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  28 Apr 2023
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Hostel Performance Metrics: All You Need To Know


You will notice a significant improvement in your company's outcomes by monitoring your metrics. Why? 

Since insight into the metrics you use enables you to determine where you are able to implement the simplest and most significant changes, If you are unable to measure it, you cannot enhance it.

If you want to completely understand hostel performance metrics and reap the benefits, you need to be able to answer the following questions:

  • What does measure mean?
  • How are you going to figure out this metric?
  • What makes this measure significant?

What is Hostel Performance?

Hostel performance includes aspects of company success like revenue growth, product market performance, and stockholder return. 

The viability of a hostel's operations in a particular month is determined by how those activities are carried out in that month. 

For efficient management and enhancement of hostel operations, a trustworthy performance assessment method is required.

Key Performance Metric

The key performance indicators, or KPIs, are the most significant measures. A KPI is used to assess how well your hostel rental business is doing in terms of reaching a primary goal. 

Both the general KPIs and KPIs unique to a department, initiative, or promotion are possible for hostels.

The Difference between metrics and KPIs

Hostels use a variety of metrics to assess general success, but those that are tied to particular objectives are referred to as KPIs. You might need to divide performance into smaller measures in order to comprehend changes to a KPI.

Look at your ratings on a listing platform like Booking.com. Your metrics for rooms, services, value, and hygiene, for instance, will help comprehend how you'll accomplish the KPI of an overall rating of 4.5.

Hostel Metrics Formula Sheet

Hotels are centers of activity that gather a ton of information from visitors, web pages, technology systems, and other sources. 

In order to comprehend the success of your business and lay the groundwork for future techniques, this data is of utmost importance.

You can monitor and assess a wide variety of revenue management measures to enhance your company. Unfortunately, it takes more work to recall, compute, or comprehend them all consistently.

This useful metrics sheet was created as a result, so you can quickly see all the crucial data for your property.

  • Sentiment score on TripAdvisor
  • Segmentation
  • Total Available Rooms
  • DRR (direct revenue ratio)
  • TrevPar
  • Average Daily Rate (ADR)
  • Average Rate Index (ARI)
  • MCPB (marketing cost per booking)
  • Website conversion rate
  • Revenue Generation Index (RGI) or RevPar yield index
  • Average Occupancy Rate
  • Revenue Per Available Room (RevPar)
  • GOPPAR
  • Market Penetration Index (MPI) or Occupancy Penetration Index



Sentiment Score on Platforms

You can evaluate visitor satisfaction or perception by using tools for reputation management or the internet and social media tracking tools like Instagram Insights.

This shows customer satisfaction, problems, and grievances, or informs you of product flaws. Additionally, it enables you to openly and instantly address client concerns.

Segmentation

Performance is shown in relation to three categories of customers using segmentation data. Which are:

Group: In groups of at least ten rooms, group rooms are leased concurrently.

Transient: Rooms reserved at the displayed price, corporately negotiated package, constant visitors, government, or international traveler prices are considered transient. It involves filled spaces reserved through outside websites.

Segmented data can show a distinct trend between transient and group visits and offers insight into the types of travelers who make up a hostel's guests and income base. 

If there are certain dates where the group company has traditionally been weak, that might be the area of emphasis going forward. 

In a similar vein, the data may confirm that a gathering your location hosted generated a sizable quantity of group business, resulting in high occupancy rates at properties nearby.

Total Available Rooms

The number of apartments that are broken, unoccupied, or without supplies. This metric is necessary for accurate inventory analyses, which result in an accurate amount of reservations. 

It is crucial for every one of the hostel's financial computations as well because it establishes the number of operating rooms on which to build income formulas. 

For example, if a hostel has 500 rooms, but only 480 are in operation, then for that time, 290 is the basis to use for measures like RevPar.

DRR (Direct Revenue Ratio)

This indicator assesses the proportion of online income generated directly as opposed to through pricey third-party platforms.

You must generate at least 40 percent of your income from your own hostel website or booking engine if you want to optimize earnings. Bookings made through travel agencies and other third parties are expensive and reduce total earnings.

RevPar

The typical everyday income per available space is taken into consideration here. Other revenue sources like F&B, spas, or retail are not taken into consideration by this measure. 

By region, the average RevPar differs greatly. It is a time-based picture of a hostel's success and varies by market, sector, and timeline as a measure for measuring hostel performance.

The formula for calculating this is Total Room Revenue / Total Rooms Available.

RevPAR is a measure of how well the hostel fills its accommodations. Increasing RevPAR indicates either increasing prices, rising levels of occupancy, or both.

TrevPar

This represents the overall income per available space. This measure is calculated by dividing the total number of available rooms throughout the period by the number of net revenues from all run divisions plus fees and other earnings per available room for the entire time frame.

Unlike Revpar, which only takes into account the earnings from the rooms, this measure aids in determining the property's total financial success. 

TRevPAR is particularly helpful for motels whose main source of revenue may not always be their accommodations.

Average Daily Rate (ADR)

The average daily rate (ADR) for hostels evaluates per-room costs. This hostel success metric compares the total amount of room income received and paid during a specific time frame to the overall number of occupied rooms during that same time.

The formula for calculating this metric is Rooms Revenue / Paid Rooms Occupied.

