The Debate Regarding Profitability: Hotel Unit and Hotel Brand Revenue and Profit Relationships

The research note explores a debate in the hotel industry regarding the relationship between hotel RevPAR and profitability, a debate around which there is a great degree of “noise.” Using a sample of 1,954 actual hotels for which both top line and bottom line indicators were available for the same year, it is concluded through this statistical analyses that while hotels with higher revenue, and particularly higher room revenue, have a higher NOI in dollars, they do not necessarily have a more profitable business model in terms of NOI percentage. Also, brand level analyses is presented.