Rooms revenue per available room, reported as RevPAR, is perhaps the most scrutinized performance indicator in the hotel business. Although the true aim of a hotel's operation is to maximize profit, the wide availability and frequent reporting of RevPAR may make revenue the hotel manager's most immediate target.
Per the name, the historical role of revenue managers has been to maximize revenue - specifically rooms revenue or RevPAR. RevPAR growth is achieved by increasing occupancy and/or average daily rates (ADR).
The present hotel cycle is defying conventional expectations of late-cycle Revenue Per Available Room (RevPAR) behavior. Over the previous two cycles, recovery began primarily with occupancy. As the cycles continued, average daily rate (ADR) began to rise.
Since 2014, U.S. lodging industry owners and operators have seen a steady decline in the pace of revenue growth. In 2014, rooms revenue per available room (RevPAR) increased by a healthy 8.2 percent according to STR.
Conventional hotel market predictions are based on time series analysis of key variables, and these kinds of predictions have well-understood properties when businesses operate as usual. Exogenous demand shocks—shocks originating beyond the scope of any particular hotel market—have the potential to create unpredictable disturbances, in part by creating emotional or psychological barriers to travel that we call stigma or fear of travel.