Leveraging Your Key Performance Indicators to Boost Bottom Line

By S. Lakshmi Narasimhan Founder, Ignite Insight LLC | December 14, 2014

Key Performance Indicators or KPIs as they are popularly known as, are a favorite topic in management meetings or in boardroom talk and owner conferences. Everybody likes to wax eloquent about these magical measures that deliver revenues and profits on a consistent basis.

The sad truth though is that these KPIs are grossly misunderstood, vaguely interpreted and abundantly under utilized.

KPIs are often revenue, profit or operation related indexes or measures that play a big part in the business results of a hotel. It is thus important that firstly, these measures are specifically identified and listed for monthly scrutiny and review*. Secondly they must become part of what are known as Management Reports and reviewed thoroughly every month by key personnel.

Hotel KPIs

In the case of a hotel, the 3 Major KPIs one could look at are:
- RevPAR
- Gross Operating Revenues
- Gross Operating Profits

One could argue endlessly and list more KPIs, however, it is a fact that if a hotel is looking to boost bottom line, these three measures would pretty much impact every aspect of that process.

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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.