Hotel projects are important investments, so it is necessary to know how to evaluate their success. The most common thing is to analyze success through profitability, but many times this is not a simple task. It is necessary to know the best tools and indicators so that this analysis is carried out correctly.
In this article, we will explore the key indicators to measure the success of a hotel project and how to use them to improve profitability. So, read until the end to find out how to know if your investment is delivering the results you expect.
1. OCCUPANCY AND AVERAGE RATE
Occupancy and average rate are critical indicators to evaluate the success of a hotel project. On the one hand, occupancy measures the number of rooms occupied during a given period of time; while the average rate measures the average price of the room sold.
High occupancy and a healthy average rate are signs of success. Therefore, these indicators must be monitored regularly and compared with the performance of the competition to identify opportunities for improvement.
2. REVENUE PER AVAILABLE ROOM (REVPAR)
Revenue per available room (RevPAR) is another of the most important indicators to evaluate the success of a hotel project. This indicator measures the income generated by each available room, and is calculated by multiplying the occupancy by the average rate.
A high RevPAR indicates that the hotel is generating significant revenue, so it can be used to evaluate the effectiveness of the hotel’s pricing strategy. Without a doubt, it is a very useful tool to know the level of success of your hotel project.
This indicator corresponds to earnings before interest, taxes, depreciation and amortization (or EBITDA, for its acronym in English). Therefore, it allows measuring the profitability of a hotel project, and is one of the most used indicators in the hotel industry.
A healthy EBITDA indicates that the hotel is generating profits and is able to cover its costs, so the investment has been successful.
4. RETURN ON INVESTMENT (ROI)
Return on investment (ROI) measures the profitability of an investment and is one of the most important indicators for investors in hotel projects. This metric (ROI) allows detecting the net benefit generated by the project in relation to the initial investment.
A positive ROI, above 1, indicates that the project has generated significant benefits compared to the capital invested. Therefore, it is a crucial tool to measure the success of your business.
5. THE LEVEL OF CUSTOMER SATISFACTION
The level of customer satisfaction is a critical indicator to evaluate the success of a hotel project. A high level of customer satisfaction translates into loyalty and a higher rate of return, which means an increase in revenue.
To measure the level of customer satisfaction, surveys and guest feedback can be used. Subsequently, based on the information obtained, it is possible to improve and apply new strategies that enhance the growth of the hotel.
6. ONLINE REPUTATION
Finally, another important indicator to evaluate the success of a hotel project is online reputation. The reason is that online guest reviews can influence users’ decision and significantly affect the hotel’s profitability. So much so that those establishments with a low reputation usually have fewer customers.
In order to evaluate online reputation, comments and reviews on sites such as TripAdvisor and Booking.com should be reviewed. This way you can know if the hotel is actually having the expected success.
The key indicators mentioned in this article, such as average occupancy and rate, RevPAR, EBITDA, ROI, customer satisfaction level and online reputation, are valuable tools for measuring the success of a hotel project. Based on them, it is possible to evaluate the profitability of the investment and even design new strategies to achieve success.
It is important to remember that these indicators must be analyzed together and continuously to obtain a complete view of the hotel’s performance. Therefore, it is best to have professional advice and help. This way you can guarantee the success of your hotel project.