16 Metrics of Healthy Customer Service-Oriented Businesses: Part Two
Last week, we published a blog that highlighted five metrics that leaders in QSR operations should reference when evaluating their business operations and employee performance. We continue with the series this week to help empower business owners and managers to more accurately assess the success of their businesses.
In today’s blog, we describe six metrics that can be used to evaluate the health of a business, specifically those in the hotel and hospitality segment. (Sneak peek: The final five metrics will be geared toward operations leaders and tracking benchmark business and employee performance in retail, which will be available next week!)
Let’s dive right into the metrics, once again categorized by operational excellence and employee productivity:
- Occupancy percentage: While hotels may strive for a higher occupancy percentage, this can come at the expense of lower profits. So this metric becomes essential to better gauge whether price adjustments should be necessary. Fortunately for US owner-operators, occupancy was on the rise, increasing 3.4% to 68.8% in 2015, according to STR, Inc. The figure can also serve as a benchmark when comparing like-businesses. For example, a competitor may differentiate her hotel on customer service, generating a higher occupancy rate at the same cost. Determine how customer service from improved employee training can increase both your occupancy rate and bottom-line.
- Adjusted revenue per available room (ARPAR): By multiplying the difference between a hotel’s average daily rate and net profit with the occupancy percentage, owner-operators can better monitor revenue management and business operations. When used to index against peers of the same size, ARPAR can help track the performance of other revenue-generating activities from a hotel, such as restaurant operations, casinos, banquets, and conferences. As these have a heavy customer service component to them, this metric can help measure the success of these programs and whether improvement needs to be made in the training of front-line personnel.
- Average length of employment: The hospitality industry has some of the lowest employee tenure out of any industry. Staying with one hotel an average of only 2.3 years in 2014, employees in this sector move onto other jobs more frequently than other industries, according to the Bureau of Labor Statistics. Employees that are established in their roles are able to complete tasks more quickly (i.e., greater productivity). Owner-operators should work to increase employee tenure with their hotel, and expect to experience improved employee productivity.
- Staff satisfaction: In service industries such as hospitality, employees must be willing and able to assist their guests in every way possible. Therefore, it’s critical that they feel empowered in their roles, whether they man the front desk or clean rooms. For example, luxury hotel chain Ritz Carlton knows that satisfied employees result in higher sales. In a report titled, “The Forum for People Performance Management and Measurement,” the hotel’s senior vice president of HR noted that even employees with no direct contact with customers can create positive financial outcomes.
- Percentage of employees with satisfactory assessment: Another measure of the effectiveness of recruitment by HR personnel, this metric gauges whether the right employees were hired for the job, writes “Performance Culture.” Also, use this metric to test whether your employees are armed with the right information to do their jobs successfully while they are on the clock.