Maximizing your profit from STR data means understanding all the jargon, acronyms and specialist terms that come with the territory – and we’re here to break it all down for you.
There are seven very common KPIs to keep your eye on when it comes to the short term rental market, and seeing how they all affect each other can help transform your business.
We’ll take you through the A to Z of KPIs, so bookmark this page and refer back to it every time you come across a term you're unfamiliar with.
The seven KPIs are:
- Average Booking Window
- Average Daily Rate (ADR)
- Average Length of Stay
- Unit Revenue
Average Booking Window
This is the number of days between a guest booking a property and them checking in.
Understanding the timings means you know when to advertise properties to potential customers, and can inform your occupancy projections. If you know when you expect a property to book for certain seasons, you can adjust pricing accordingly.
Booking windows change depending on the time of the year, and smaller properties usually have shorter booking windows.
Average Daily Rate (ADR)
Simply put, the Average Daily Rate is a measure of how much you’ve sold your rooms for in a given time period.
Monitoring it will help you spot how your destination’s popularity is changing, and can give you some vital insight into how well-off your visitors are. A high ADR is generally a good thing, since it means you’ve earned more money from your property, but pushing it too high may mean that you start to see your occupancy rate drop.
Calculate ADR by dividing the total unit revenue by the total number of guest nights.
Average Length Of Stay
This metric measures the average number of days that customers spend in a property.
Use this KPI to check how long guests are staying in your destination, and see how this changes from season to season.
Monitoring average length of stay will help determine required staffing levels for the months ahead to let you maximize your short term rental investment. It will also help create customer profiles for marketing and sales promotions.
This is one of the most important metrics for managing your revenue with short term rental market analysis.
Knowing your occupancy rate is important because you need to know how full your properties will be on a particular date. This measure also lets you gauge how the location’s popularity is changing over time.
Paid Occupancy Rate
Paid Occupancy Rate lets you know how many rooms are occupied out of the total number of rooms in the property.
To calculate it, you divide the number of guest nights by the total nights.
Adjusted Occupancy Rate
This metric adjusts the Paid Occupancy Rate by removing rooms that aren’t available for guests to rent. This might be due to owner reservations or other hold nights.
If owners have booked 10% of the rooms and 5% are hold nights, the maximum occupancy will be 85%.
The calculation is the same, but you divide the number of guest nights by the total nights available to be booked.
Revenue Per Available Rental or Room (RevPAR)
If you’re only going to follow one metric, RevPAR is the one to watch. It’s the best measure of overall performance since it takes into account occupancy and the revenue earned.
Keeping an eye on RevPAR lets you work out whether rates and occupancy are balanced. It also lets you follow trends in revenue per rental, and see whether your average property is profitable.
You can calculate RevPAR by multiplying Adjusted Paid Occupancy and ADR. Alternatively, you can divide the total unit revenue by total nights in a given period.
Knowing about local supply is vital if you are going to make informed decisions about pricing and predicting occupancy.
Supply measures the number of active rental properties in your market at a specific time. A large increase in inventory may explain a boost to revenues or a decrease in occupancy.
This piece of short term rental data can let you see what type of properties are available in the area, where they are clustered, and the most popular size.
This measures the total revenue brought in by all your properties.
But remember it doesn’t include taxes or other revenues like fees for things like resort fees, bike rentals, ski rentals, and concierge charges.
Calculating unit revenue is simple. Just subtract taxes and other revenue from the total revenue.
These are some of the main KPIs you’ll use to monitor the short term rental market data, but for any other terms and our 40+ KPIs, visit our KPI glossary here.