HECON Chapter 6
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15 Terms
Supply in lodging sector
number of room days available
Demand in lodging sector
number of room days sold
Revenue in lodging sector
revenue from room sales including service charges
Occupancy
rooms days sold/room days available * 100
Room days sold
occupancy * room days available
Average Daily Rate
room revenue/room days sold
RevPAR
room revenue/room days available
What affects hotel costs/supply in short run
economic recession
Why does RevPAR decline in short run (reason 1)
demand decreases while supply does not change
Why does RevPAR decline in short run (reason 2)
both ADR and occupancy decreases
Why hotel expenses decrease
hotels shut down or hotel lower occupancy
Lodging supply in short run vs long run (hotel)
Hotel supply cannot respond to demand seasonality (adding more capacity has a lot of fixed costs)
Lodging supply in short run vs long run (Airbnb)
Airbnb supply responds to demand seasonality (lower fixed costs than hotel)
Demand Seasonality HOTEL Performance
Both hotel ADR and occupancy increase with demand
Hotel ADR and occupancy are positively correlated
Airbnb Performance
Airbnb ADR is stationary
Airbnb absolute room days sold increase with demand
Airbnb occupancy is stationary