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For decades, we have measured hotel and resort performance using a familiar set of metrics: occupancy, ADR, RevPAR, GOP, labor percentage, guest satisfaction scores and market share.
And we should.
Those metrics matter. They always will.
But I think we make a mistake when we allow them to end the conversation.
A property can have a good P&L and still be getting weaker underneath the surface. An operator can hit budget, grow RevPAR and improve flow-through while simultaneously making decisions that hurt the long-term value of the property.
That is the part I think our industry needs to spend more time thinking about.
The question should not only be:
What did the property produce this year?
It should also be:
What is the operator leaving behind?
A Good P&L Can Hide a Lot
Traditional KPIs are mostly backward-looking. They tell us what happened.
What was occupancy?
What was ADR?
How did RevPAR perform?
Did we beat budget?
Did GOP improve?
Those are important questions, but they do not necessarily tell us whether the business itself is healthier.
A strong operator should also be asking what had to happen beneath the surface to produce those results.
For example:
- Great GOP + deferred maintenance = borrowed profit.
- Great labor productivity + burned-out managers = unsustainable performance.
- Great occupancy + growing OTA dependence = expensive demand.
- Great current revenue + declining repeat business = a future revenue problem.
- Great condo hotel RevPAR + declining rental inventory = a shrinking business.
None of these make the traditional metric wrong.
They simply make it incomplete.
Sometimes the financial statements can look very good while the operator is spending down the things that created those financial results in the first place.
Are We Building the Business or Extracting From It?
There is a difference between operating a property well and extracting the maximum short-term performance from it.
You can cut labor.
You can delay maintenance.
You can defer a renovation another year.
You can reduce service levels.
You can lean harder into third-party distribution to replace lost direct demand.
You can push an expense into next year’s budget.
Every one of those decisions may improve today’s P&L.
The problem is that today’s P&L does not necessarily show you what those decisions cost tomorrow.
That is why I believe operators should be judged not only on the cash flow they generate, but on whether the engines producing that cash flow are stronger or weaker when the year is over.
Did we strengthen the asset?
Did we strengthen the guest relationship?
Did we strengthen our distribution channels?
Did we strengthen the team?
For condo hotels and vacation rentals, did we strengthen the relationship with the people who actually supply our inventory?
Those questions are harder to put into a monthly ownership report.
They may also be more important.
A Property Can Make Its Numbers While Losing Its Guests
Consider something as simple as guest experience.
An operator can reduce staffing and improve labor percentage.
For a period of time, the result may look terrific.
But perhaps phones take longer to get answered.
Rooms are not ready as quickly.
Maintenance requests take longer.
Managers spend more time covering line-level positions.
Guest recovery becomes less effective.
Review scores begin to slide.
Return visitation declines.
Direct bookings soften.
Now marketing has to work harder to replace guests the property used to retain naturally.
At that point, OTAs and paid marketing can become the billboard keeping occupancy intact.
Revenue may continue to look healthy for quite some time.
The hidden problem is that the property is now paying more to acquire a guest it previously could have retained.
You can hide a deteriorating guest relationship for a surprisingly long time by buying more demand.
Eventually, however, that deterioration reaches the bottom line.
The real question is whether your operator recognized it before then.
Maintenance Is Another Easy Place to Borrow From the Future
The same principle applies to the physical asset.
A property can delay carpet replacement, push furniture another year, patch equipment instead of replacing it, reduce preventive maintenance, leave positions open or postpone capital projects.
In the short term, expenses improve.
Sometimes dramatically.
The operator looks disciplined.
But a few years later, someone inherits the consequences.
Rooms begin going out of order.
Guest complaints increase.
Competitive positioning declines.
Rate becomes harder to hold.
Renovation needs become larger and more expensive.
Some operators do not necessarily create margin. They move expenses into someone else’s tenure.
That may make for a good annual P&L.
It does not necessarily make for good stewardship.
Condo Hotels Add Another Layer Entirely
This issue becomes even more important in a condo hotel or vacation rental environment because the operator is not simply managing a hotel.
The operator is also managing an inventory partnership.
In a traditional hotel, ownership generally controls the rooms.
In a condo hotel, every participating homeowner is making an ongoing decision to keep their unit in the rental program.
That distinction is enormous.
A condo hotel could maintain excellent RevPAR while steadily losing units from the rental program.
If a program goes from 300 participating units to 250, RevPAR may look exactly the same.
The business is not the same.
