Maximizing Profit and Guest Satisfaction: Discover the Top Hostel KPI Metrics

Welcome to our blog post on the Top Seven Hostel KPI Metrics. If you're looking to improve your hostel business, it's important to track and calculate the right performance indicators. According to recent statistics, the global hostel industry is expected to grow at a CAGR of 6% from 2021-2026, reaching a market size of $22 billion by the end of the forecast period.

So, what are these key performance indicators? Let's take a closer look. The first metric worth tracking is the occupancy rate. This KPI measures the percentage of available beds that are occupied at any given time.

• Occupancy rate
• Average length of stay
• RevPAR (revenue per available room)

Another important KPI is the average length of stay. This metric reveals how long guests are typically staying at your hostel. A higher average length of stay can indicate higher guest satisfaction and loyalty.

• Average length of stay
• RevPAR (revenue per available room)
• Average revenue per guest

The third vital hostel KPI is the RevPAR (revenue per available room). This measures the amount of revenue generated per available hostel room. By monitoring and optimizing this metric, you can maximize profits and identify potential pricing strategies to boost bookings.

Don't miss the other four key performance indicators that we will discuss in detail further below. Scroll down to learn more and start improving your hostel's performance today.

• Customer satisfaction rate
• Return guest rate
• Cost per occupied room

Occupancy rate

As a hostel owner, the occupancy rate is one of the most essential KPIs to track. It determines the number of beds sold and is calculated by dividing the number of beds sold by the total number of beds available.

Definition

The occupancy rate is a measure of how many beds have been sold relative to the total number of beds available to be sold by the hostel.

Use Case

The occupancy rate is a critical KPI because it helps hostel owners to understand how effectively they are filling beds. A high occupancy rate indicates that the hostel is doing well, while a low occupancy rate may be a warning sign that something needs to be addressed.

How to Calculate KPI

Calculation Example

KPI Advantages

• Helps to determine how effective the hostel is at filling accommodation
• Enables the hostel to identify potential opportunities for growth
• Helps the hostel to understand current performance versus the industry average

KPI Disadvantages

• Occupancy rates can be heavily influenced by external factors such as seasonality and weather conditions
• It does not take into account the quality of the stay for guests
• It provides limited information on specific room types or timeframes

KPI Industry Benchmarks

The average occupancy rate for hostels is around 70-75%. However, this varies significantly between hostels based on various factors, including location, building age, and customer demographics.

Average length of stay

As a hostel owner, calculating the average length of stay is crucial in understanding the behavior of your customers and plan accordingly. This KPI will help you in identifying if your hostel caters to backpackers or families, or if your customers are in town for business or vacation. Let's dive into the details of it:

Definition

The average length of stay is the average number of nights a customer stays in a hostel.

Use Case

This KPI is often used to determine the hostel's most profitable customer segments and optimize pricing strategies. By identifying your target customer and understanding their behavior, you can plan accordingly and make informed business decisions.

How To Calculate KPI

The formula to calculate the average length of stay is:

Calculation Example

Suppose your hostel had 50 reservations last month, and the total number of nights stayed was 250. To calculate the average length of stay:

KPI Advantages

• Helps in understanding customer behavior and identifying target segments
• Enables optimization of pricing strategies
• Allows for effective inventory management and forecasting

KPI Disadvantages

• May not capture the full picture, as some customers may have stayed for different durations on separate occasions
• Cannot account for cancellations and no-shows
• May not be comparable between hostels with different business models, such as luxury hotels vs backpacker hostels

KPI Industry Benchmarks

According to industry data, the average length of stay in hostels is approximately 3-5 nights, although this may vary depending on the hostel's location, amenities, and target customer demographics.

RevPAR (revenue per available room)

RevPAR is one of the most important hostel KPI metrics. It measures the revenue earned per available room within a specific time span.

Definition

RevPAR is a performance indicator used to measure how efficiently a hostel is generating revenue. It is a crucial metric used in the hospitality industry to evaluate the financial performance of a hostel. RevPAR indicates whether a hostel is filling its available rooms and at what price.

Use Case

If you're a hostel owner, it's important to understand your RevPAR to track profitability and measure success. RevPAR helps identify trends in the fluctuation of revenue and occupancy of the hostel. It also helps optimize rates, measure marketing initiatives, and track sales performance.

How To Calculate KPI

RevPAR can be calculated by the following formula:

Calculation Example

Let's say you run a hostel with 50 rooms, priced at $100 per night. If you sold 40 rooms last night, your Total Room Revenue would be:

So your RevPAR would be:

KPI Advantages

• RevPAR helps hosteliers to adjust room rates.
• It helps to identify occupancy rates for a given period of time.
• A meaningful comparative analysis of the hostel's performance with its competition.

KPI Disadvantages

• As RevPAR takes into account the number of available rooms, it is vulnerable to manipulation by influencing the denominator.
• Does not take into account other revenue streams in addition to room sales.

KPI Industry Benchmarks

For hostels, a healthy RevPAR should be more than $35 per available room. However, the benchmark can vary significantly depending on the location, season, and other factors affecting the demand for hostel rooms.

Average revenue per guest

As a hostel owner or manager, one of the most important KPIs you should track is the average revenue per guest. Understanding this metric can help you determine how much money your hostel is making per guest and make informed decisions to improve your revenue. Let's dive into the details of this KPI.

