Tracking performance metrics helps tell the whole story of your financial performance, not just whether revenue and net income have increased or decreased over time. Perhaps rental revenue has grown, but gross profit grew at a slower pace because OTA and other fees grew, or maybe, revenue per property has decreased because your property portfolio grew faster than your rental revenues.
Key Performance Indicators for Vacation Rental Managers
Below are the 4 key performance indicators that every vacation rental property manager should start with:
- Gross Rental Revenues
- Net Rental Revenues
- Revenue per Available Room/Property
- Booking Pacing
Gross Rental Revenues
To calculate Gross Rental Revenue, simply sum up all fees charged to renters during a time period. This includes, but is not limited to, fees like taxes, housekeeping and cleaning, OTA fees, and credit card processing charges.
Gross Rental Revenues = Sum of Payments Received from Guests
Net Rental Revenues
To calculate Net Rental Revenues, subtract all relevant business expenses from the Gross Rental Revenues you received during the same period (see above).
Net Rental Revenues = Gross Revenues – Expenses
Expenses can include items like direct wages, sales commissions, vendor payments, OTA fees, taxes, and any other costs of doing business.
Revenue per Available Room/Property
RevPAR is a metric used by the hospitality industry that reflects your ability to rent available listings at an average rate. To calculate revenue per available room and/or property, divide gross rental revenue by the total number of available rooms or properties in the period being measured.
RevPAR = Gross Rental Revenues / Total # Rental Units
As available rooms and properties for rent fluctuate for property managers, this metric is key to telling the whole story of financial performance, especially for managers who want to identify trends across subsegments within a larger portfolio.
Booking Pacing
To give this number some context, you will want to look at specific time periods. For example, as of January 1, 2022 what are the gross rental bookings for Q1 2022 compared to bookings for Q1 2021 as of January 1, 2021? Knowing your booking pace helps make vital decisions, such as where to focus marketing efforts, planning for hiring or seasonal layoffs, or which properties and destinations to highlight.
To calculate Booking Pacing, divide the sum of all bookings to-date by the sum of the prior year’s bookings through the same date.
Booking Pacing = Current Bookings To-Date / Previous Bookings To-Date
The end result is a multiplier that is less than, equal to, or greater than 1, and can be interpreted as follows:
- If Booking Pacing = <1, bookings are behind last year
- If Booking Pacing = 1, bookings are in-line with last year
- If Booking Pacing = >1, bookings are ahead of last year