Understanding the top seven KPIs in the vacation rental industry is the key to maximizing your company’s performance. Paying attention to their trends and the relationship between them will help you create an effective revenue management strategy. View what each KPI means and an example of applying them below!
Occupancy | Average Daily Rate | RevPAR | Unit Revenue | Supply | Average Booking Window | Average Length of Stay |
OCCUPANCY
Paid Occupancy Rate
Tells you the percentage of occupied rooms.
Calculation: Paid Occupancy Rate = Guest Nights /Total Nights
Example: Paid Occupancy Rate 60% = 60 / 100
Vacancy Rate 40% = 40 / 100
Adjusted Occupancy Rate
Adjusts the occupancy rate to account for owner reservations and other hold nights.
Calculation: Guest Nights / Total Nights Available to Book
Example: 75% = 60 / 80
Why Does Occupancy Matter?
- It lets you know how full your destination will be on a certain date
- It helps you understand how your destination’s popularity is changing over time
Occupancy Chart Insights:
AVERAGE DAILY RATE
Average Daily Rate (ADR)
ADR measures the average Unit Revenue paid by guests for guest nights in a given time.
Calculation: Total Unit Revenue (Nightly)/ Total Number of Guest Nights
Example: Average Daily Rate $112 = $6,720 / 60 Guest Nights
Why Does ADR matter?
- It tells you how much people are paying for rentals
- It helps you understand how your destination’s popularity is changing over time
- It tells you the affluence of the visitors you can expect (i.e. luxury or budget)
ADR Chart Insights:
REVPAR
Revenue Per Available Rental (RevPAR)
Referred to as Revenue Per Available “Room” with hotels, RevPAR is a critical KPI for measuring revenue performance. RevPAR considers both the average rate at which you booked the property (ADR) and the number of nights it was booked (Occupancy). This provides a better indicator of overall performance when compared to looking at the ADR or the Occupancy alone.
Calculation: = Occupancy x ADR
(or) = Total Unit Revenue / Total Nights in a Given Period
Example: RevPAR $67.20 = 60% x $112
Why does RevPAR matter?
- It allows you to determine whether rates and occupancy are balanced
- It shows you how revenue per rental changes over time
- It helps you determine whether your average property is making money
RevPar Chart Insights:
UNIT REVENUE
The total amount of revenue that all rental units are bringing in.
Why does vacation rental revenue matter?
- Taxes
- Economic impact on the community
Unit Revenue Chart Insights:
SUPPLY
The number of active rental properties in your market at a given time.
Why does supply matter?
- For code, permitting, and tax enforcement
- Better determine neighborhood impacts
Supply Chart Insights:
- most of the rental units are small (1-3 bedrooms)
-most are single-family homes
- clearly where the concentration of rental units is
AVERAGE BOOKING WINDOW
The number of days between guests making reservations and checking in.
Why does the booking window matter?
- Helps you know when to advertise to potential guests
- Provides crucial insight into occupancy pacing
Average Booking Chart Insights:
AVERAGE LENGTH OF STAY
The average number of days guests spend in a rental.
Why does the stay length matter?
- see how long people are staying in your destination
- see how that varies by season
Average Length of Stay Chart Insights:
IMPORTANT CONSIDERATIONS
Seasonal Variation
Nightly rates, occupancy, revenue, booking windows, stay lengths, and more vary from season to season.
Example: 2021 average booking window by week. Summer trips are booked much further in advance than spring and fall stays. Booking windows are longer for holiday stays.
Seasonal Variation Chart Insights:
Geographic Variation
Nightly rates, occupancy, revenue, booking windows, stay lengths, and more vary from destination to destination.
Example: 2021 Occupancy by month. Austin and Dallas are less seasonal and don’t have large drops during the off-season. South Padre Island is popular during the winter. Galveston has a strong spring and summer but very low fall and winter.
Geographic Variation Chart Insights:
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