General managers are increasingly preferring to judge their hotel’s performance on RGI (Revenue Generated Index), the relative share of the market for room revenue the hotel enjoys compared to its competition, rather than the more traditional benchmark of RevPAR (Revenue Per Available Room).
Just one of the findings revealed in the recent Hotelier Middle East GM Survey 2013, 34.5% of GM participants declared that they prefer to have their hotel’s performance assessed by RGI, compared to the 31% of hoteliers who rely on RevPAR.
Commenting on this year’s survey results, Kempinski Hotel & Residences Palm Jumeirah general manager Alessandro Redaelli said: “A few years ago RevPAR was the new key performance indicator for the industry because it allowed us to combine occupancy and ADR to create a more impartial performance indicator. Using RGI seems to bring this a step further to the next level, with hotels able to compare themselves against a determined group of hotels with common characteristics.”
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“It makes more sense to compare a hotel performance against a set of other same level hotels in the same location or in other major cities in the country or region, which RGI allows,” he added.
One explanation for this new trend outlined by the region’s general managers is the ability of RGI to take in to account the increasing level of competition in the Middle East hospitality market, with hotel performance benchmarked against the relative performance of a selected range of local competition.
Explaining his own preference to RGI, Radisson Blu Hotel, Dubai Media City general manager Francois Galoisy said: “In a dynamic environment like the Middle East and especially Dubai, forecasting growth is a real challenge. For example, if you reached budget RevPar of 10% year on year growth, but in the same period your competition increased by 12%, your hotel growth is slower that the rest. Your RGI index decreases and indicates that you have missed opportunity on occupancy market share or on rates.”
Looking to the future, Galoisy also identified other, non-accounts based, methods for establishing hotels performance, with guest satisfaction surveys, social media scores and staff retention all singled out as possible metrics ahead of Dubai Expo 2020.
“Expo 2020 is to trigger an unprecedented number of new hotels in the city, with the big challenge facing new hotels being the ability to recruit skilled people, while a challenge for existing hotels will be to try and retain talented team members. For a while, a talent war will weaken the present high service level of the city, while at Radisson Blu Hotel, DMC, we are busy preparing action plans to develop and retain our own talent, with our ability to continue to delight guests throughout any staff shortage periods ahead being a demonstration of our performance,” said Galoisy.
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