (Direct Revenue Ratio)

What is Direct Sales DRR?

DRR is the index that shows the percentage of revenue coming from direct bookings such as website, phone, emails compared to the total revenue. The commission for third parties might affect your revenue and profits by around 40 percent.

DRR formula:

(Revenue from direct bookings) ÷ (Total revenue) x 100 =% DRR

Example:

In a month, your hotel generates $40,000 in revenue. The revenue comes from direct booking is $20,000, the DRR is calculated as follows:

DRR = $20,000 in direct bookings ÷ $40,000 of total revenue x 100% = 50%

How to improve DRR

• Encourage loyal guests

Keep a record of guests who have stayed at the hotel and occasionally offer them special offers. It will encourage guests to book you directly for their future visits.

• Use social media

Create a social networking site for your hotel to reach potential customers directly. Social media such as Facebook and Instagram are powerful tools to promote your hotel and make it easy for guests to contact you directly. 

• Direct booking privileges

To boost direct booking, you want to give your guests the privilege when they book directly with you. Free airport transfer, early check-in, late check-out, complimentary drinks, F&B discount, and so on are some of the offers you can give to direct booking guests.

8. Evaluate hotel comp sets

Research and evaluate your competitors are essential, no matter which industry you are in. By identifying groups of direct competitors, you can contrast and reference the potential of competitors.

Identify your competitors

You can determine your group of direct competitors by the following factors:

• Your position:

Positioning your hotel in the industry is the first step to identify your direct competitors. What types of accommodation facilities do you offer? How big are they? Who are their target customers? Answering those questions would help you identify your position and direct competitors. 

• Your services:

As well as positioning your hotel in the marketplace, you can identify competitors base on the products and services you provide. 

Market analysis

Once you know your competitors, the next step is to compare and analyze the market in which you are.

Step 1: Identify the group of competitors

Step 2: Assess your strengths and weaknesses

Step 3: Enhance improvement and development

Put yourself in the shoes of guests to get their standards and expectations from you and your competitors.

9. Marketing Cost Per Booking – MCPB

What is the marketing cost per booking?

The MCPB is the metric that measures the costs needed to attract new guests. With this metric, not only do you know how much it will cost you to get guests, but you also evaluate the effectiveness of your branding campaigns.

How to calculate MCPB?

The first step is to find out from which channels that your guests use to find your hotel. Calculating your average cost per acquisition can be simple, but here’s an equation to get started:

For each campaign or channel, subtract the total marketing cost from its total revenue.

This will help you figure out which channels are working well, and which are not.

10. Tripadvisor rating

Tripadvisor is one of the most popular reviews and rating sites in the hospitality and tourism industry. The voice of guests has the power and affects your hotel rating and booking.

How to increase reviews on Tripadvisor

Before you learn how to improve your ranking position on TripAdvisor, the first step is to get lots of customer reviews.

1. Create an Amazing Guest Experience
   One of the most fundamental things about getting a good review is that you provide the best experience. You have to deliver an experience, service that is beyond your guests’ expectations, so they want to share their incredible experiences with others.
2. Encourage guests to write reviews
   You want to encourage guests to leave a review about how they feel about their stay. You can ask guests to write reviews upon check-out, or you can send a thank-you email with a link to your TripAdvisor review page.

How to improve your ranking on Tripadvisor

Notice that reviews and ratings about your hotel on Tripadvisor do not always match. For example, you can get many good reviews but your hotel rating is not on top. Here’s the algorithm Tripadvisor is using:

• Latest Reviews:

Make sure you have new reviews on Tripadvisor regularly. The more recent reviews, the more trustworthy they are for potential customers. Outdated reviews are not valuable to your hotel.

• Review Score:

How positive are your reviews? Of course, when considering your Tripadvisor ranking, the strength of reviews will be taken into account. Keep impressing your guests.

• The Volume of Reviews:

How many reviews do you have? The more reviews you have, the more potential guests have to judge you. Keep encouraging guests to leave a review. Furthermore, regularly engage and respond to bad reviews to improve your reputation.

Booking.com – one of the world’s largest booking and review sites

11. Reviews on Booking.com

Booking.com – a platform of reviews, ratings, and reservations

Founded in 1996, Booking.com is now one of the world’s largest booking and review sites. Guests can write reviews and book rooms on a single platform. Therefore, Booking.com has a huge impact on hotels around the world.

How to increase your Booking.com reviews?

There are 02 steps to get more reviews: create a guest experience that is beyond expectations and encourage guests to write reviews by the end of their stay. In particular, if your guests booked through Booking.com then you do not want to miss their reviews. So how can you improve your ranking on Booking.com?

Booking.com allows guests to search for hotels according to their preferences such as hotels with swimming pools, spa services, etc. Therefore, you should always update your hotel amenities and facilities on Booking.com. This will help your ranking position in more searches.

According to Booking.com the best way to improve search ranking is keeping your page up to date. As long as your page is up to date and relevant to the guests you are targeting, then you should rank well in their searches.

12. Guest Satisfaction

Guest satisfaction – one of the most important metrics that you must pay attention to. There are several factors to take into account when measuring guest satisfaction. However, two main factors affect guest satisfaction:

• Essential services

You are providing essential services to customers: a place to eat & a place to sleep. The hotel is the guests’ second home. Therefore, you must make sure your hotel is clean, safe, and comfortable.

• Friendly staffs

Another factor that affects guest satisfaction in the hotel industry is the hotel staff. The staff’s welcoming and smiles are the first impressions of a guest. 

How to measure guests satisfaction

It is simple to know how satisfied your customers are: You can encourage them to write a review about their stay (on Tripadvisor, Booking.com, etc.). Or you can send them a survey via email or upon check-out.

How to improve guest satisfaction

There are many ways you can do to enhance your guest experience. A personalized experience such as a romantic couple room décor or a birthday cake, or even a hand-writing welcome note can impress your guests and give them a warm feeling.

2020 was a year with many challenges for the hospitality industry. Knowing 12 key hotel metrics is one of the ways to grow back in 2021.