Revenue & Yield Management Blog
Hotel Revenue Management Tips & Ideas by XOTELS
Welcome to our XOTELS‘ Hotel Revenue Management Blog. Explore cutting-edge strategies, data-driven insights, and expert tips tailored for optimizing revenue in the dynamic world of hotels. Discover the revenue management potential and elevate your hotel’s profitability to success.
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Operating Expense Ratio
Using this KPI can help you evaluate whether an investment is worth your time by giving insight into how much it costs to manage / maintain the project. How? By taking the operational cost and rental income into account you will be able to compare the ratio (ideally under 80%) to make a well-informed decision for your investment opportunity. This step can´t be overlooked and our hotel revenue management consulting company always recommends calculating the Operating Expense Ratio to ensure the full potential and financial health of your projects.Payback Period
To start, our hotel management company always recommends determining the actual payback period, otherwise known as break-even, is essential for a real estate investment project and can help to pick better projects with a fast payback period. This can be achieved by determining the number of years it will take to pay back the amount invested.Tenant Turnover
This real estate KPI informs you at what rate your tenants are leaving, and will typically be calculated on an annual basis. Our hotel management company highly suggests knowing the tenant turnover rate will help you gain insight into which of your projects has a more stable tenant cycle. The lower the turnover rate the better since:Average Rent Price Per Property
As the name suggests, the KPI 'Average Rent Price Per Property' helps to keep track of your rental prices and is typically measured and recorded across various timeframes (i.e. weekly, monthly, quarterly and annual changes). Our hotel management company emphasizes on comparing the performance against the same period last year is crucial to ensure you're on the right track to create a successful investment project. You can also easily compare against other properties with this metric and see where opportunities are for your property.Calculation: LTV Ratio = Mortgage Amount / Appraised Property Value
When investing it is obviously favourable to accrue as little additional cost as possible while minimizing the amount of down payment on your loan to ensure you have plenty of cash on hand to manage your business and investments.Average Mortgage Rate
This KPI helps investors to evaluate if properties require refinancing. Specifically, investors can compare their mortgage rates (by turning it into an average if they have multiple properties) to the current index mortgage rate. Our hotel management company always suggests making this comparison, as it will tell if the property is better off being refinanced.Calculation: Equity to Value Ratio = Total Property Equity / Total Property Value Ideal ratio: ratios below 0.5 are an indication of a heavily leveraged business What is the Definition & Importance of ´Loan [...]
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The sector-wide standard for hotel accounting practises, the Uniform System of Accounts for the Lodging Industry (USALI format) has been in operation in some form or other since 1926. With our experience as a hotel management company, we can say that these best practises are essential for any hotel to create higher uniformity and consistency in the presentation and understanding of a hotel´s performance. The primary functions of this uniform system of accounts for hotels has been to provide hotel managers, owners, and other relevant stakeholders with operating statements, and to be able to run comparative analyses across different business areas. The 11th edition of USALI was released in 2015, requiring hotels to update how they reported accounting and financial data and introducing many new changes. Now knowing the importance of the system, let's take a deeper look at the details and highlight what is most important to understand as a stakeholder for a hotel.
Fundamentally it has been a completely different year from any other - many referring to a “new normal” - bringing a plethora of contrasts to the hotel industry compared to pre-covid times. This urges the need to review which trends have come and go, and put any concerns into perspective. Of course, Covid-19 has scrambled things up causing ripples in the hotel industry pond, just as we have seen with previous crises. Regardless of the negative effects that came into being, there are always new opportunities that arise as a result. In this article, we will be sharing everything we´ve seen as a hotel management company to get you up-to-speed on the trends in the hotel industry, from consumer behaviour to hotel concept trends.
