Essential metrics for holiday rental hosts
Discover the key metrics
- Why are metrics so important for holiday rentals?
- Most important metrics for holiday rentals.
- How does RevPAR work?
- What situations affect the performance of metrics in vacation rentals?
- Other metrics of interest.
April 2024
Knowing the key metrics is crucial for the smooth operation of your holiday rental. Terms like occupancy rate, RevPAR, or ADR should ring a bell. That’s why we’re here to explain what these terms mean, helping you understand the profitability of your business. Moreover, metrics are incredibly useful for guiding your strategies.
Understanding these metrics will contribute to making your holiday rentals more prosperous. Their results will also aid you in decision-making and even spotting trends. They are also a crucial tool for achieving your goals, uncovering your weaknesses, and becoming more competitive in a high-demand market.
Why are metrics so important in the holiday rental business?
How much do I earn from renting out my holiday home? Every host wants to make a profit from this practice, and metrics are a fundamental pillar for that. They serve as indicators of efficiency and provide important insights into the projection of your property. Getting guests is essential, but using metrics is just as important. Employing metrics allows you to have a clear view of the performance of your holiday rental, as well as potentially bolstering its strengths. If you want to discover the true potential of your holiday rental, you must use them: metrics are indispensable.
They are also essential for maximising the potential of your property, as well as for achieving your objectives. Renting out a holiday flat on a holiday rental portal is not enough to attract many guests. You need to assess profitability, check if your rates are appropriate, and monitor where your business is heading.
The most important metrics for holiday rentals:
- The ADR (Average Daily Rate) is the average price your guests pay for a night in your rental property. It’s an average of all your rates for the same room.
- The guest satisfaction score is the guest satisfaction rating. A necessary metric to understand your customers’ satisfaction with your property.
- The response rate is the tenants’ response rate. This percentage reflects the number of people who have completed the action of renting the property compared to those interested, and in this context, the number of times and the speed at which the host has responded to their questions.
- The occupancy rate refers to the percentage of time the property was occupied. It examines the occupancy period over a specified time, whether two months or a year.
- The GSS is a global solutions system whose mission is to provide information on the holiday rental sector worldwide. So it’s ideal for understanding guest trends.
- The average length of stay is also interesting for obtaining an average of how long your guests stay in your holiday rental. It’s the time they spend in your property.
- The RevPAR (Revenue Per Available Room) is the income obtained per availability. Thanks to this term, you can know the benefits generated by bookings in your holiday rental property.
How does RevPAR work?
This metric is widely used to check the profitability of a holiday property. This is done through occupancy rate and availability. If you want to find out how your holiday rental is doing, whether it’s successful or not, this tool is the most suitable. And the higher the figure, the better, as it means you have a high occupancy rate.
But is it possible to calculate RevPAR? Of course! And in a very easy and quick way. You just have to multiply your holiday rental properties by the nights occupied. For example, if you have two holiday rental properties that have been occupied for 60 nights. In this case, multiplying one figure by the other gives you 120 as the result. And this would be the total number of nights.
Then, you would have to divide the total earned in a month by the previous result. In this case, if, for example, we divide 3000 euros of monthly profit by 120, it would result in an average of 25 euros per night during that month. However, RevPAR doesn’t consider earnings, but occupancy. And why is it so important?:
- Measures profitability
- Optimises rates
- Aids decision-making
- Analyses trends
- Evaluates your rental’s efficiency
What situations affect the performance of metrics in holiday rentals?
To begin with, guest reviews can make us lose clientele. So, it’s essential to work on the guest experience, as one bad review might not harm us, but several might.
It goes without saying that the listings on the holiday rental website must be accurate. Misleading photos or information should not be shown to guests. This will only result in bad reviews. It’s also important to respond quickly to customer inquiries; the sooner, the better.
The more you work on this, the better results you will achieve in the metrics; after all, they reflect your actions. Likewise, customer service is essential for everything to go smoothly. Therefore, Holidu recommends offering a quality holiday rental, pampering guests, and respecting the information provided. But if you don’t implement metrics, you will never realize the mistakes you are making.
Other metrics of interest
Although we’ve focused on the most common metrics, there are others that will be of great interest to you. Such as the booking pace, which will help you identify patterns, as it analyzes the bookings made in a specific period. The conversion rate studies the number of people interested and the number of guests who ultimately book the holiday rental.
On the other hand, you have the occupancy forecast to assess the projected occupancy of the property for a specific period. By predicting future occupancy in specific periods, it will be very useful for you to anticipate events. Likewise, length of stay is another point in your favor, essential to know how many nights on average guests stay in your holiday rental.
If you’ve just started with holiday rentals, we recommend using metrics from day one. Additionally, they will serve to see how you evolve and help you prepare strategies. And if you’ve been in holiday rentals for years, we also recommend them, as they will help you attract more customers.