It’s now easier to check in on the health of your hotel, inn, or B&B, but it’s also more time-consuming. Even worse, you run the risk of focusing on the wrong metrics and ignoring the areas where you can truly impact your profitability.
These days, you have a number of tools at your fingertips to track the success of your property. It’s now easier to check in on the health of your hotel, inn, or B&B, but it’s also more time-consuming. Even worse, you run the risk of focusing on the wrong metrics and ignoring the areas where you can truly impact your profitability.
A trend I’ve noticed as a fellow hotelier is that too many independent lodging owners and managers focus solely on occupancy. Instead, they could be making strides to grow top-line revenue and improve profitability in different ways.
That’s what this article is all about. I’ll share the hotel metrics that can get too much attention and other areas that deserve more of your energy. Let’s dive in.
Hotel occupancy rate can tell you how many rooms are booked out of your total rooms available in a percentage. This KPI is a valuable metric to track for independent lodging. Maybe it’s even the first one you look at in the morning. However, if you’re only focused on reaching 100% occupancy, or what some like to call “getting heads in beds,” you might negatively impact your profitability in the process.
Industry research suggests there’s a sweet spot for occupancy, and it’s not always being completely full.
According to Hotel Tech Report, “For many hotels, an ideal occupancy rate is between 70% and 95% — though the sweet spot depends on the number of rooms, location, type of hotel, target guests, and more.”
That’s because every room booked brings additional expenses: housekeeping, maintenance, restocking, properly staffing your front desk, responding to guest requests, and more. The more bookings you secure, the more your expenses add up, too.
The other factor to consider when looking at occupancy is market demand. Changes in travel trends can impact bookings, so if you’re still aiming for 100% occupancy when travel is down, you might discount room rates to a detrimental point. At certain rates, your expenses can outweigh your income and decrease net profits as a result.
And even with heavy discounts, you still might not reach full occupancy if the demand isn’t there.
Speaking of discounting, this is another tool that can end up hurting your boutique hotel or inn long-term.
It’s common to lower room rates as needed to secure the bookings you need. However, there’s a lot of science and strategy that goes into hotel revenue management and pricing strategies. If you discount rates just to be the lowest option amongst your competitors, your potential guests might start to see you as the low-budget choice.
Chances are, if you run a boutique hotel, inn, or B&B, there aren’t many properties like yours. Your uniqueness becomes undervalued (or overlooked) when you try to compete just by having the lowest room rates.
Similar to what was discussed above, you can also risk profitability by discounting too much.
While tracking occupancy and average daily rate (ADR) is important to get a snapshot of the health of your hotel or inn, it shouldn’t be your only focus. Similarly, discounting rates to draw in guests and feed these metrics shouldn’t be your best pricing strategy.
These are parts of the puzzle and tools to use wisely, but there are other places to spend your valuable time.
To get started, try creating a weekly habit to make one minor improvement. Introduce one automation, one amenity improvement, one labor efficiency improvement, or one guest experience improvement. Just one per week would be the goal, though even doing that might be challenging at first.
Some initiatives will require more time and energy, but if you can take on a mindset of continual refinement, your inn will benefit.
Your guest inquiries are a great window into this process. Our rule is that if any three guests ask a similar question or provide similar feedback, we target that portion of the experience to improve.
If you’re not sure where to start, here are three steps you can take to improve your operations.
Read what independent operators are doing with pricing, AI, and marketing—plus what’s holding them back. Your must-read playbook for staying competitive.
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