The Top 7 KPIs for Maximizing Success in Serviced Apartments

Welcome, fellow entrepreneurs. As someone who has started and ran many successful businesses, I know firsthand the importance of measuring key performance indicators (KPIs) for success.

In the fast-paced industry of serviced apartments, keeping track of KPIs is more important than ever. According to the latest statistics, the global serviced apartments sector is projected to grow by 14.14%, reaching a market size of $34.7 billion by 2024.

• One crucial KPI to track is the occupancy rate, which measures the percentage of available apartments that are being rented out.
• Another important KPI is the average daily rate, which measures the average price of each serviced apartment per day.

To truly maximize profits and guest satisfaction, it is also important to track KPIs such as revenue per available apartment, guest satisfaction score, repeat customer rate, cost per apartment cleaned, and average length of stay. Scroll down to find out more about each of these top seven serviced apartments KPI metrics, including how to track and calculate them.

Occupancy Rate

One of the most important KPI metrics for serviced apartment owners is the Occupancy Rate. In this chapter, we will explore what the Occupancy Rate KPI is, how it is used, and how to calculate it. Additionally, we will look at KPI advantages, disadvantages, and industry benchmarks.

Definition

The Occupancy Rate KPI is a metric that measures the number of occupied units in a serviced apartment building. This metric is used to determine how effectively the owner is marketing and managing their property.

Use Case

The Occupancy Rate KPI is used to gauge how well a serviced apartment building is performing in terms of occupancy rates. It can be used to identify issues that need to be addressed in order to improve the occupancy rate and, ultimately, the profitability of the property.

How to Calculate KPI

To calculate the Occupancy Rate KPI, you need to divide the number of occupied units by the total number of available units and multiply it by 100. The formula for calculating the Occupancy Rate KPI is:

Calculation Example

Suppose you have a serviced apartment building with 100 units, and 70 of them are currently occupied. The calculation for the Occupancy Rate KPI would be as follows:

Therefore, the Occupancy Rate of this serviced apartment building is 70%.

KPI Advantages

• Helps identify underperforming units
• Allows owners to improve marketing and management strategies
• Provides a benchmark for comparison with competitors

KPI Disadvantages

• Does not take into account the quality of tenants
• Does not consider the quality of amenities and services
• May not accurately reflect market conditions

KPI Industry Benchmarks

The industry benchmark for the Occupancy Rate KPI for serviced apartments is 75%. Any value above this industry benchmark is considered good, while anything below 75% indicates poor performance and room for improvement.

Average Daily Rate

As a professional who has started and run many businesses, you know the importance of tracking and monitoring KPI metrics. Today, we'll be discussing one of the top seven KPI metrics for serviced apartments: Average Daily Rate (ADR).

Definition:

ADR is a metric used to measure the average daily rental income of a serviced apartment. It includes all room charges and is calculated by dividing the total revenue generated by the number of rooms occupied.

Use Case:

ADR is an essential metric for serviced apartments as it helps owners and operators to evaluate the performances of their properties. It provides insights on how well properties are doing in terms of attracting guests and generating revenue. This metric is also used to determine pricing strategies, promotions and marketing campaigns.

How To Calculate KPI:

Calculation Example:

KPI Advantages:

• Easy to calculate and understand.
• Helps to evaluate and monitor property performances.
• Helps to determine pricing strategies and marketing campaigns.

KPI Disadvantages:

• Doesn't account for additional revenue sources such as room service or laundry services.
• ADR can be misleading if there are a lot of complimentary upgrades or discounts offered.

KPI Industry Benchmarks:

According to industry standards, the ADR benchmark for serviced apartments is between $120-$150. However, this can vary depending on the location and target audience of the property.

