Back to blog
IoT Solutions Deliver Bottom Line Impacts & Meet KPIs in Hospitality

IoT Solutions Deliver Bottom Line Impacts & Meet KPIs in Hospitality

For hoteliers, operational efficiencies impact major KPIs, including average daily rate (ADR), gross operating profit per available room (GOPPAR), and guest satisfaction. Discover how IoT is enabling the industry to meet these key measures of success for higher profit margin potential.

The hospitality industry is highly competitive, with hotels constantly striving to improve operations and provide a superior guest experience for repeat business. Currently, the average profit margin for hotels in the US is around 18%. Additionally, 65% of revenue comes from rooms, 25% from F&B operations, and 10% from other outlets. This means that hoteliers rely on key performance indicators (KPIs) such as occupancy rates, average daily rate (ADR), revenue per available room (RevPAR), and guest satisfaction scores to measure success. And with every KPI a factor to these profit margins, hoteliers are turning to  the Internet of Things (IoT) solutions more frequently to drive meaningful impact.

Utility Reduction for GOPPAR Impacts

One KPI that IoT solutions can significantly impact is GOPPAR, which is calculated by dividing the gross operating profit of a hotel by the total number of available rooms. IoT solutions for energy management, for example, provide a tremendous opportunity for hoteliers to cut into the average $2,196 spent per room per year on energy costs. Other potential solutions that can drive utility cost savings include leak detection – from monitoring leaky toilets to building risers – and gas and water metering. With IoT, facilities teams can leverage smart sensors to monitor and optimize consumption while mitigating risks, leading to significant savings and a reduced carbon footprint. It also hits ESG goals for many hoteliers.  Some hotels have also implemented IoT-sensors to detect air filtration issues or underperforming HVAC systems for proactive and predictive maintenance, which can reduce energy use. All of this translates to improved GOPPAR, which provides visibility into hotel performance, a reduction in costs and enhanced guest experiences, leading to higher guest satisfaction and repeat business.

Green Initiatives for Increased ADR  

Another important KPI for hotels is ADR, which represents the average price a hotel charges per room. ADR is forecast to rise 4.5% YoY to $155.81. IoT solutions can help hotels increase ADR by providing guests personalized experiences that justify higher prices. And the good news – travelers are willing to pay more for it – with 43% of today’s travelers saying they would do so for hotels who have an ESG initiative or practice sustainability at their hotel. This validation emphasizes the value of deploying an IoT-backed solution, such as a smart restroom solution, to reduce the amount of paper products being used at a hotel while optimizing cleaning teams’ schedules. Additionally, water conserving smart toilets and faucets ensures you’re only using the exact amount of water needed. Doing so reduces operating costs, hits on a guest preference that ranks high on their priority list, and differentiates a hotelier from competitors to command higher prices.

Guest Satisfaction for Repeat Business

Finally, guest satisfaction scores are a vital KPI, directly impacting a hotel's reputation and future business. IoT solutions can help hotels improve and enhance a guest’s overall stay. For example, hotels can automate custodial practices within the hotel’s property, saving time, money, and labor by employing smart, connected restrooms. It promotes cleanliness, hygiene, and operational efficiencies while reducing manual efforts and optimizing resource planning. Rather than using a time-based cleaning schedule, staff receives real-time alerts when sensors identify the need for cleaning, restocking supplies, or performing repairs – creating better experiences and reducing frustration for employees and hotel guests.

Turnkey IoT Solutions for Improved KPIs

As the competition in the hospitality industry continues to intensify, it's clear hotels that invest in IoT are better positioned to meet the demands of today's tech-savvy guests and succeed in a highly crowded market. MachineQ, a Comcast Company, delivers quick-to-market, affordable IoT solutions for improved KPIs. Contact us today and learn how to get started.  

Enjoyed this read?

Stay up to date with the latest IoT insights sent straight to your inbox!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.