In a world where year-over-year metrics are no longer relevant, how should our industry measure success?
As the hospitality industry sector continues to progress on its slow path to recovery from the Covid-19 pandemic, traditional metrics that once guided strategic planning and progress measurement are, at least temporarily, rendered rather useless. For the vast majority of the industry sector, performance in both 2020 and 2021 fiscal years have been an anomaly, with only recent months likely showing a glimmer of return to a 2019-or-prior performance. What metrics are industry leaders using in the interim to measure success, or recovery? How should we define success when it may still look very different from the definition we once held?
While some industry leaders take a more zoomed-in approach, looking at day-by-day or week-by-week performance, others admit they still use pre-pandemic metrics, and the results are often skewed or “depressing”. Below are some tips for assessing performance in today’s post-pandemic world.
Zoom In into Industry Sector
How is performance compared to last week, or last month? If occupancy was 10% last month, has it grown to 12% this month? Though this may seem myopic, celebrating small wins can be key. For example, a company experiencing a reduction in new sales may choose to celebrate an offsetting reduction in implementation expenses, which can be costly, particularly for SaaS companies utilizing third party implementation partners.
Build from Foundational Metrics
Key performance indicators are just that for a reason – they were chosen as important and illuminating for the progress of the business, and in many cases, they should not be abandoned in times of hardship. Evaluate the standard utilization of these dashboards and determine how feasible it is to continue to use them given the actual performance of your properties or businesses. If they are largely still relevant, continue. If they are completely off-base, re-assess.
In some scenarios, business leaders evolved their performance tracking to leverage EBITDAC, a version of the traditional Earnings Before Interest, Taxes, Depreciation and Amortization that specifically incorporates adjustments from pandemic-related losses, such as severance pay, overtime pay or office space lease termination. A “back to basics” approach to classic metrics can inspire creativity while still staying true to the tenets of economics.
Take it Case by Case
Urban properties or agencies that specialize in sporting events, meeting hosting, leisure travel or other recovering industries are likely still outperforming business travel-focused properties by a significant amount, though the success of Q3 and Q4 of 2021 has led to some narrowing of what was previously a performance gap. It is entirely acceptable to measure different types of businesses by different rubrics during this time. One opinion piece has even suggested bringing back the Club Sandwich Index from some years ago to measure the impacts of pandemic staffing levels, supply chain snags and inflation.
Focus on People
While performance metrics drive critical business decisions in hospitality industry sector, organizations cannot function without employees. While many tech companies were able to pivot with relative ease to remote work, employees still required new or additional support – in the form of virtual collaboration tools, guidance on updated company policies related to remote work or stress management and flexibility to juggle the various demands of family life in quarantine.
One study found that a major indicator of employee workforce health and happiness was the training and support offered to a company’s managers and supervisors. If metrics to track ongoing employee wellness and satisfaction were not included in pre-pandemic dashboards, they should be considered for inclusion moving forward.
What Was Your Takeaway?
What will the future hold? Next year promises to bring even more recovery, as hotels and travel agencies are reporting booms in hospitality industry sector in the latter half of 2021. While classic metrics may not be able to help in making future predictions, one thing is certain: flexibility and adaptability are critical. Re-assessing and redefining KPIs as needed will help ensure businesses are positioned for whatever comes next.