The ADR is helpful for evaluating a hostel's financial success and benchmarking it against its rivals.

Average Rate Index (ARI)

This hostel success indicator assesses how a hotel's typical daily rate stacks up against those of its rivals. 

The formula for calculating this metric is the ADR of the hostel / the ADR of the hostel market.

In comparison to the combined collection of hostels, an ADR Index of 100 represents an equitable distribution of ADR. 

ADR success for the combined group is more than fairly represented by an ADR Index higher than 100. An ADR Index below 100, on the other hand, represents less than a fair representation of the ADR success of the combined company.

What makes this measure significant? This measure helps determine whether or not rates should be raised or reduced by serving as a gauge of market pricing accuracy and a comparison of a hostel's rate performance with that of its rivals.

MCPB (Marketing Cost Per Booking)

This compares the expense of each S&M station to its real output.

The distribution expenses associated with each route can vary from 10% to 50% of income. To obtain the MCPB, these expenses are deducted from the overall cost of the reservation. This is the best way to calculate this metric.

It demonstrates how important the expense of acquisition is when calculating gross earnings. 

The objective is to investigate every available medium in order to generate demand, raise exposure, boost bookings, and ultimately boost revenue. However, there must be an ideal combination of the best and cheapest options across all platforms. 

Hostels must strike an equilibrium between client acquisition expenses and profit in order to avoid overspending on a marketing platform.

Website Conversion Rate

This determines the proportion of distinct website visitors who make reservations. Revenue comes from prospective visitors who look up a place online. 

A hostel's website serves as its digital front door, and it has the greatest impact on how visitors perceive the establishment.

The key to lowering the expense of income and MCPB is increasing the conversion rate of visitors. The conversion rate also sheds light on how a user engages with a website and suggests ways to take advantage of that interest.

Revenue Generation Index (RGI) or RevPar Yield Index

This hostel success indicator determines how a hotel's RevPar stacks up against its rivals. 

 It estimates a hostel's reasonable market portion of the income per available bed in their segment (the market, the submarket, the competitive set, etc.). 

The indicator will be 100 if a hostel is gaining its fair share in the market; it will have a value of less than 100 if it is securing lower than its fair market share; and it will be greater than 100 if it is capturing more than its fair market share.

The formula for calculating this metric is Hostel’s RevPar / Hostel Market RevPar

If your RGI findings are less than 1, with a base index of 100, then hotels in your competing group are turning more guests than you are.

Maximizing RGI increases lodging revenue. The indicator measure shows how a hostel's RevPar numbers are doing in relation to its benchmark group. This aids in identifying areas where prices may need to be raised or expenses cut.

Average Occupancy Rate

The percentage of accessible rooms that are filled for a given time range is called occupancy. Total paid rooms rented divided by total rooms accessible is how it is determined.

The formula for calculating this metric is Occupancy % = Paid Rooms Occupied / Rooms Available OR Occupancy % = Revenue per Available Room / ADR

Generally speaking, the higher the occupancy rate, the more money the business makes compared to businesses with low occupancy. This might not always be the case, though, if the business lowers its rates to increase utilization.

The rate is essential for the operational aspect of the company as well as for ensuring adequate personnel and stock levels.

GOPPAR

This metric is known as the gross operating profit per available room.

The formula for calculating this metric is Available Rooms / GOP (gross operating profit)

What makes this measure so essential? Performance is evaluated using data from all income sources. In addition to rooms, hostel property managers and property owners can view earnings across all income sources and the total of all the components.

Market Penetration Index (MPI) or Occupancy Penetration Index

This hostel success indicator assesses how an establishment's occupancy stacks up against its rivals. The indicator is intended to calculate a hostel's percentage of a market, a comp group, or a region.

The formula for calculating this metric is Hostel Occupancy% / Market Occupancy%.

This metric is so beneficial because it acts as a roadmap for comprehending a hostel's market leadership and demand. Naturally, rising demand generates rising profits.

Hostel Property Management System (PMS)

Cloud-based, all-in-one management systems are your best bet for operating your hostel properties. This best practice has made significant progress and now ranks among the most important technological resources available to lodging companies today. 

Simply stated, a strong PMS is thought of as the foundation of a business. Coordinating the duties of the front desk, guest administration, sales, planning, and reporting are made simpler by property management tools. 

Hostel Property Management Systems like Booking Ninjas help with centralizing the state of all hostel properties, enabling property owners to handle front counter operations, rates and promotions, and client retention data.

Here are some tasks that the Booking Ninjas management software can help you carry out flawlessly:

  • Guest Reservations
  • Reporting
  • Third-Party Integrations
  • Revenue Management
  • Front-desk Operations
  • Digital Check-In
  • Guest Data Management
  • Managing online third-party sales channels

Key Takeaways

A hostel business, like many others, uses a special collection of statistics and performance evaluations to measure success. 

It's crucial to comprehend the basic measures used to assess the performance of your accommodation company, regardless of whether you run a hostel, vacation rental, corporate housing rental, hotel, or another sort of property.

You'll need a proper hostel business strategy to record and measure the success of your business system once you've decided which metrics to focus on.

To learn more about what we do and why we do it, schedule a free call with us right now!

Improve Your Property's Management, Operation & Revenue With Booking Ninjas Property Management System

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