The Relationship between Product Quality and Revenue Per Available Room at Holiday Inn

Three years of quality and operational performance data from 1,135 franchised Holiday Inn hotels were analyzed to determine the relationship between product quality and operational performance. Hotels with at least one quality defect in the exterior, the guest room, and the guest bath had a revenue per available room per day (RevPAR) of approximately $2.80 less than hotels that did not have defects in each of the areas. This implies that to be successful, a hotel must concentrate on maintaining high quality standards in areas that have the greatest impact on financial return.