The pie got smaller.
Every unit that leaves the program represents lost future revenue and, in many cases, a direct hit to profitability.
So what good is maximizing RevPAR on every unit if you keep having fewer units on which to earn it?
That is why homeowner relationships cannot simply be categorized as a customer-service issue.
They are an economic issue.
The homeowner should not be viewed as a commodity or simply as inventory.
They are a business partner.
Take care of your partner’s economics and there is a much better chance they will take care of yours.
Ignore their economics long enough, lose their confidence, or make them believe their interests are always secondary to the operator’s, and eventually they will look for another option.
And once that inventory leaves, getting it back can be extremely difficult.
Big Dashboards Can Miss Small Warning Signs
This is also where I believe ownership groups should think carefully about the operator they choose.
Large operators bring obvious advantages.
Scale.
Purchasing power.
Systems.
Technology.
Reporting.
Revenue management resources.
Brand relationships.
All of those things matter.
But scale also requires standardization.
And standardized reporting naturally gravitates toward metrics that can be compared easily across dozens or hundreds of hotels.
Occupancy.
ADR.
RevPAR.
GOP.
Labor.
Guest satisfaction.
Those dashboards are useful.
The danger comes when the dashboard becomes the entire conversation.
The easiest things to measure across a large portfolio are not always the most important things happening inside an individual property.
A disciplined smaller operator may have an advantage when they are close enough to the business to understand the context behind the numbers.
They may see that RevPAR is strong but direct bookings are slipping.
They may recognize that GOP improved because maintenance was deferred.
They may understand that labor looks great because managers are filling open positions themselves.
They may see condo hotel RevPAR holding steady while valuable owners quietly leave the rental program.
The numbers are not wrong.
They just do not tell the whole story.
Proximity can create context.
And context matters.
What Are Owners Actually Hiring an Operator to Do?
I also think ownership groups have some responsibility here.
Operators tend to focus on what owners inspect.
If every ownership meeting begins and ends with RevPAR, budget variance, labor and GOP, eventually the organization will learn exactly how to optimize those measurements.
That does not make the operator unethical.
It makes the incentives predictable.
But I would argue an ownership group should expect more than reporting.
They should expect judgment.
The real value of an operator should be the ability to walk into an ownership meeting with a green P&L and still say:
“We are having a good year financially, but I do not think this property is as healthy as these numbers suggest.”
Then explain why.
Maybe direct demand is deteriorating.
Maybe the guest database is weakening.
Maybe too much maintenance is being deferred.
Maybe turnover is masking a leadership problem.
Maybe the management team has no bench strength.
Maybe the condo rental program is losing inventory.
Maybe owners are becoming dissatisfied even though current financial performance remains strong.
Those are the conversations I would want my operator having with me.
The Second Question Matters
Maybe the industry does not need another collection of new acronyms and KPIs.
Maybe we simply need to become better at asking the second question.
RevPAR is up. What happened to acquisition cost and direct booking share?
GOP is up. What happened to the condition of the asset?
Labor percentage is down. What happened to service, turnover and manager workload?
Guest scores are stable. What is happening to repeat visitation?
Condo hotel RevPAR is up. What happened to participating inventory?
Rental revenue is growing. What happened to homeowner economics and retention?
We beat budget. Did we actually improve the business?
That second question is where a lot of the real operating story lives.
What Are Your Operators Leaving Behind?
I am not suggesting that owners stop measuring ADR, occupancy, RevPAR, GOP or any of the other traditional hotel metrics.
Quite the opposite.
If an operator cannot deliver on those fundamentals, everything else becomes secondary.
But a good P&L should start the conversation, not end it.
The better question is what sits underneath those results.
Is the physical asset stronger?
Is the guest relationship stronger?
Is the direct booking channel stronger?
Is the leadership team stronger?
For condo hotels and vacation rental programs, is the homeowner relationship stronger and is the rental inventory growing or shrinking?
At the end of three or five years, what did the operator actually build?
You can hide a lot behind a good P&L.
You can hide deferred maintenance, burned-out leaders, weakening guest loyalty, expensive distribution and, in a condo hotel, a shrinking inventory base.
But you cannot hide those things forever.
Eventually, the bill comes due.
Because sooner or later, everything happening beneath the P&L finds its way into it.
The operators worth hiring are the ones who understand that their job is not simply to deliver this year’s results. It is to make sure the business is stronger, more valuable and better positioned to deliver next year’s results too.
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