Question

When you receive your STAR report your ADR index was 110 and your Occupancy index was 90.

What do you know?
a. The RevPAR index will be in the neighborhood of 115
b. The RevPAR index will be in the neighborhood of 100
c. The RevPAR index will be in the neighborhood of 105
d. The RevPAR index will be in the neighborhood of 85

Answer 1

The RevPAR index is calculated using both the ADR index and Occupancy index. In this case, with an ADR index of 110 and an Occupancy index of 90, the RevPAR index is approximately 99, which means the answer is in the neighborhood of 100.

Step-by-step explanation:

When you receive your STAR report and find that your ADR index is 110 and your Occupancy index is 90, this provides insight into your hotel's performance compared to your competitive set. The ADR index over 100 means you are charging more on average than your competitors, while the Occupancy index under 100 means your hotel is less occupied than your competitors. To estimate the Revenue Per Available Room (RevPAR) index, you need to consider both ADR and Occupancy, which are components of RevPAR. In this case, your RevPAR index can be calculated by multiplying the ADR Index (110) by the Occupancy Index (90) and then dividing by 100. So, the RevPAR index would be 99 (110 * 90 / 100 = 99). Therefore, the correct answer is that the RevPAR index will be in the neighborhood of 100, which corresponds to option b.