You cannot offer a great guest experience without understanding the key performance indicators (KPIs) that define your property’s financial viability. Tracking these KPIs empowers you to optimize operations, refine strategy, and protect long-term profitability that ensures you can keep serving guests for years to come.
Here are the most important accounting metrics to have in your back pocket.
Total Revenue
Total revenue is calculated by adding income from all revenue streams together. It encompasses rooms, food and beverage, spa, parking, etc. and measures overall business health, accounting for every dollar spent across your property.
Occupancy Rate
Occupancy rate is the percentage of occupied rooms at any given period and keeps the pulse on your property’s daily health. A higher rate is preferable, though fluctuations should be expected throughout the year. You may also sacrifice a portion of occupancy by charging higher prices—and increase your total revenue by doing so.
Average Daily Rate (ADR)
Your average daily rate (ADR) represents the average revenue earned per sold room, which tells you how effectively you are setting rates. Find it by dividing room revenue by the number of rooms sold. Use dynamic revenue management software to adjust rates automatically based on demand and other market factors for maximum profitability.
RevPAR
Unlike average daily rate (ADR), RevPAR includes unsold rooms to show revenue generated per available room. If rooms sit empty, that affects this metric, calculated by dividing room revenue by total available rooms.
Review RevPAR and ADR in conjunction to determine optimal pricing. For instance, if ADR is much higher than RevPAR, you may need to lower rates to bring more guests in the door.
Net RevPAR
Net RevPAR or NRevPAR is RevPAR with commissions, transaction fees, and other distribution costs subtracted. Use it to compare booking channels and discover your most profitable. In WebRezPro, market and source codes allow you to track which bookings originate from which channel.
TRevPAR
TRevPAR displays total revenue generated per available room. Unlike RevPAR, it includes ancillary sources such as food and beverage, spa, parking, etc. Examine RevPAR and TRevPAR alongside one another to determine the performance of amenities and add-ons.
Average Length of Stay (ALOS)
Average length of stay (ALOS) reveals the average number of nights a guest stays at your property. It’s calculated by dividing the total number of occupied room nights by the number of bookings. A higher ALOS is desirable as it decreases turnover costs, though you should keep industry standards for your property type and guest demographics in mind. For example, guests typically stay longer when they travel for leisure than for business.
Gross Operating Profit (GOP)
Gross operating profit is funds remaining once operating expenses are paid. Find it by subtracting these expenses from your revenue. Note that costs that do not go towards operating your property, such as taxes, are not included. You can also use this number to calculate your gross operating profit per available room (GOPPAR) by dividing it by available room nights over a specific period. GOP and GOPPAR reveal the true profitability of your daily operations.
Cost of Goods Sold (COGS)
The cost of goods sold (COGS) shows how much your property pays in order to provide its offerings (both rooms and ancillaries). It includes direct expenses such as housekeeping and maintenance costs, food and beverage, spa supplies, labor, etc. but excludes indirect overheads such as sales and marketing. Lower COGS means higher profit margins.
Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) measures the cost of acquiring a single guest, including commission, sales, and marketing expenses (as well as staff salaries). Compare CAC across guest segments and booking channels, e.g., your website, OTAs, etc., to identify your most profitable sources.
Solvency Ratio
Solvency ratio is a key indicator of long-term financial viability and is calculated by dividing total assets by total liabilities. A value greater than 1.0 shows that the business is solvent.
Current Ratio
Your current ratio uses the same equation as your solvency ratio but focuses exclusively on current assets and liabilities for a short-term outlook. A current asset is one that you plan to sell or convert into cash within one year, while a current liability is an obligation expected to be settled within that same period.
EBITDA
EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization. This metric highlights income generated from business operations after all operating expenses are paid, excluding non-cash or non-operational costs such as interest, taxes, and previous investments. It’s vital for comparing operating performance to that of your competitors or deciding to buy or sell a property.
Use these accounting metrics to track your property’s financial success and inform decisions that support profitability now and in future.
WebRezPro includes a full suite of accounting functionality that simplifies the tracking of essential KPIs. From daily operational dashboards and property stats to financial statements and year-over-year comparisons, WebRezPro automates financial reporting, providing the critical data operators need at the click of a button.
