Over the last four years, the market experienced a level of volatility in the main indicators of hotels’ performances, including the occupancy rate, the average daily rate (ADR) and the revenue per available room (RevPar). In particular, European countries like France, Germany, Italy, Spain and Switzerland, started showing some encouraging signs of recovery, notably over the last two quarters of 2017. Over the whole period, there was a positive correlation between real GDP growth and both ADR and RevPar, while there wasn't a significant correlation with the occupancy rate. These results suggest, that hotels are adopting a strategic behavior that consists of raising their prices during expansionary phases of the cycle. Below the break-even point, hotels’ supply is relatively elastic: Hotels play with quantities to make sure to reach their break-even point. Beyond the break-even, their strategy changes: Hotels rather renounce to strong increases in the number of rooms sold, and prefer to focus on margins instead. Get the full story at Ecole hôtelière de Lausanne