Boost Your Motel's Success with Essential KPIs - Track Your Progress Now!

Welcome to the world of motels, where occupancy is as vital as air to breathe. Making sense of your motel's overall performance can be a daunting task, but it's necessary to stay competitive in the industry. Tracking and analyzing the right Key Performance Indicators (KPIs) can guide your decision-making process by identifying areas of strengths and opportunities for improvement.

Here are some core KPIs that every motelier should track and calculate regularly:

• Average occupancy rate: This KPI measures the percentage of total available rooms that are occupied during a given time period. According to the latest industry statistics, the average occupancy rate for motels in the US in 2020 was 44.8%, a significant decrease from the previous year due to the pandemic.
• Average daily rate: This KPI measures the average price per room for a given time period. In 2020, the average daily rate for motels was $61.67, a decrease of 14.5% from the previous year.

But these are just the tip of the iceberg. Keep scrolling down to learn about other important KPIs that can help you grow your motel business and stay ahead of the game.

Average occupancy rate

As a serial entrepreneur who has owned and operated many motels, I can attest to the importance of tracking and analyzing key performance indicators (KPIs). One of the most critical KPI metrics for a motel is the average occupancy rate.

Definition

The average occupancy rate is the percentage of available rooms that are occupied during a specific period. This KPI is essential for measuring the motel's ability to attract and retain guests.

Use Case

By measuring the average occupancy rate, motel owners and managers can identify trends and patterns that impact revenue, such as fluctuations in demand, marketing campaigns, and seasonal changes.

How To Calculate KPI

To calculate the average occupancy rate, divide the total number of occupied rooms by the total number of available rooms, and then multiply by 100 to get a percentage. The formula is as follows:

Calculation Example

Suppose a motel has 40 rooms, and on a particular night, 30 of those rooms are occupied. To calculate the average occupancy rate, divide 30 by 40, which equals 0.75. Multiply by 100, and the result is an average occupancy rate of 75%.

KPI Advantages

• Measures motel's ability to attract and retain guests
• Helps identify trends and patterns that impact revenue
• Enables proactive measures to improve occupancy rates

KPI Disadvantages

• May not consider external factors that impact demand, such as natural disasters or economic downturns
• Does not account for the average length of stay per guest

KPI Industry Benchmarks

According to industry data, the average occupancy rate for motels in the United States was 61.8% in 2020, down from 66.2% in 2019 due to the COVID-19 pandemic.

Customer satisfaction score

Definition

Customer satisfaction score is a KPI metric that shows how satisfied customers are with the products or services provided by your motel. Measuring customer satisfaction can help you identify areas of improvement and make strategic decisions to enhance the overall guest experience.

Use Case

Tracking the customer satisfaction score can help motel owners to evaluate their employees' performance and identify issues with the motel's facilities or service. It can also help monitor the impact of any changes or improvements made to the motel's amenities or services.

How To Calculate KPI

Calculation Example

If you survey 100 customers and 80 of them are satisfied with the motel's services, the customer satisfaction score would be:

KPI Advantages

• Shows how successful the motel is in meeting customer expectations
• Enables you to identify strengths and weaknesses in your services
• Helps to improve employee performance and morale

KPI Disadvantages

• Measuring customer satisfaction requires a substantial investment of time and resources
• Results may be misleading if the survey is not conducted properly
• Customers may not be entirely honest in their responses

KPI Industry Benchmarks for the KPI: 'Customer satisfaction score'

The hospitality industry average customer satisfaction score is around 80%, but the score can vary based on motel location, price range, and other factors.

Top Seven Motel KPI Metrics: How to Track and Calculate

Average Daily Rate

Definition: The average daily rate (ADR) is a metric used in the hospitality industry to calculate the average revenue earned per room on a daily basis.

Use Case: ADR is a critical metric used to evaluate a motel's performance and profitability. It is used to determine the overall effectiveness of a motel's pricing strategy and to identify opportunities to increase revenue.

How to Calculate KPI:

Calculation Example: A motel has total room revenue of $20,000 for the month of June and sold a total of 500 rooms. The ADR for the month of June would be calculated as follows:

KPI Advantages:

• Helps identify underperforming room rates
• Allows for better forecasting and budgeting
• Helps track performance against industry benchmarks

KPI Disadvantages:

• Does not take into account other revenue sources, such as food and beverage sales
• Calculations can be skewed by outliers, such as extremely low or high room rates
• May not be a good metric for motels with non-standard room types or rates

KPI Industry Benchmarks for ADR:

• Economy motels: $50 to $70
• Midscale motels: $80 to $120
• Luxury motels: $200 to $400

Top Seven Motel KPI Metrics: How to Track and Calculate

Revenue per Available Room

Definition: Revenue per available room (RevPAR) is a KPI metric used in the hospitality industry to measure a hotel's revenue by comparing the income generated per available room in a given time period.

Use Case: RevPAR is a crucial KPI metric for hotels and motels because it provides a clear indication of how well a property is performing and how efficiently it is utilizing its resources.

How to Calculate KPI: To calculate RevPAR, divide the total revenue for a specific time period by the number of available rooms during that period. The formula is as follows:

Calculation Example: If a motel has 100 rooms and generates a total revenue of $50,000 in one month, the RevPAR calculation would be:

KPI Advantages: RevPAR is an excellent KPI metric because it measures the overall effectiveness of a motel's pricing, demand, and occupancy in a specific period.

KPI Disadvantages: RevPAR doesn't account for rooms that are not available, such as those being refurbished or closed for maintenance. Additionally, RevPAR doesn't take into account the expenses or profits generated outside the room, such as from food and beverage sales, spas, or recreational facilities.

