That's the magic of hotel benchmarking. It reveals the financial performance of the whole field, breaks down the factors contributing to each hotel's position and highlights how your hotel can improve its financial standing.
Ready to learn how to benchmark your hotel against competitors and push your hotel decisions forward? Here's how to benchmark your hotel against the competition effectively.
If you're wondering how to benchmark your hotel against the competition, there are a few simple steps to consider. Here's a breakdown of how to benchmark your hotel and create a swifter path to profit:
Benchmarking your hotel begins by choosing the right competitive set. Location matters, but there are a host of other variables — such as room count, number of food and beverage (F&B) outlets, meeting space — that should be taken into consideration when deciding what hotels to include in your comp set. You wouldn't measure the performance of a Jaguar versus a Hyundai, would you? Sure, they both do the same thing (drive), but the delivery of experience is vastly different. It's the same with hotels.
The first step in benchmarking your hotel is to examine its current position. The deeper you dive into metrics, the more areas that reveal inefficiencies in your hotel operation will pop up. For instance, you may find your competitors have significantly lower F&B costs. Perhaps your labor expenses are higher than the competition's, or your average daily room rate is lower.
With a hard look at the competition's operational metrics, hoteliers can see exactly where the hotel is dragging behind the pack. And they can start digging in to ways to plug the holes in the operation.
Most hoteliers are familiar with RevPAR as a competitive benchmarking KPI. Unfortunately, RevPAR only reveals one piece of a hotel's true financial standing. That's because it only accounts for the money coming into an operation through room sales. It doesn't begin to address additional moneymaking sources or how much money is spent along the way.
Instead, hoteliers can use stronger KPIs to anchor the hotel's benchmarking strategy. Here are a few examples of more complete hotel KPIs:
By measuring these deeper KPIs, hoteliers and investors can see the weak spots in an operation, spot advantages and make decisions that churn out higher profit.
When a hotel's inefficiencies are clear, it's time to set up goals that bridge the gap between your hotel and the competition. That takes identifying the areas that the hotel needs to focus on in order to boost financial performance. For instance, if profit from the F&B department is lagging, hoteliers may want to zoom in on key operational metrics, such as:
When hoteliers identify the areas where the hotel is falling behind financially, they can use hotel benchmarking to hyperfocus on those operations that need attention. That will simplify decisions and help hoteliers trim departments for higher financial gains.
It's good to kick off your hotel benchmarking efforts by beefing up those KPIs that are lagging most. But to secure long-term profit, hotel benchmarking takes a holistic approach.
For example, imagine you find out your hotel's F&B revenue is miles behind the competition's. That doesn't necessarily mean it will be profitable to pour money into the operation. After all, if your F&B department has lower expenses, it might already be in a more profitable position than competitors.
Instead, it's best to let profit guide the whole hotel benchmarking effort. When it comes time to make investments, cuts or other decisions, be sure to watch how those moves are affecting profit and overall operational performance.
With thorough competitive benchmarking reports, hoteliers receive month-by-month data comparing a hotel's deep financial metrics to those of competitors. These resources reach far below top-line figures into the operations driving hotels. They essentially make benchmarking and measuring results easy.
Owners can tap into this data, see exactly where the hotel stands and identify what's holding the hotel back. Here are a few important ways these benchmarking resources help:
With a combination of hotel benchmarking data, important KPIs and a holistic approach to hotel performance, hoteliers and investors will have everything it takes to boost operations, widen their hotel's stride and race ahead of the field toward higher returns.
Click here to view the original version of this release.
83 – 87 Crawford Street
London, W1H 2HB
Phone: +44(0)20 7892 2222
David Eisen is Director of Hotel Intelligence and Customer Solutions for HotStats, a monthly profit-and-loss data benchmarking service. He is responsible for business development activity in the Americas and developing marketing strategies to drive HotStats’ brand awareness. Prior to joining HotStats, David served as Editor-in- Chief of the Questex Hospitality Group, which includes Hotel Management magazine. His responsibilities included overseeing content direction for the magazine and website, and leading content creation for events and conferences under the Questex umbrella. Prior to Questex, he was hotel editor at Business Travel News. David has a master's degree in hospitality industry studies from New York University’s Jonathan M. Tisch Center for Hospitality and Tourism. He frequently participates on panels and roundtable discussions on myriad global hospitality industry trends and topics.
Director of Hotel Intelligence and Customer Solutions for HotStats