Revenue per Available Apartment

If you're in the serviced apartment industry, you know how important it is to track and measure your KPIs. One of the most critical metrics is Revenue per Available Apartment (RevPA). RevPA is a measure of how much revenue you generate per apartment that is available for rent during a given period. Here's what you need to know:

Definition

RevPA is a financial KPI that measures the revenue generated per available apartment in a given time period. Available apartments are those that can be rented out and not currently occupied, even if they are undergoing maintenance or renovations. RevPA is calculated by dividing the total revenue generated by the total number of apartments available for rent during the period.

Use Case

RevPA is an essential KPI for serviced apartment businesses as it helps them to monitor their revenue stream and optimize room rates. By calculating RevPA, you can assess your business's financial performance and compare it with industry benchmarks. You can also identify underperforming apartments and optimize their room rates, increasing overall revenue and profitability.

How To Calculate KPI

The formula to calculate RevPA is as follows:

Calculation Example

Let's say that during June, you generated a total of $200,000 in revenue and had 100 available apartments. To calculate RevPA:

This means that you generated $2,000 in revenue for each apartment that was available for rent during June.

KPI Advantages

• RevPA is an accurate representation of your businesses' financial performance as it considers the number of apartments available for rent during the period.
• RevPA helps you optimize your room rates and increase revenue by identifying underperforming apartments.
• RevPA is a widely used industry KPI, so you can compare your performance with industry benchmarks.

KPI Disadvantages

• RevPA does not factor in the length of stay or occupancy rate of each apartment, which may impact the overall financial performance of the business.
• RevPA may not be suitable for businesses that offer a mix of apartments with different sizes and amenities, as it does not take these differences into account.

KPI Industry Benchmarks

The industry benchmark for RevPA varies depending on the location, size, and amenities of your serviced apartment business. However, according to research, the average RevPA for serviced apartments is $170 per night.

Guest Satisfaction Score

As a pro serial entrepreneur who has started and run various businesses, I can confidently say that measuring and tracking KPIs is crucial for any business's success. One such KPI that is of utmost importance in the serviced apartment industry is the Guest Satisfaction Score (GSS).

Definition

The GSS is a metric that measures the level of satisfaction of guests during their stay at a serviced apartment. A high GSS indicates happy and satisfied guests, while a low GSS suggests that guests were dissatisfied with their stay.

Use Case

The GSS KPI is essential for any serviced apartment business as it can help them understand the areas that need improvement, leading to higher guest retention rates and higher revenue.

How To Calculate KPI

To calculate the GSS, you need to obtain the number of satisfied guests, the total number of guests at the serviced apartment, and then multiply the result by 100.

Calculation Example

Suppose a serviced apartment has 180 guests in a month, and 160 of them report complete satisfaction with their stay. The GSS would be 88.89, calculated as follows:

KPI Advantages

• Helps to identify specific areas of guest satisfaction and dissatisfaction.
• Enables the apartment management to make informed decisions about improvement initiatives.
• Assists the management team to prioritize resources and budget to maximize guest satisfaction.

KPI Disadvantages

• The GSS can be subjective as it relies on guest feedback surveys, which may not always be accurate or consistent.
• Factors outside of the serviced apartment's control, such as inclement weather, transportation issues, or unforeseen events, can impact the GSS.
• Low survey response rates can lead to less accurate GSS scores, particularly if the feedback received is unrepresentative of the guest population as a whole.

KPI Industry Benchmarks for 'Guest Satisfaction Score'

The average GSS score for the serviced apartment industry ranges from 80-90. However, it is essential to note that the benchmark will vary depending on the location and target market of each serviced apartment.

Repeat Customer Rate

As a serviced apartment business, one of the most important metrics to be tracking is the repeat customer rate. This KPI allows businesses to measure the effectiveness of their services and amenities, as well as their overall customer satisfaction levels. Below, we will dive into the various components of this important KPI.

Definition

Repeat customer rate is the percentage of customers who have booked a stay in your serviced apartments more than once. This metric is a clear indicator of customer loyalty and their willingness to return to your location for future visits.

