U$.$S$.$ Hotel Industry

Performance

Learning Outcomes:

Working on the case study will assist students in developing the following student learning

outcomes.

$1.$ Name key hotel performance metrics;

$2.$ Define average daily rate $($ADR$),$ occupancy $($OCC$),$ and revenue per available room $($RevPAR$)$;

$3.$ Discuss positive and negative sides of using each of the metrics for hotel performance

evaluation;

$4.$ Interpret data and appraise evidence;

$5.$ Dis$0$nguish, compare, or contrast diverse points of view and$/$or alterna$0$ve conclusions;

$6.$ Ar$0$culate personal insights about complex issues or problems.

Background Information:

The hotel industry serves the accommoda$0$on needs of tourists, those visitors who are staying

at a des$0$na$0$on overnight, but no more than one year $($World Tourism Organization, n$.$d$.,$ para.

$1).$ Hotels come in different forms. They may be branded, which means affiliated with a

par$0$cular chain $($e$.$g$.,$ Marriot, Hilton, Accor$),$ or independent. Hotels differ in service level that

they provide and may be grouped into such categories as economy, midscale, upscale, and

luxury. Based on location, hotels may be classified as urban, suburban, airport, or interstate

properties.

The hotel industry was comprised of $55,900$ hotels in $2018($Oxford Economics, $2019).$ These

hotels directly $($hotel operations$)$ and indirectly $($supply$-$chain employment$)$ supported $8\mathrm{.}3$

million jobs, which is the equivalent of $1-$in$-25$ jobs in the U$.$S$.$ Taken all together, hotels

contributed close to $$660$ billion to the U$.$S$.$ gross domestic product $($GDP$),$ and supported $$185$

billion of local, state, and federal taxes. Given the impact of the hotel industry on the local and

national economies, it is important to learn how to evaluate hotel performance. Therefore, the

focus for this case study will be on hotel performance metrics. Such metrics may be applied to

each individual hotel, a group of hotels, hotels in a given state, country, or worldwide.

Hotel Performance Metrics:

The hotel industry uses a variety of metrics to assess hotel performance and the economic

impact of hotel industry. The key performance metrics include average daily rate $($ADR$),$

occupancy $($OCC$),$ and revenue per available room $($RevPAR$).$ Each of these metrics describes an

important aspect of hotel operations. And, taken all together, they assist hotel managers in

evaluating the performance of their properties from different angles. Let$$s explore what these

metrics can teach us about the performance of the U$.$S$.$ hotel industry.

ADR may be defined as $$the average selling price of guest rooms during a specific $0$me perio