The Average Daily Rate (ADR) is one of the key metrics to measure the performance of a hotel. Because rooms are priced differently depending on their size, location, and amenities, the ADR (room revenue divided by the rooms sold) helps you understand how much rent is generated by each room on average. Your ADR will fluctuate over time due to holidays, special events, and day of the week (depending on whether you cater to tourist or corporate guests), and can be measured against historical performance or compared to competitors.
While room prices are based on many factors, monitoring and analyzing your ADR can help you identify trends so that you can make better decisions about when to add value by offering attractive package deals, when to increase room rates because of demand, and when to consider a rate increase because the price your guests are willing to pay has surged. The latter is every hotelier’s goal, and it can be as easy as 1-2-3:
- Strengthen Your Online Reputation
- Personalize the Guest Experience
- Hire the Right People
It may seem like these are three separate solutions, but they depend on each other. One of the best ways to increase your ADR is to strengthen your online reputation, one of the best ways to strengthen your online reputation is to personalize the guest experience, and one of the best ways to personalize the guest experience is to hire the right people.
The Personalized Experience
From baby boomers to millennials, modern travelers are seeking personal experiences and authentic connections. According to a 2016 Report from the Cornell University School of Hotel Administration, a significant factor in delivering personalized experiences and raising a guest’s overall satisfaction is to improvise. It does seem contrary to a hotel’s mandate to offer consistent, reliable, and efficient service. After all, you’ve taken the time to establish strong policies of service, and rightly so. But, as this report explains, while “guests do appreciate consistent services in hospitality operations, an increasing body of evidence suggests that guests concurrently crave a sense of authenticity, empathy, and spontaneity.” In other words, your service policies and practices would be augmented by improvisation. The report likens the customer service representative to that of a musician. Most musicians play every note as it’s written, but a jazz musician uses the written music merely as a starting point from which they can ad lib to create something original. Allowing employees the freedom to be the jazz musician of customer service enables them to conceive creative solutions to problems and to carry out spontaneous acts of care for your guests.
The Trained Employee
You can’t just sit your service staff down and tell them to “Be spontaneous!” Creativity doesn’t work that way. What you can do, however, is hire the right people. Your employees should be passionate about the hospitality industry. They should also possess the knowledge to initiate effective improvisation.
Like the professional jazz musician, the best customer service representatives are trained and experienced. It’s no surprise that, as the Cornell report states, “higher-tier hotels report higher levels of creativity in their interaction with guests.” This, they claim, is because high-end hotels have more services to offer, which makes sense; the larger the pool of services and amenities on offer, the easier it is to think of a fit for a guest’s request or need. However, high-end hotels are also more likely to hire professional customer service representatives (ones who have made hospitality their career), which means they have a depth of experience to draw from when searching for creative ways to care for guests. But, whether you are a 2-, 3-, 4-, or 5-star hotel, you can provide your staff with strong training and the opportunity to grow their knowledge and education of hotel hospitality. Improvisation starts with strong policies and training.
The Cornell report names three elements of improvisation: creativity, spontaneity, and bricolage (creation through whatever is at hand). By embracing the idea of bricolage, they explain, an employee can “rearrange available resources in crafting a solution to guests’ problems.” Arm your employees with knowledge and then give them the freedom to draw on and combine policies, practices, information, and their own history of experience in creative and spontaneous ways.
Technology is another tool that allows for spontaneity. Use your Property Management System (PMS) to store guest information, including special requests, prior accommodations and preferences, birthdays, anniversaries, number of children or grandchildren, names of pets, whatever personal details you think could build a pool of knowledge that could be drawn on to offer a more personalized experience during a guest’s stay or for future stays. Inter-hotel communication through your PMS also enables the members of your staff to access the knowledge they need to ensure a guest is well cared for.
Your ADR is a practical and important measure of the trends and performance of your hotel, but it relies on the overall satisfaction of your customers. A hotel that hires and trains the right staff is better equipped to offer creative (and effective) improvised service; a guest who leaves a hotel delighted with the level of personalized service is more likely to write a glowing online review; a culmination of these reviews will help strengthen your online (and offline) reputation; and when guest satisfaction levels are higher, you can consider raising room rates, thus increasing your ADR for the best possible reason: customers are willing to pay more for your level of service.