Hospitality leaders from HSMAI Europe analyze the results of Global Curate, which brainstormed the most relevant KPIs for the post-pandemic market.
By Christopher Durso, Vice President of Content Development, Hospitality Sales & Marketing Association International (HSMAI)
If there’s one thing we learned from our recent Global Curate event, during which attendees from HSMAI Americas and HSMAI Europe worked in small groups to brainstorm the KPIs that will be most relevant to them in the post-pandemic hospitality market, it’s that KPIs are situational. The performance metrics that hospitality professionals find most valuable vary not just from one piece of business to the next, but often within an individual piece of business — depending on the customer’s goals, the hotel’s goals, the greater economic climate, and numerous other factors.
Those factors include international geography and cultural expectations, which is why we’re following up the analysis of our Global Curate results by members of HSMAI Americas’ KPI Workgroup with similar analysis from hospitality professionals with HSMAI Europe.
RESULTS FROM GLOBAL CURATE
As a reminder, unrelated to Global Curate, the KPI Workgroup recently published a master list of 65 KPIs for hospitality sales, marketing, and revenue professionals. KPI Workgroup Chair Lori Kiel then consolidated the brainstorming results from Global Curate and compared them to this master list. In the Global Curate results printed below, the number after each KPI indicates the number of Global Curate groups that brainstormed that particular KPI; any KPI in italics is not part of the Workgroup’s master list, meaning it’s unique to Global Curate:
Reputation score — 6
Loyalty mix — 4
ST2Y/WOW/MOM benchmarks — 4
Brand contribution —3
Channel mix — 3
Employee satisfaction — 3
GOP (gross operating profit) — 3
GOPPAR (gross operating profit per available room) — 3
Index (fair share) — 3
TRevPAR (total revenue per available room) — 3
ADR (average daily rate) — 2
Ancillary revenue per room — 2
Client engagement mix — 2
Occupancy — 2
RevPAR (revenue per available room) — 2
RFP conversation rate — 2
RGI (revenue generating index) — 2
ROAS (return on advertising spend) — 2
Business mix/source markets — 1
Consumer confidence (travel) — 1
Demand change YOY — 1
EBITDA (earnings before interest, taxes, depreciation, and amortization) — 1
Local revenue vs total revenue — 1
Net revenue — 1
NOI/EBIT (net operating income/earnings before income and taxes) — 1
Segment mix — 1
Total spend per guest — 1
Transient segment mix — 1
ANALYZING THE RESULTS: EUROPEAN EDITION
Do you see any common themes or dominant trends in the Global Curate results?
- Bob Engeringh, commercial director for citizenM: It is quite clear and good to see that there is an increased interest in KPIs that are focused on profitability. Other than that, it was quite a mixed bag of the standard KPIs and some other new ideas.
- Markus Keller, senior vice president of sales and distribution for Accor: There is a tendency to revert to the classic metrics, even if they were not all relevant during the pandemic. As in any business, profitability remains important, and a greater consciousness on reputation, but overall, there was a lot of mixed opinions as the industry continues to search for a guiding compass out of the pandemic.
- Paul Proctor, commercial vice president – Europe for IHG Hotels & Resorts: In today’s environment, profitability-related KPIs (GOP, NOI, etc.) together with commercial KPIs like RevPAR are essential to truly understanding the business mix. Then it’s crucial to consider benchmarking KPIs such as RGI, Index (fair share), and reputation score. These KPIs combined can help hospitality professionals understand the route and performance of the recovery trend.
Are there any surprises for you in the Global Curate results?
- Engeringh: Overall, I am missing the focus on CLV (customer lifetime value). Looking at the KPIs, the industry still seems very much focused on optimizing today, this week or this month, rather than looking at the guests that do not require any additional spend to get them to stay and are true fans of the brand. Loyalty mix is mentioned, but this does not fully represent that. Other than that, there were actually little to no KPIs focused on sales (account value, sales growth, etc.).