Use Case

The repeat customer rate is an important KPI as it allows a business to monitor and improve customer loyalty. If a company can keep its customers happy, they are more likely to return, leading to improved revenue and potential growth. In addition, a high repeat customer rate can be a key selling point when marketing to potential new customers. This metric indicates that your location has a loyal customer base that values your services.

How to Calculate KPI

To calculate the repeat customer rate for your serviced apartment business, you need to use the following formula:

Calculation Example

Let's say that your serviced apartment business had 100 total customers over a given period. Out of those 100 customers, 40 returned for additional bookings. Using the formula above, your repeat customer rate would be:

KPI Advantages

• Allows you to measure customer loyalty
• Helps identify areas to improve customer satisfaction
• Can be a valuable selling point when marketing to potential new customers

KPI Disadvantages

• Does not provide insight into why customers are returning or not returning
• May not be as relevant for businesses with shorter booking periods

KPI Industry Benchmarks

According to industry data, a good repeat customer rate for serviced apartment businesses is around 40%. However, this can vary depending on factors such as location, amenities, and competition in the area.

Cost per Apartment Cleaned

As a serial entrepreneur who has started and run many businesses, I understand the importance of tracking and calculating key performance indicators (KPIs) in order to measure success. When it comes to serviced apartments, one crucial KPI to monitor is the cost per apartment cleaned.

Definition

Cost per apartment cleaned is a KPI that measures the cost it takes to clean a single serviced apartment.

Use Case

By tracking the cost per apartment cleaned, serviced apartment operators can identify inefficiencies in their cleaning processes and optimize them for cost savings. Additionally, this KPI can help operators budget for cleaning expenses and ensure that cleaning costs are not eating into their profits.

How to Calculate KPI

To calculate the cost per apartment cleaned, divide the total cost of cleaning by the number of serviced apartments cleaned during the same time period:

Calculation Example

Let's say a serviced apartment operator spent a total of $5,000 on cleaning expenses last month and cleaned 100 apartments during the same time period. The cost per apartment cleaned for this operator would be:

KPI Advantages

• Identifies inefficiencies in cleaning processes
• Helps budget for cleaning expenses
• Ensures cleaning costs are not eating into profits

KPI Disadvantages

• Does not account for varying cleaning needs of different apartments
• May not reflect quality of cleaning service
• May fluctuate based on seasonal demand

KPI Industry Benchmarks

According to industry research, the average cost per apartment cleaned for serviced apartments in the United States is between $25 and $35 per apartment cleaned.

Average Length of Stay

As a serial entrepreneur who has been running many businesses, I can confidently say that tracking Average Length of Stay is one of the most important KPIs for serviced apartments. Below, I will go into more detail about what this metric is, how it can be used, and how to calculate it.

Definition

The average length of stay KPI measures how long guests typically stay in a serviced apartment during their visit. This metric is important for tracking guest preferences and can help inform pricing decisions.

Use Case

By keeping track of the average length of stay, serviced apartments can more effectively manage their occupancy rates, as well as their pricing structures. Additionally, understanding how long guests typically stay can help serviced apartments better understand their target demographic, and tailor their marketing strategies accordingly.

How to Calculate KPI

The formula for calculating average length of stay is as follows:

Calculation Example

Let's say that in the last month, a serviced apartment had 20 guests staying for a total of 40 nights. To calculate the average length of stay, we would divide 40 by 20, resulting in an average length of stay of 2 nights per guest.

KPI Advantages

• Helps serviced apartments effectively manage their occupancy rates
• Provides valuable insight into guest preferences and demographics
• Assists in pricing decisions to maximize revenue

KPI Disadvantages

• May not be a useful metric for serviced apartments with significantly varying guest stays
• May be difficult to calculate if guests are not tracked accurately

KPI Industry Benchmarks

Across the serviced apartment industry, the average length of stay tends to range from 3-7 nights, but it can vary depending on location and the type of travelers serviced apartments cater to.