Hotel sales department’s Key Performance Indicators

Key Performance Indicators or also known as KPI, is defined as a performance indicator that measure specific goals set for businesses to be able to evaluate the success of an organization.

Various performance indicators will be set depending on the importance of each industry segment as well as the main focus to achieve the business objectives.

What are the Key Performance Indicators in sales and marketing department of the hotel industry?

The sales and marketing department can have different key performance indicators per each division. This means that the 3 divisions of sales and marketing department, i.e., sales, marketing communication and revenue management division, each will have its key performance indicators.  In some situation, revenue management in the hotel industry will be a separate department reporting directly to General Manager.

In this writing, I will focus on elaborating the Key Performance Indicators created for sales department of the hotel industry.

Sales department in medium to large size of hotel with range numbers of function rooms including ballroom will generally consists of room sales team and catering & event sales team.  Their main focus will definitely to generate revenues both from room accommodation as well as meeting & event from various channels and segments.

Here are some of Key Performance Indicators that you can consider to be applied for sales team in a hotel industry.

1. Overall hotel revenue

The revenues can cover all aspects available in a hotel, not only from room accommodation and catering & event, but also from food & beverage facilities (restaurant, bakery, room service, etc), laundry and other revenue generated department.

2. Room and Catering & Event revenue as per target

You can create both team target and individual target from these revenues sources as hotel sales Key Performance Indicators.  Monthly revenue breakdown can help the team to have a clear focus on what to achieve on monthly basis and chase the previous month’s shortfall in the next following month.

3. Revenue Generating Index (RGI) position

Revenue Generating Index (RGI) is a method to determine on a fair share of revenue of your hotel compared to the hotel competitors.  What is your hotel’s RGI target positioning by end of year?

If your hotel’s RGI is currently positioned on number 3, do you set the target to become number 1 or number 2 of RGI positioning by looking into your hotel situation, the hotels competitors as well as market situation.

4. Revenue Per Available Room (RevPar)

RevPar is a metric used to measure hotel performance by having understanding on what is the revenue generated per available room.

What will be your hotel’s RevPar target by end of year? Hotel can focus either on boosting the occupancy level with competitive average room rate or aiming higher average room rate with reasonable occupancy level.  Hotel can also ideally aim to balance the occupancy level and average room rate to achieve the targeted RevPar figures.

5. Occupancy rate

What is your hotel occupancy level that has been budgeted?  Do you want to include hotel occupancy rate as the Key Performance Indicators to achieve hotel room revenue or you want to focus on the Average Room Rate?

6. Average Room Rate (ARR)

Average Room Rate is to measure the average rate paid for the rooms sold.  Average Room Rate can become one of the hotel sales Key Performance Indicators when the hotel main focus is to achieve the budgeted Average Room Rate.

Sales team can study which market segments generate high average room rate and how to further maximize these segments.

7. Number of new accounts acquired

Not only maintaining and developing existing accounts, but to consistently acquire new potential accounts are important to support the overall revenue generated.  Set a reasonable number of new qualified accounts to secure per month for each individual sales person to achieve.

8. Percentage growth of top accounts

Identify the monthly, quarterly or yearly minimum room nights contributed from the accounts to be categorized as the hotel top accounts.  Usually, the hotel will determine the top 50 or 100 accounts that are potentially to be developed further in terms of room nights and revenues production.

Justify the yearly realistic percentage growth of each account based on the historical data.  It must be a thorough discussion with sales team to agree on the percentage growth per account based on each account’s potential.

9. Percentage growth of market segment

Not all market segment will generate significant contribution to the hotel.  Hotel market segment can range from business transient, leisure transient, corporate FIT, corporate group, government FIT, government group travel agent, online travel agent, etc.

Focus on the main contributor segment and decide on the achievable percentage growth for sales team to achieve.

10. Percentage growth of geographical origin of business

Does your hotel monitor the contribution of geographical origin of business? This will be related to where the booking comes from.  Does your hotel receive a large contribution from domestic, national or international market?  Which countries or cities give significant production for your hotel?

Similar like market segment, identify the main contributor geographical origin of business and agree on the reasonable percentage growth to be accomplished by sales team.

11. Number of prospected leads gained

One of the hotels sales person’s job responsibilities will be to search for potential leads, be it for room accommodation, meeting, conferences, social event, wedding or incentive event that will contribute to hotel revenue.  Determine the monthly number of prospected leads for each sales person to capture in which this can become as an individual Key Performance Indicators.

12. Number of leads confirmed

Not only getting qualified business leads but it is also important to measure how many businesses can be converted to definite status.  Create realistic number of leads to be confirmed in one month for each individual sales person to achieve.

13. Number of sales calls

How many numbers of sales calls that each hotel sales person must conduct in a week or a month?  Does quality sales calls more important than quantity sales calls or the other way around? How about conducting sales trips to certain areas or cities, will this be counted as part of sales calls quota?

14. Number of entertainments

Entertaining new potential and existing supported clients are important sales activities as part of maintaining and strengthening business relationship.  And at the same time, sales person can also show the hotel facilities and services to attract client’s interest.

Decide reasonable number of how many entertaining activities that each sales person must conduct in a week or a month.

15. Mystery Guest / Shopper score

The objective to participate on mystery guest or shopper program is to monitor the quality of services provided by each sales person to be up to the expected standard.  Questionnaires prepared are customized according to the hotel’s needs with the agreed score result to be achieved by sales person.

A yearly Key Performance Indicators can be created for sales team with monthly tracking and quarterly review to analyze the team and individual performance, understand the challenges faced, what things to improve and adjust the strategies if necessary.

Have a productive day and all the best.