Determinants and COVID-19 effects on RevPAR

The case of Europe

Abstract

As Europe prepares itself for a new downturn, this paper proposes to examine the determinants of hotel Revenue per Available Room (RevPAR) through literature review, and contribute to improving hotels’ performance by understanding the weight of the occupancy rate and the Average Daily Rate (ADR) on RevPAR, after the pandemic. A quantitative methodology was used, collecting data from STR Share Center and Our World in Data, such as ADR, occupancy rate, RevPAR, and COVID-19 confirmed cases. Results show the overwhelming effect of COVID-19 on hotel performance, conducing to ADR, occupancy rate, and RevPAR decline, and highlighting a co-movement of these indicators during COVID-19. After the lifting of major COVID-19 restrictions, RevPAR had a greater influence from ADR in some European countries, but the occupancy rate should not be disregarded. The findings, however, suggest the absence of the revenge travel phenomenon. The relationship between the number of COVID-19 cases and the decrease in RevPAR is not statistically significant, implying the existence of other factors that probably also had impact. The different measures adopted by governments to contain the virus, and each country´s dependency on tourism, led to different impacts on hotel performance. This study helps hoteliers to know how to measure performance and the RevPAR drivers that can improve it, taking into account the situations that differ by country, as well as variables that are not controllable.