What is Corporate Performance Management in Hospitality?

Corporate Performance Management (CPM) refers to the processes and systems used by organizations to monitor, manage, and improve their business performance. CPM encompasses a wide range of activities, including planning, budgeting, forecasting, financial reporting, and analysis. It helps organizations align their resources and strategies with their goals, measure progress, and adjust tactics to optimize outcomes. 

Specific to hospitality, CPM integrates data-driven planning, monitoring, and reporting to optimize financial performance. The net result of a successful CPM program is improved profitability and a sustained competitive advantage in a crowded industry. 

Key Components of Hospitality CPM 

1. Planning & Budgeting: Creating financial and operational plans that align with the company’s objectives. 

1. Forecasting: Updating financial and operational plans based on real-time data to adapt to market conditions. 

1. Reporting & Analysis: Generating and delivering reports that provide insight into key performance metrics. 

1. Comparing Budgets & Actuals: Using tools like balanced scorecards to track and manage performance against strategic goals. 

1. Data Integration: Consolidating data from across the hotel tech stack to enable holistic visibility and decision-making. 

CPM in Hotel Operations 

In hotel operations, CPM is a powerful tool for ensuring efficient management and alignment with strategic objectives, especially in segments and chain scales where margins are often tight and customer experience is critical. 

Financial Performance Monitoring 

• Budgeting and Forecasting: Hotels can set financial goals for revenue, expenses, and profitability across various departments (rooms, food & beverage, spa, etc.). By continuously forecasting based on market trends, occupancy rates, and seasonality, they can adjust their spending, marketing, and pricing strategies. 

• Cost Control: CPM allows hotels to track cost structures, labor expenses, and amenity and services costs against benchmarks, prior year and budget. If costs are rising beyond anticipated levels, adjustments can be made, such as renegotiating vendor contracts or optimizing staffing levels. 

Operational Efficiency 

• KPIs and Metrics: Hotels can monitor advanced key performance indicators such as Net ADR, Total RevPAR, Guest Satisfaction Scores, and staff productivity. By benchmarking these KPIs against industry standards, management can identify areas where performance is lagging and make data-driven decisions to improve.  Organizations can evolve and expand on these KPIs over time, thereby enabling decision makers at all levels with data-driven decision-making capabilities. 

• Resource Allocation: CPM can help hotels optimize resource allocation by analyzing how different departments (F&B, front desk, housekeeping, spa...) are driving return on investment. This can lead to better staffing decisions during peak and off-peak seasons or even the introduction of automation where feasible. 

Guest Experience 

• Service Quality Tracking: Using CPM to monitor guest feedback and satisfaction scores can help hotels enhance service quality. Hotels can identify trends in guest preferences and complaints, enabling proactive adjustments to services and amenities. 

• Guest Retention: Hotel companies can track loyalty participation and guest return rates. If performance in these areas is declining, hotels can adjust their loyalty offerings or develop personalized marketing strategies to re-engage guests. 

Revenue Management 

• Dynamic Pricing: By integrating CPM with revenue management systems, hotels can analyze booking trends, competition pricing, and market conditions to adjust room rates dynamically. This ensures that hotels maximize revenue, especially during high-demand periods. 

• Profitability by Segment: CPM enables detailed profitability analysis by guest segment (corporate, leisure, group) or sales channel (direct, OTAs), helping hotels focus on the most lucrative areas. 

Data is the Key to CPM 

In hotel operations, CPM can streamline decision-making, improve financial performance, enhance the guest experience, and reduce costs. By integrating data from multiple sources across their properties and portfolios, hotel management can maintain a clear view of performance across departments, allowing them to adapt to market changes while aligning day-to-day operations with long-term strategic goals. 

A hospitality business can begin implementing a Corporate Performance Management program by defining the strategic objectives, investing in data collection and reporting tools, and developing standardized metrics and dashboards for tracking performance.  

Don’t have access to the data and reporting you need for a comprehensive CPM strategy? Ask Otelier how we can help.