The Best Performance Indicators (KPIs)
Running a hotel, a gîte or a property management company is a bit like spinning several plates at once. Between keeping guests happy, handling bookings and protecting your profit margins, it is easy to lose sight of what really matters. Thankfully, performance indicators (or KPIs, to those in the know) are there to guide you like a satnav through the hospitality jungle.
What is a performance indicator and why does it matter so much?
A performance indicator is a key measurement that lets you work out how effective your actions are. In other words, it is the tool that tells you whether you are on the right track or whether what you are doing simply is not paying off.
For hotels, gîtes and property management companies, these indicators are essential in order to:
- Spot what is working (and what is not).
- Make well-informed decisions.
- Increase your revenue and cut your costs.
- Keep your guests happy (and coming back!).
The must-have KPIs for hospitality
Occupancy rate
Why does it matter?
Your occupancy rate measures the percentage of rooms or properties occupied over a given period. If it is low, it is time to rethink your marketing strategy or your pricing.
How do you calculate it?
A little maths involved, but we promise it is simple!
Occupancy rate = (Number of rooms occupied divided by the total number of rooms available) × 100.
Tip: To boost this KPI, think about off-season promotions or partnerships with local agencies.
Average daily rate (ADR)
The ADR, or Average Daily Rate, shows the average revenue generated per room let. It is useful for assessing how well your pricing strategy is performing.
Formula:
ADR = Total room revenue divided by the number of rooms sold
Why track your ADR?
It tells you whether you are selling your rooms at their true value. If your ADR is too low, it may be time to review your prices or add extra services to increase perceived value.
Revenue per available room (RevPAR)
This is arguably one of the most important KPIs in the hotel industry. RevPAR combines occupancy rate and ADR to assess the overall performance of your property.
Formula:
RevPAR = ADR × occupancy rate
A concrete example:
If your ADR is 100 € and your occupancy rate is 75 %, your RevPAR will be 75 €. Simple, isn't it?
Cost per booking (CPB)
This KPI helps you understand how much you are spending on every booking made. That includes commission from platforms such as Booking.com, your advertising spend, and so on.
Why is it crucial?
A cost per booking that is too high will eat into your profits. Always compare it with your ADR to make sure your margins are healthy.
Guest Satisfaction Score
In hospitality, guest satisfaction is king. Positive reviews boost your bookings, while poor feedback can send future guests elsewhere.
How do you measure it?
Look at your ratings on platforms such as TripAdvisor, Google or Booking.com. Post-stay surveys are also useful for gathering more detailed feedback.
Average length of stay (LOS)
A longer stay usually means extra revenue per guest. Tracking the average length of stay helps you spot trends and adapt your offers (long-stay discounts, for instance).
Guest retention rate
Keeping a loyal guest costs less than winning a new one. Tracking this KPI lets you measure how effective your loyalty efforts really are.
Tip: Loyalty schemes, personalised surprises and impeccable service can make all the difference.
Specific points for gîtes and property management companies
Gîtes and property management companies face their own challenges. Here are a few KPIs worth watching closely:
Direct booking rate
Third-party platforms often charge hefty commission. Tracking your direct booking rate lets you assess how well your website and marketing campaigns are performing.
How can you improve it?
Highlight the benefits of booking direct (discounts, small gifts, flexibility).
Website conversion rate
If plenty of visitors land on your site but few of them book, it is time to rethink your design or your booking process.
Response time to enquiries
In a property management company, responsiveness is crucial. The faster you reply, the happier your guests are.
Here, on a single page, are all the indicators mentioned so far, how to work them out and what they actually tell you.
| Indicator | How to work it out | What it tells you |
|---|---|---|
| Occupancy rate | (Units occupied ÷ units available) × 100 | If it stays low, review your rates or your visibility before anything else |
| Average daily rate (ADR) | Total room revenue ÷ number of rooms sold | Whether you are selling your rooms at their fair value |
| RevPAR | ADR × occupancy rate, i.e. €75 with a €100 ADR and 75% occupancy | Overall performance, occupancy and rate combined into a single figure |
| Cost per booking (CPB) | Platform commissions, advertising spend and costs tied to each booking | To be compared with your ADR: a high figure eats into your profits |
| Guest satisfaction | Ratings on Google, TripAdvisor and Booking.com, plus post-stay surveys | Good reviews feed your bookings, bad ones hold them back |
| Average length of stay (LOS) | Average number of nights per booking over the period | A longer stay earns more per guest and justifies long-stay discounts |
| Direct booking rate | Share of bookings made outside third-party platforms | How well your website and campaigns work, and the commission you avoid |
| Response time to requests | Average delay between a guest request and your reply | In property management, it weighs directly on satisfaction |
Improve your KPIs with the right tools
To track these indicators without tearing your hair out, invest in the right tools. Here are a few popular options:
- Channel managersto handle your bookings and keep your calendars in sync.
- Analytics toolssuch as Google Analytics to monitor your online performance.
- Hotel CRMsto centralise guest information and personalise your approach.
Tips for boosting your KPIs
- Review them regularly:Once a month, go through your KPIs and adjust your strategy where needed.
- Get your team involved:Your staff are your best allies. Share the targets with them to keep them motivated.
- Be creative:Try out new offers, events or partnerships to attract more guests.
Conclusion: KPIs are your best allies!
Tracking the right performance indicators is like having a treasure map for your business. It helps you pinpoint what needs improving, increase your revenue and, above all, guarantee an outstanding experience for your guests.
Would you like to know more about how to show your property in its best light? Take a look at our article on hotel stars in all their glory
Frequently asked questions
Which metric should you start with if you track none at all? Occupancy rate. Divide the number of occupied rooms or units by the total number available, then multiply by 100. It is the quickest figure to obtain and it already tells you a lot: if it stays low, your pricing or your visibility needs reviewing before anything else.
How do you calculate RevPAR? Multiply your average daily rate by your occupancy rate. With an ADR of €100 and an occupancy rate of 75%, RevPAR comes to €75. It combines how full you are with how much you charge, so it sums up in one figure what the two other metrics say separately.
Is a high ADR enough to guarantee good results? No. A flattering average rate in a half empty property still produces a poor RevPAR. And if your cost per booking climbs because of platform commissions and advertising spend, your margin goes with it. Always compare CPR against ADR before celebrating.
Which metrics matter for a holiday rental or a property manager rather than a hotel? Direct booking rate first, since third party platforms take high commissions. Add your website conversion rate: plenty of visitors and few bookings points to a booking journey that needs reworking. For a property management business, response time to guest requests weighs directly on satisfaction.
How do you measure guest satisfaction? Look at the ratings left on Google, TripAdvisor and Booking.com, then add post stay surveys to collect more detailed comments. Positive reviews feed bookings, poor ones hold them back. Retention rate completes the picture, since keeping a guest costs less than winning a new one.
How often should you review your KPIs? A monthly review is enough to spot a trend and adjust your strategy before it is too late. Share the results with your team, since they are the ones applying the changes day to day. A dashboard opened once a year only serves to record the damage.
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