Definition

The average revenue per guest is the amount of revenue generated for each guest who stays at your hostel during a specific period. It takes into account all the revenue streams, including room rates, food and beverage sales, and any other additional revenue sources, divided by the total number of guests.

Use Case

Calculating this KPI can help you understand your hostel's financial performance on a per-guest basis. You can use this metric to identify the most profitable time periods and adjust your pricing strategy accordingly. Additionally, you can use this KPI to compare your hostel's performance against industry benchmarks and identify areas for improvement.

How To Calculate KPI

To calculate the average revenue per guest, use the following formula:

Calculation Example

Let's say your hostel generated a total revenue of $10,000 over a month, and 200 guests stayed during that period.

Therefore, your hostel's average revenue per guest is $50 for the month.

KPI Advantages

• Helps understand the financial performance of the hostel on a per-guest basis
• Enables you to compare your performance against industry benchmarks
• Can identify areas for improvement and opportunities for revenue growth

KPI Disadvantages

• Does not take into account the costs of acquiring and retaining customers
• Does not consider the length of stay or guest demographics as factors

KPI Industry Benchmarks for the KPI: ' Average revenue per guest '

According to industry benchmarks, the average revenue per guest for hostels is around $35 to $50 per night. However, this can vary depending on the location, amenities, and target audience of the hostel.

Customer Satisfaction Rate

As a hostel owner, tracking customer satisfaction is essential to ensure your guests are happy and your business is thriving. The customer satisfaction rate KPI is a metric that measures the level of satisfaction among your customers.

Definition

The customer satisfaction rate is the percentage of guests who report being satisfied or very satisfied with their overall experience at your hostel.

Use Case

The customer satisfaction rate KPI is used to measure how well your hostel is meeting the needs and expectations of your guests. This KPI can help you identify areas where your hostel is excelling, as well as areas where improvements can be made.

How To Calculate KPI

To calculate the customer satisfaction rate KPI, you first need to gather data from your guests. This can be done through surveys, feedback forms, or online reviews. Once you have collected this data, divide the number of satisfied guests by the total number of guests, and multiply by 100 to get the percentage.

Calculation Example

Let's say that in the past month, your hostel had 100 guests, with 90 reporting being satisfied or very satisfied. Using the formula, we can calculate the customer satisfaction rate KPI:

Therefore, the customer satisfaction rate for the past month is 90%.

KPI Advantages

• Helps identify areas of improvement within your hostel.
• Assists in providing a better guest experience.
• Can be used as a marketing tool to attract new guests.

KPI Disadvantages

• Survey fatigue may cause a lower response rate from guests.
• Some guests may be dishonest or biased when providing feedback.
• May not provide a complete picture of the guest experience.

KPI Industry Benchmarks

The customer satisfaction rate KPI can vary depending on the type of hostel and location. However, the industry benchmark for a customer satisfaction rate is typically between 85-90%.

Return guest rate

As a hostel owner, it's important to understand how frequently your guests return to your property. The Return Guest Rate KPI measures the percentage of guests who have stayed at your hostel more than once.

Definition

The Return Guest Rate KPI is a performance metric that measures the percentage of guests who have returned to your hostel more than once. This KPI helps you understand how loyal your guests are and how well your hostel is functioning in terms of customer satisfaction and overall experience.

Use Case

The Return Guest Rate KPI is an important metric for any hostel owner who is looking to build a loyal customer base. A high Return Guest Rate indicates that your guests are happy with the service you provide and are likely to return to your property in the future.

How To Calculate KPI

Calculation Example

Suppose your hostel had 500 total guests last year, and out of those 500, 100 guests returned for a second stay. Using the formula, the Return Guest Rate would be:

KPI Advantages

• Helps identify hostel's loyal customers
• Improves customer satisfaction
• Provides insight into the success of current marketing strategies

KPI Disadvantages

• Can be affected by factors outside of the hostel's control, such as natural disasters, economic downturns, and pandemics
• May not be a useful metric for hostels with a high turnover of guests, such as those located near airports or train stations

KPI Industry Benchmarks

According to industry data, the average Return Guest Rate for hostels is around 15-20%. However, this can vary widely based on the location, price point, and overall guest experience at a given hostel.

Cost per Occupied Room

For the hospitality industry, cost per occupied room is one of the most important Key Performance Indicators (KPIs) as it helps in tracking the costs associated with each room occupied by the guests.

Definition

The cost per occupied room refers to the total expenses incurred for a particular room in a hotel or hostel.

Use Case

The KPI of cost per occupied room is widely used to measure the profitability of a particular room. It helps in identifying the efficiency in reducing the overall operational costs while still maintaining a high-quality service.

How To Calculate KPI

To calculate the KPI, divide the total costs (fixed and variable) by the total number of rooms occupied. The formula is as follows:

Calculation Example

For instance, a hostel has a total cost of $100,000 per month, with 5,000 rooms occupied in the entire month. The cost per occupied room would be:

KPI Advantages

• Helps in understanding the operational costs associated with each room.
• Provides insights into the efficiency of reducing overall costs while maintaining quality services.
• Assists in identifying the key factors affecting the costs of a particular room or service.

KPI Disadvantages

• The calculation may not consider some factors such as maintenance costs, repairs, and unforeseen expenses.
• The KPI may not provide deeper insights into the quality of services provided in the hostel or hotel.
• It may not be applicable to smaller hostels with fewer rooms.

KPI Industry Benchmarks

The cost per occupied room KPI varies significantly across the industry. The average KPI range for hostels is approximately $10-$30.