Comparing your hotel to industry standards

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We’ve talked at length about how your Hotel business needs to track and review its occupancy rate and manage its profit centres with a view to improving efficiency and profitability.

But knowing the overriding health of your hotel cannot be judged purely through internal measures – it is also extremely valuable to compare your own metrics against those of your competitors, and the industry as a whole.

Understanding the impact of outside influences

Industry standards within the hotel sector provide a benchmark against which to compare the performance of your hotel.

Comparing the key performance indicators (KPIs) of your hotel to those for similar hotels helps you identify that your hotel is on track, especially if you have been experiencing a downturn in your numbers.

If other hotels are experiencing falling occupancy levels then a drop in your own room sales is not such a great surprise. For example, the uncertainty following recent events in France has halved occupancy rates in Paris-based hotels and Aberdeen has seen occupancy slip due to a slump in the demand from the shrinking oil and gas industries.

These are events that are beyond your control, as a hotel owner or general manager, but it is important to know their impact, while also understanding that these are fluctuations that affect the whole industry.

Benchmark your hotel against the competition

The hotel sector is highly proactive in producing statistics and benchmarking figures for the industry as a whole. Within the sector, there are certain relationships between financial figures that are seen as the expected norm – and these can be used as a benchmark for your own hotel to gauge how well you are performing.

For example, the payroll costs for a hotel with a residents-only restaurant should not exceed 25% of total expenditure. In contrast, if your hotel has a public restaurant then your payroll costs should not exceed 30%. Those benchmark percentages give you a target to work into your budgeting and show you if you are meeting or missing the average for similar hotels in the industry.

Likewise, we would not expect to see gross profit margins under 65% on food and beverage sales for a hotel that offers a restaurant to its guests.

Figures for comparison can come from many different sources, including the Office for National Statistics (ONS), industry bodies such as the British Hotel Association.

or regional and local surveys from the likes of the tourist board or hoteliers bodies.

You can even follow wider trends in the hotel and leisure sector in the national press or online.

Do you need help with your KPIs?

If you are looking to compare your hotel against other similar hotels in the area or nationally, Saints Tourism & Leisure will help you to set up your accounts and KPIs to give the best possible comparison against industry standards.

Contact Saints Tourism & Leisure – we will help you customise your accounts to deliver the important KPIs for benchmarking and measuring your hotel’s performance.