- Keller: Nothing surprising in the list. The stronger emergence non-financial measures such as reputation score, client engagement, but also employee satisfaction were likely reinforced during last 18 months, but shouldn’t be surprising as such. While KPIs have come a long way, the emphasis on sustainable tourism in the context of our global climate change challenges should see new KPIs taking shape.
- Proctor: It’s great to see that the human factor is being considered in the context of performance with KPIs such as employee satisfaction, client engagement, consumer confidence, and reputation score, as it recognizes what’s at the core of the hospitality business: people. These are essential additions to consider alongside fundamental commercial and financial metrics.
How do the results from Global Curate square with the work that the KPI Workgroup has done before and during the pandemic? Do they make you rethink anything?
- Engeringh: The focus in both groups on profitability is quite visible, and it is good to see this is so high on the radar. As many KPIs often also get the need of being benchmarked, I think that is the next difficult task for the industry. There are tools out there that attempt to make this visible, but in practice it might be hard to find real comparable sets. Many companies hold various definitions around distribution costs or have even non-comparable numbers due to different business models. This still offers a potential risk for hotel management, as they find themselves many times in the split between owners/stakeholders wanting to see high market shares but also optimal EBITDA. These two often do not necessarily go hand in hand.
- Keller: Short term, a focus on returning to profitability and sustaining customer satisfaction is at the front of everyone’s agenda, so not surprisingly this came out in the discussion. That will invariably lead to related KPIs and analysis on net contribution/channel costs. However, discussion of non-financial measures will certainly occupy part of the mid-term metrics and should shape thinking.
- Proctor: It has become evident that the success of the hospitality industry is measured against many indicators. To truly understand business performance, we need to measure the commercial impact on profitability (net RevPAR) as well as considering the profitability optimization in relation to guest and employee satisfaction. Both Global Curate and the KPI Workgroup are addressing these elements through the additional KPIs definitions.
Of the nine KPIs from Global Curate that were not already part of the KPI Workgroup’s master list, are there any that you think are particularly relevant to the post-pandemic hospitality market?
- Engeringh: It is quite fascinating that there is no mention at all in the KPI Workgroup’s master list about reputation scores. GRI (Global Review Index) or NPS (Net Promoter Scores) are very important drivers of revenue, hence they should not be missed on a list of important KPIs.
- Keller: The comparisons to Y-2 were not part of prior methodology, but it’s a punctual need given the impact on baseline KPIs in 2020, and short term everyone is focused on when we’ll get back to 2019 levels. But no KPI can be considered in isolation since they are all linked, either mechanically or systematically. As said, post-pandemic, the consciousness around sustainable tourism will certainly change the way we operate, and therefore probably take on a new relevance.
- Proctor: The Global Curate list provides more insight through the addition of business/geographical/segment mix KPIs, which is important to identify what has changed in terms of travel and demand patterns post-pandemic. Together with the ST2Y measurement, it provides strategic guidance about where to focus commercial initiatives in the short- and long-term future.
How should hospitality sales, marketing, and revenue professionals approach identifying the KPIs that will be most relevant to them in the months ahead?
- Engeringh: They should definitely not compare anything back to 2020 or even 2021. Those years can really be struck through, as they do not give any significant data to be used in any form of metric. Therefore, the increased mentions on KPIs like ST2Y/WOW/MOM benchmarks are indeed very relevant in the post-pandemic hospitality market.
- Keller: For now, we’ll remain focused on short-term needs, but mid-term we’ll look to integrate the new preoccupations of clients to ensure a sustainable return to business and of tourism long term. Specifically, we need to demonstrate a measurable link between sustainable tourism initiatives to customer satisfaction, employee satisfaction, and ultimately financial performance, which will be key to engaging asset owners and influencing commercial strategy.
- Proctor: Given the impact of the pandemic on the hospitality business, securing profitability will be amongst the highest priorities in the short term for many stakeholders within the industry. Therefore, it’s beneficial to look at the KPIs which can best help define commercial strategies which deliver profitable and loyal business, increase market share while building and driving guest and employee satisfaction.