Are the impacts of calendar shifts on RevPAR measurable or even predictable? U.S. hotel performance data from the past 19 years reveal trends.
HENDERSONVILLE, Tennessee—Calendar shifts can have a significant impact on U.S. performance results.
Since an average year has an odd number of days, the number of weekdays shifts when comparing the same month year over year: A month that starts on a Friday and has five Saturdays one year will in the following year start on a Saturday and have five Sundays, and so forth. So, in effect this hypothetical month dropped a Friday and added a Sunday.
Since room demand is not equal across weekdays, this shift can impact monthly key performance indicators materially. In general, Wednesday and Saturdays are high-demand days as business and leisure travelers are on the road. In contrast, Sundays and Mondays are historically lower-demand days when compared to other weekdays. So, the shift in the calendar has varying impact depending on which weekday is added or subtracted from the monthly demand and revenue-per-available-room calculation.
The question we get often is if the impact of the calendar shift is measureable, and then—more importantly—predictable going forward? Looking back at the last 19 years of data, we feel that we can estimate the calendar-shift impact with some precision and estimate the demand and RevPAR impact on monthly performance results.
The following table shows the average positive and negative rooms revenue and RevPAR impact of the trade of a weekday as the calendar shifted, here shown as a combination of “gain and lose”:
Here is the math we deployed to come up with the results: First we took 19 years of data and established the average monthly room revenue by day of week—for example, Mondays generate around $288 million. We then calculated the room-revenue change for the change in day, so if a Monday gets dropped for a Tuesday, the impact is around $31 million. We then calculated the percent change that this revenue change signifies for the whole month by dividing it by the average monthly rooms revenue. The result—here 0.3%—implies that for months when the calendar shows an additional Tuesday and drops a Monday compared to the same month in the prior year, the impact is positive. Revenues are 0.3% higher in the month that adds a Tuesday.
Recall that RevPAR change can also be expressed as revenue change minus supply change. In our calculations above, the revenue impact is actually the RevPAR impact since the supply growth is always zero. This is so because we are looking at 19 years’ worth of data and are looking at the percent change by weekday. In this calculation there is no change in supply from, say, a Wednesday to a Thursday. In other words, since the supply change is zero, the revenue change is also the RevPAR change.
Since the U.S. hotel industry is very seasonal, it stands to reason that the calendar-shift impacts can change depending on the month. To make this point, we calculated the table above based on the revenue performance by weekday for each of the twelve months. As an example, here are the calendar-shift impacts of March and August.
Change of impact over the years
We also examined the percent changes solely for each of the 19 years and compared the impact over time. No significant changes in the summary results as shown in the first table were observed, which seems to suggest that no matter if the industry is in expansion or contraction, the calendar-shift revenue impact is similar for the days of the week.
Calendar-shift impact and expectations for 2020
Every four years, the usual calendar-shift impact is skewed by an additional day, 29 February. The next leap year is 2020, and the corresponding changes can be calculated in a similar way. The only difference is that that for each month (other than January and February) the days shift by two, so if in a normal year a Saturday would be added, in 2020 it will be a Sunday and a Monday.
The corresponding RevPAR impact for the months in 2020 will be somewhere around these values:
Calendar shifts matter to monthly results and we hope the tables above give U.S. hotel industry analysts a better sense of what to expect as days get added and dropped each month.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.