What’s the problem with a RevPAR-only hotel performance focus
Imagine you’re trying to bake a world-class cake. You’ve picked out the best ingredients, tossed them in a bowl, and … you’re done, right?
Of course not.
The ingredients going into the batter tell you very little about how your cake will turn out. The way ingredients mix, along with the baking temperature, and which tastes and textures are left after you bake all contribute to the final product.
The same problem is at the heart of RevPAR-only strategies. RevPAR may touch on the basic ingredients for a profitable hotel operation, but it doesn’t even start to account for expenses, operational efficiency or how much money is left over at the end of the day.
That means relying on RevPAR alone can cause major problems for hotel decision makers. Luckily, there’s a much more reliable recipe for hotel profit. In this article, we examine the critical flaws of RevPAR-only hotel strategies and dip into better metrics for measuring financial performance.