The first part of this series discussed the sources of information for our year end review. In this post we’ll look at ways you can “drill down” in the information you have to learn more about the year’s performance. If you haven’t been keeping records that will give you the information, we’ll talk about how to get started keeping those records.
We’ll look at two different areas for our year end review. The first will be a look at bookings and revenue. The second, in the third installment in this series, will be website performance, referral sources, and the like.
Year End Review of Bookings and Revenue
[pullquote]There is gold to be mined in your guest records![/pullquote]Most (but, incredibly, not all) property management software or online booking systems will allow you to generate a report that will show the number of bookings you had over the past year, and the amount of revenue that represents. Fewer of them will allow either a direct comparison with the prior year, or at least allow you to run a second report for the prior year, so you can compare the figures manually. That’s a good start, but there is so much more gold to be mined!
Year End Review of Room Performance
In essence, your guests are telling you, by their booking patterns, which rooms they prefer. Our objective is to see what they are telling us, and learn from it. So we’ll begin by looking at the performance of individual rooms.
Many PMS systems will provide a report of room performance, showing nights booked by room, revenue by room, and ADR (Average Daily Rate) by room. If yours gives this information, use it. Be sure you can compare it to prior years, as well.
If your software doesn’t do it, or if you would like to be able to tweak it a bit to see how things change for yourself, you can get a copy of our room performance spreadsheet online.
Once you’ve got that information (either from your PMS or from a spreadsheet) you should be able to see if there are any poorly performing rooms. Think about those rooms. Is there something making them less attractive (either in appearance, amenities, location, or price) than your other rooms? What about the stellar performers? What is making them so successful? Can you duplicate those attractive features in other rooms?
What about bookings? If your software allows it (or if you can figure it out another way), determine the average length of stay of a guest. How do we do it? We take each check-in date and subtract it from the check-out date to get the length of stay of that guest, Doing this for all the bookings for the year allows you to get an average.
What do we do with the average length of stay? We do two things. First, we compare it to prior years. If the average length of stay is increasing, we are meeting one of our goals! If not, we try to come up with marketing that will encourage longer stays.
The second thing we do with average length of stay, is use it to calculate the average value of a booking. To find this, multiply the average length of stay by the ADR for your property. If you do this for multiple years, you should see a trend that, because of both longer stays and rate increases, the average value of a booking is increasing. Not only is that useful in seeing how things are going, but can be used to evaluate ROI (Return on Investment) of various
marketing opportunities – how many bookings did they generate? What does that translate to in value?
Year End Review of Monthly Performance
Whether your property is seasonal or year-round, it can be very useful to see how each month has performed against the same month in previous years. For example, in our Freeport Maine B&B, we are open all year, but our business is strongly seasonal, with history showing August to be our busiest month. This year, however, August slipped a bit, but September came on like gangbusters. Seeing a change like that forces you to consider what caused it, and consider whether or not there is something you can do to improve it.
Once again, your PMS software may provide exactly the report you are looking for. If not, or if you just want a comparison, visit the second tab of the spreadsheet linked above, copy it or download it if you haven’t already done so, and you can start entering your own figures to see the comparisons.
Once you are armed with solid information about your room performance and your booking patterns, you will be in a better position both to evaluate how your year really was, and what you can do to make next year even better!
Next week: Year end review of web performance.