List of KPI (Key Performance Indicators) Used in Hotel Front Office
Key Performance Indicators (KPIs) are essential for measuring the performance of any business. In a hotel, the Front Office department holds a critical position as it is responsible for creating the first impression of the hotel on guests. Therefore, it is imperative to measure the performance of the Front Office department with the help of KPIs.
One of the critical KPIs for the Front Office department is the Average Daily Rate (ADR). It is calculated by dividing the total room revenue by the number of rooms sold. A higher ADR indicates that the hotel is charging a premium for its services, which is a good sign for the business.
Another crucial KPI for the Front Office department is the OccupancyThe number of rooms sold to the total. Rate. It is calculated by dividing the number of rooms sold by the total number of rooms available for sale. A higher occupancy rate indicates that the hotel is doing a good job of attracting guests, which is an essential metric for any hotel.
The Front Office department should also keep track of the RevPARThe formula for RevPAR calculation: RevPAR = Total Room Revenue / Total Number of Available Rooms fo... (Revenue Per Available Room). It is calculated by multiplying the ADR and Occupancy Rate. A higher RevPAR indicates that the hotel is making more revenue from each available room.
In conclusion, monitoring KPIs for the Front Office department is crucial for the success of any hotel. By measuring performance using these metrics, the hotel can identify areas for improvement and make data-driven decisions to enhance the guest experience.
| Front Office KPI’s | |
| KPI | Formula |
| Average Room RateThe price of hotel charges for overnight accommodations. (ARRADR (Average Daily Rate) or ARR (Average Room Rate) is a measure of the average rate paid for the ro.../ADR) | Average Room Rate (ARR) = Rooms Revenue / Number of rooms sold |
| Average Rate Per GuestDefinition of Guest in Hospitality Industry: A guest is the most important person in any business. A... (AGRThe formula for calculating Average Rate Per Guest (AGR): Average Rate Per Guest= Total Room Revenue...) | Average Rate Per Guest= Total Room Revenue / Total Number of guests |
| Bedroom Occupancy Rate | Bedroom occupancy rate = % of Number of rooms sold / Number of rooms available x 100 |
| Revenue per Available Room | Total Room Revenue / Total Number of Available Rooms for sale |
| CostCost is� the price paid to purchase an asset or to pay for the purchase of goods or services. Also... per OccupiedA room status term indicating that a guest is currently registered to the room. Room | Total rooms department cost / Number of rooms sold |
| Potential Average Rate SingleA guest room assigned to one guest/pax. In beverage operations; a drink prepared with the standard m... and DoubleA guest room assigned to two people. In beverage operations; a drink prepared with twice the standar... Rate | Single Room Revenue at Published Tariff or Rack RateThe published tariff for each room type/category in a hotel. / Number of Rooms sold as singles |
| Room Achievement Factor AFThe Formula for Room Achievement Factor AF:Room Achievement Factor = Actual Average Rate / Potential... (Rate Potential Percentage) | Actual Average Rate / Potential Average Rate |
| Labour Cost RatioRatio is the relationship of one item to another. For example; $2;000 of current assets to $1;000 of... | % Rooms PayrollPayroll employees calculate the pay rate with the hours worked to do the payroll so paychecks are re... & Related expenses x 100 / Room Revenue |
1. Average Room Rate (ARR/ADR):
Although room rates may vary depending on the market segment, many lodging property managers calculate an average room rate (“ARR”). The average room rate reveals the average rate charged per paid room occupied and is calculated by dividing room revenue by the number of paid rooms occupied, as follows.
Average Room Rate (ARR or ADR) = Total Rooms Revenue / Number of rooms sold
2. Average Rate Per Guest (AGR):
Provides the average revenue contribution by each guest occupied in the hotel, This rate is normally based on every guest in the hotel including children. Some hotels take their AGR without considering children.
Average Rate Per Guest= Total Room Revenue / Total Number of guests
Average Rate Per Guest W/O Child = Total Room Revenue / Total Number of Adults
3. Bedroom Occupancy Rate:
This operating ratio compares the number of rooms sold to the number of rooms available. Managers rely on this ratio in determining whether, or not, the premises are being utilized efficiently and whether expansion is possible.
The bedroom occupancy rate is calculated by dividing the number of rooms sold by the number of rooms available, as follows.
Bedroom occupancy rate = % of Number of rooms sold / Number of rooms available x 100
4. Revenue per available room (RevPAR)
This operating ratio compares room revenue to the number of rooms available. Revenue per available room (“RevPAR”) is calculated as follows:
Revenue per available room = Total Room Revenue / Total Number of Available Rooms for sale
5. Cost Per Occupied Room
This operating ratio compares the cost of the rooms department to the number of rooms sold. Managers rely on this ratio to determine whether, or not, room costs are reasonable. Occupied room cost is calculated by dividing the cost of the rooms department by the number of rooms sold, as follows:
Cost per occupied room = Total rooms department cost / Number of rooms sold
6. Potential Average Rate Single and Double Rate:
One of the main computations involved in the front office or revenue management is to calculate the hotel’s yield statistics. The potential Average Rate provides the amount of revenue that would have been generated if all the rooms were sold at their published or rack rate.
Potential Average Single Rate = Single Room Revenue at Published Tariff or Rack Rate / Number of Rooms sold as singles
Online Calculator for Potential Average Single & Double Rate
7. Room Achievement factor
The Room Achievement Factor also known as Rate Potential Percentage of a hotel, is defined as the percentage of the Rack Rate that the hotel receives by selling their rooms. The room Achievement factor is calculated by dividing the Actual Average Rate (ARR or ADR) by the Potential Average Room Rate.
Additionally, depending upon the hotel’s management policy the Actual Average Rate is either divided by the total Rooms Sold or Occupied Rooms. Room Sold = (Occupied Rooms – ComplimentaryA complimentary or 'comp' room is an occupied room for which the guest is not charged. A hotel may o... and House use)
Room Achievement Factor = Actual Average Rate / Potential Average Rate
Online Calculator for Room Achievement Factor
8. Room labor cost
The room labour cost percentage is calculated by dividing room payroll and related expenses by total room revenue, as follows:
Rooms labor cost = % Rooms Payroll & Related expenses x 100 / Room Revenue
