As a hotelier you are interested in constantly increasing your revenue. The best way is to use your own direct website. To help you better understand which factors are important for direct revenue, we explain the most important key figures and help you to make the right decisions.
More revenue through more website visitors.
We consider the following Key Performance Indicators (KPIs) to provide valuable insights:
- Conversion rate
- Shopping cart
- Distribution costs
If you measure these continuously and compile them in monthly reports for example, you will gain an overview of the economic success of your hotel website. At the same time, you can uncover weak points and take countermeasures at the right time. We will now take a closer look at the four key figures and their interdependencies.
Traffic describes the number of visitors on your website. The goal should be to increase the traffic, because the more visitors you have, the more bookings are possible. This assumes that the conversion rate, meaning the ratio of lookers that turn to bookers, remains the same or increases. But even if the number of website visitors stays the same, but the conversion rate goes up, you will also generate more sales. However, the best thing is to achieve both: higher traffic and a higher conversion rate.
For measuring success, the key figure distribution cost plays a major role. It consists of marketing costs (e.g. for myhotelshop advertising) and infrastructure costs (e.g. for the provider of your booking engine). The sum of these two factors results in your total costs. By dividing the total costs with your revenue, you get a percentage. This percentage is your direct website’s distribution cost and should be around the same level you pay your OTAs, depending on your distribution goal.
With the distribution cost, you have complete cost transparency, which allows you to budget and act much better economically. Remember that revenue does not only include bookings via your website, but also telephone and e-mail enquiries, MICE, group and voucher enquiries, restaurant and wellness reservations.
Overview and transparency through regular reports
In order to be able to classify the data of the KPIs correctly, you should create a report. For this purpose, you can use three sources:
- Google Analytics
- Booking engine
- Property Management System (PMS)
Google Analytics provides figures on traffic. You can also use it to measure the conversion rate and turnover, but the numbers are never completely correct. Inaccurate data can occur if, for example, Google Analytics is incorrectly integrated into your website and booking engine, if website visitors block Google Analytics in their browsers and thus their bookings cannot be recorded or if the currency settings are incorrect.
You should therefore check your booking system directly, as this is where the actual bookings and cancellations are recorded. In fact, Google Analytics does not record cancellations.
You can also use the Property Management System (PMS), but it can only pull data that is based on the date of arrival. Unfortunately, this does not help, because in e-commerce you always have to look at the day of booking.
Tip: For a reliable reporting, you should always make sure to use several data sources in order to obtain clear figures.
Which data belong in a report?
By gathering relevant data, you can get a clear overview of how your website is performing and what measures are successful in increasing traffic and sales. Such measures can be a relaunch, i.e. a new website design, new images on the website or SEO investments. The permanent monitoring helps you to recognize which areas are improving or deteriorating, so that you can then figure out the reason. As a result, you can adjust the right parameters and continuously optimize your performance. Only if you know the weak spots of your website, can you take appropriate measures to counteract them and get your online performance back on track.
The most important information the report should include:
- Number of website visitors
- Number of bookings
- Number of booked nights
- Conversion Rate
- Shopping cart
- Length of stay
- Revenue per visitor:
Revenue divided by number of website visitors. This is a very important factor because you need to know how many users visit your website and how much revenue each individual website visitor brings you.
- Distribution cost
Conclusion: The most important KPIs for your online performance
To give you more transparency about the performance of your hotel website and to enable you to take the right measures for optimization, we’ve summarized the most important key figures once again. Focus on:
- traffic: number of website visitors
- conversion rate: bookings divided by number of website visitors
If you increase the number of website visitors while the conversion rate remains the same or increases, you will automatically generate more sales.
- Shopping cart: You can influence the total amount of the shopping cart by the average rate and average length of stay.
- Effective commission: Sum of marketing and infrastructure expenses divided by revenue
If the key figures traffic, conversion rate and shopping cart can be positively influenced, the sales on your website will increase.
Online seminar from myhotelshop: The most important key figures for your online performance
Ulli Kastner held a online seminar on this topic, which you can watch here in full length.
If you would like us to support you with KPI and reporting, please contact us!