Nowadays, “Key Performance Indicator” is a frequently used term not only in business but also other types of establishment and organisation. However, this concept is not fully understood by a number of readers.
In the Strategic Report and Directors’ report of the Companies Act 2006, United Kingdom legislators define “Key Performance Indicators” (hereinafter referred as KPIs) as “factors by reference to which the development, performance or position of the business of the company can be measured effectively” (p.3). According to Chartered Global Management Accountant, “a Key Performance Indicator (KPI) is a measure used to reflect organisational success or progress in relation to a specified goal” (KPIs – financial and non-financial, 2013). Also,
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However, in order to decide which performance is crucial to an establishment/organisation, the organisation should consider various factors such as: industry’s specifics and products/services’ characteristics; the organisation’s overall mission, vision & strategy; short-term & long-term goals; the organisation’s value drivers and the core activities and competencies to make a useful KPI. In this paper, our primary focus is KPIs used to directly measure a cruise company revenue performance and for direct revenue management purposes. Therefore, several indications such as sustainability KPIs or foreign currency exchange rates will not be covered though they have a significant influence on the performance of international and nature-relied businesses such as cruise …show more content…
The purpose of using statistical and GAAP financial KPIs is to set up an overall understanding of the organisation’s performance while using non-GAAP financial KPIs that will give a more in-depth sight into the business. For instance, Net Yield is commonly used in the cruise industry to measure a cruise corporate revenue performance and for revenue management purposes. Carnival Corporation & PLC – the current biggest cruise corporation in the world – argue that Net Revenue Yield and Net Cruise Costs Excluding Fuel per APCD enable the corporation to separate the impact of predictable capacity or APCD changes from price and other changes that affect the business. In addition, Indicators in U.S. GAAP Consolidated Financial Statements are insufficient to provide an adequate amount of useful information to investors and expand insight to measure revenue and cost performance. The use of specific significant non-GAAP measures, such as Net Yield, Net Cruise Costs and Net Cruise Costs Excluding Fuel allows enterprises to perform capacity and rate analysis to separate the impact of known capacity changes from other less predictable changes which affect a business. However, without the overall information provided by