KPI Industry Benchmarks: In the hotel industry, RevPAR is calculated by dividing the total revenue by the total number of rooms available in a specific period. The industry benchmark varies depending on the location, brand, and the type of accommodation. As an example, US RevPAR benchmarks differ depending on the area, ranging from $40 to $130 per night.

Average Length of Stay

Definition

Average length of stay is a KPI metric that gives an insight into how long guests stay at your motel on average.

Use Case

This metric allows you to understand how often your motel rooms turn over, how well your services meet the needs of guests, and how much revenue is being generated per guest. Monitoring the average length of stay can also help identify opportunities for additional services that could extend the duration of guest stays.

How To Calculate KPI

To calculate average length of stay, divide the total number of room nights sold by the number of guests occupying rooms during a particular time frame.

Calculation Example

For example, if your motel sold 500 room nights during the month of December and had 250 guests occupying the rooms, the formula would be:

This equates to an average length of stay of two nights per guest during the month of December.

KPI Advantages

• Monitoring this KPI allows you to better understand guest behavior and preferences.
• You can adjust prices and amenities depending on the length of stay of your guests.

KPI Disadvantages

• The average length of stay fluctuates depending on the season, location, and type of guests.
• It is possible that a shorter average length of stay means that your motel is generating more revenue from higher nightly rates.

KPI Industry Benchmarks

According to industry research, the average length of stay for motels across the US is about 2.4 nights per guest. However, this varies significantly depending on the region, type of motel, and clientele.

Percentage of Repeat Customers

Definition

The Percentage of Repeat Customers is a key performance indicator (KPI) that measures the percentage of customers who have made a repeat purchase. This KPI helps businesses track the overall satisfaction of their customers and determine the effectiveness of their marketing strategies in building customer loyalty.

Use Case

Measuring the percentage of repeat customers can provide a clear understanding of how well a motel is serving its customers and whether they are satisfied with the services provided. It is also a good indicator of customer loyalty and can help identify areas for improvement.

How to Calculate KPI

To calculate the Percentage of Repeat Customers, divide the number of repeat customers by the total number of customers and multiply the result by 100.

Calculation Example

Suppose a motel had 500 customers in a month, out of which 200 were repeated. The percentage of repeat customers for the motel would be:

KPI Advantages

• Helps identify customer loyalty and satisfaction levels.
• Allows businesses to benchmark their performance against competitors.
• Helps in identifying whether marketing strategies are effective or not.

KPI Disadvantages

• May not account for variations in customer behavior, such as seasonality or promotions.
• May include customers who have left negative feedback but continue to use services because of a lack of alternatives.
• May not accurately represent the satisfaction levels of customers who leave without making a purchase.

KPI Industry Benchmarks

The average Percentage of Repeat Customers for motels in the hospitality industry is around 40-50%. However, this percentage varies depending on the location, season, and quality of services provided.

Net promoter score

Definition

The net promoter score (NPS) measures customer satisfaction and loyalty by asking one simple question: on a scale of 0-10, how likely are you to recommend our motel to a friend or colleague? Customers are grouped into three categories, detractors (scores of 0-6), passives (scores of 7-8), and promoters (scores of 9-10). The score is calculated by subtracting the percentage of detractors from the percentage of promoters.

Use Case

NPS helps motel owners to understand how likely customers are to return and recommend the motel to others. It is a straightforward measurement that can be used to evaluate customer satisfaction and identify areas for improvement.

How To Calculate KPI

To calculate NPS, you need to:

• Survey a sample of customers, asking them to rate the likelihood of recommending the motel.
• Calculate the percentage of detractors, passives, and promoters based on responses.
• Subtract the percentage of detractors from the percentage of promoters to calculate the NPS.

Calculation Example

Let's say you surveyed 100 customers and received the following NPS scores:

• 20 detractors (score of 0-6) = 20%
• 30 passives (score of 7-8) = 30%
• 50 promoters (score of 9-10) = 50%

Calculating the NPS would look like this:

So the motel's NPS is 30, which is considered good, but there is still room for improvement.

KPI Advantages

• Provides a clear and simple metric for measuring customer satisfaction and loyalty.
• Allows motel owners to identify areas for improvement and track progress over time.
• Can be easily compared to industry benchmarks to see how the motel performs against competitors.

KPI Disadvantages

• Can be oversimplified and not provide a complete picture of customer satisfaction.
• May not take into account the motivations behind customer responses.
• Can be influenced by factors outside of the motel's control, such as the economy or competitive landscape.

KPI Industry Benchmarks for the KPI: 'Net promoter score'

The average NPS for the hotel industry is 36, while luxury hotels have an average NPS of 58. These benchmarks can vary based on location, customer demographics, and other factors, so it is essential to compare against relevant competitors.

By tracking and analyzing KPIs, moteliers can gain valuable insights into their overall performance and take actionable steps to improve their business.

Key performance indicators such as average occupancy rate and average daily rate provide important metrics to evaluate a motel's performance. In 2020, the pandemic significantly impacted the industry, causing a decrease in both KPIs. Monitoring these parameters can help moteliers adjust their strategies and remain competitive in the market.

Customer satisfaction score and net promoter score are also critical indicators of a motel's success. High scores can indicate that guests are happy with their experience, leading to positive reviews and increased word-of-mouth marketing.

Other factors such as revenue per available room, average length of stay, and percentage of repeat customers can help moteliers understand their guests' behavior and preferences. By identifying trends and patterns, vehicle owners can adapt their services and offerings to provide more value to guests.

In conclusion, tracking and analyzing the right KPIs is essential for every motel business. By regularly monitoring these metrics, moteliers can make informed decisions, identify areas for improvement, and ultimately drive growth in their business.