6 holiday let performance indicators, with formulas
We often stop to consider whether our business is reaching its full income potential or whether there is still room for improvement.
That is why tracking KPIs, or key performance indicators, is a crucial part of managing a property.
It helps us check whether the property is genuinely profitable or starting to head towards future problems.
However, this does not mean every detail must be monitored exhaustively, as that can have the opposite effect: an overwhelming situation in which we lose sight of what really matters.
Tracking KPIs is just as important as choosing meaningful measures. Not every indicator helps us establish whether our objectives are being met or suits the sector in which we operate.
Here, Alehost looks at a series of KPIs that may be useful for managing your holiday let.
Why do KPIs matter in property management?
First, a KPI is a performance indicator whose analysis helps us understand how successfully a business is operating.
Indicators help detect changes, but depend on complete data and consistent definitions. Read them together and compare them with costs, the calendar and any incidents.
The aim is to keep your objectives in view, identify weaknesses in a strategy and make appropriate decisions for each situation.
Six areas to review in your holiday property’s performance
Trying to cover too many KPIs can distract you from your real objective, so we have selected a few with which to start assessing your holiday let’s profitability.
1. Revenue per available room (RevPAR)
RevPAR divides accommodation revenue by available nights in the same period. For entire homes, use the unit “property night” consistently; do not mix beds, rooms and apartments.
It provides an overview of business performance and can be calculated by multiplying the average daily rate by the occupancy rate.
RevPAR changes depending on whether your holiday property focuses on securing nightly bookings at the highest rates or maximising occupancy.
2. Average daily rate (ADR)
ADR divides accommodation revenue by nights sold. It is not an amount per guest when the entire property is sold, and should not indiscriminately include all revenue from additional services.
A high ADR does not prove profitability: it may coexist with few nights sold or high costs. Compare it with occupancy and the result for the same period.
3. Occupancy rate
The occupancy rate is a percentage that shows how frequently a holiday property is booked relative to its total availability.
Occupancy measures nights sold divided by available nights, multiplied by one hundred. It describes what happened in that period; it does not, by itself, represent the probability of future bookings.
4. Customer acquisition cost (CAC)
CAC compares acquisition costs with the new customers secured, using a consistent approach. Separate advertising and distribution from operating expenses such as maintenance. When comparing channels, measuring their cost per booking is also useful.
Customers are at the centre of every business, but the cost of acquiring them must not become too high or profitability will suffer. Attracting a new customer is not everything: as we know, reaching someone new costs much more than retaining existing customers and meeting their needs.
5. Return on investment (ROI)
Return on investment is one of the best-known and most widely used indicators across sectors. It helps show how much a company earns from its investments.
ROI compares the result attributable to an investment with its cost. It is not the same as adding up revenue. Define the investment, period and profit being considered; a campaign, a refurbishment and a property purchase require different analyses.
6. Rate structure
A business’s chosen pricing strategy is fundamental for many companies, since price is the deciding factor for a large proportion of consumers.
A rate structure is a management decision, rather than a standalone KPI. Assess its effects through ADR, occupancy, revenue and margin, taking conditions and channels into account.
This is particularly relevant in tourism, where fluctuations in demand and the market are commonplace, making it necessary for rates to be responsive and adapt to each situation.
Ultimately, not every indicator meets our needs, and tracking all of them is not the best solution.
As a holiday accommodation management company, Alehost understands the importance of monitoring results to assess each property. We study each case to provide a personalised service.
At Alehost, we can review your property’s data and establish monitoring suited to the service you delegate. Agreeing indicators and a reporting format allows management to be assessed against shared criteria.
An example of reading the figures together
A property offers 30 nights, sells 21 and generates €2,520 in accommodation revenue. Its occupancy is 70%, ADR €120 and RevPAR €84. To determine the result, commissions, cleaning, utilities, management and other relevant expenses still need to be accounted for.
If it offered fewer nights because it was closed, explain how you treated that closure. Comparing percentages based on different inventories without explaining them can lead to the wrong conclusion.
A manageable tracking dashboard
Record the period, availability, nights sold, accommodation revenue, distribution costs and operating result. Add relevant incidents or events alongside the figures and compare equivalent periods. Then review revenue management to turn that information into decisions.
