Hotel Defects Negatively Affect RevPAR

Aloha Kakou:

I know you're tired of hearing me carp on upgrades, but I've found a study that reinforces the notion that the fewer defects found in a lodging property, the higher the revenue. Note that this study takes into account the entire property and not individual units. Also note that, while the study does have some age, I would expect that today's more demanding guest would make for an even greater RevPAR loss.

Here are some of the salient parts of the article:

Financial performance is affected by higher quality in two ways: (1) firms can charge a premium price and (2) firms can increase market share. Although quality does not always have a direct impact on return on investment (ROI), the increase on market share may indirectly influence ROI.

Having even a single defect seemed to cost the hotels money. For example, in February 1990, hotels with at least one defect in the exterior had a RevPAR of $3.12 less than hotels with no defects in the exterior. Hotels with at least one defect in the guest room had a RevPAR of $2.01 less than hotels with no defects in the guest room. Hotels with at least one defect in the guest bath had a RevPAR of $1.32 less than hotels with no defects in the guest bath.

The RevPAR for the deficient hotels was consistently lower than that of the not-deficient hotels for all six test periods.

http://www.entrepreneur.com/tradejournals/article/79382266.html