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Cornell Hotel Industry Research Finds Discounting Costs Asian Hotels = Money

Contact: Glenn Withiam, 607.255.3025, grw4@cornell.edu
FOR = IMMEDIATE=20 RELEASE:

Cornell Hotel Industry Research Finds Discounting Costs Asian Hotels=20 Money

Newly released hotel research study finds Asian hotel demand defies=20 expectations=E2=80=94failing to show market-share increase from = competitors=E2=80=99 rate cuts=20

Ithaca, NY, February 6, 2008 =E2=80=93 Conventional wisdom says = hotels can undercut=20 their competitors=E2=80=99 room rates to grab market share and boost = room revenues. A=20 new hotel industry research report published by Cornell=E2=80=99s Center = for Hospitality=20 Research (http://www.hotelschool.cornell.edu/research/chr/pubs/reports/2008.= html)=20 finds that this gambit doesn=E2=80=99t work at all for upscale Asian = hotels.

The hotel research report, =E2=80=9CPricing for Revenue Enhancements = in Asian and=20 Pacific Region Hotels: A Study of Relative Pricing Strategies,=E2=80=9D = is written by=20 Linda Canina and Cathy A. Enz, both faculty members at the Cornell = University=20 School of Hotel Administration.

Hotel Industry Research Again Challenges Conventional Use of = Discounting to=20 Raise Occupancy

By comparing average percentage differences in occupancies, average = daily=20 rates (ADR), and revenue per available room (RevPAR) between individual = upscale=20 Asian hotels and their competitive set between 2001 and 2006, Canina and = Enz=20 found that hotels that raise their rates slightly above those of = competitors=20 improve their revenues. On the other hand, Asian hotels that price below = their=20 competitive sets do not gain concomitant occupancy boosts and see = revenue=20 reductions.

=E2=80=9CIn this set of Asian hotels, we found that relative = occupancies remained=20 stable even when hotels charged less than their competitors = did,=E2=80=9D said Canina.=20 =E2=80=9CAt the same time revenues went up when a hotel priced above its = competitive set=20 and down when it undercut competitors.=E2=80=9D

Canina cautions that the results cannot be generalized to all hotels, = because=20 this study examined just 135 upscale hotels in Asia. =E2=80=9CEven with = that limitation,=20 however, our findings with respect to relative gains and losses of = RevPAR in=20 Asia were similar to an earlier study we conducted for hotels in the = United=20 States,=E2=80=9D she continued. =E2=80=9CThus, we must caution hotel = managers to think carefully=20 before reducing room rates compared to competitors.=E2=80=9D

Meet and interact with Dr. Enz, an active member of the executive = education=20 faculty at the School of Hotel Administration, when she presents = sessions in the=20 Professional Development Program: http:= //www.hotelschool.cornell.edu/industry/executive/pdp/.

Thanks to the support of the partners listed below, all Cornell = Hospitality=20 Reports and Tools are made available free of charge from the center's = website,=20 http://www.chr.cornell.edu/.
=
About=20 the Center for Hospitality Research
A unit of the Cornell School of = Hotel=20 Administration, The Center for Hospitality Research (CHR) sponsors = research=20 designed to improve practices in the hospitality industry. Under the = lead of the=20 center=E2=80=99s 69 corporate affiliates, experienced scholars work = closely with=20 business executives to discover new insights into strategic, managerial = and=20 operating practices. The center also publishes the award-winning = hospitality=20 journal, the Cornell Hospitality Quarterly (formerly the Cornell Hotel = and=20 Restaurant Administration Quarterly). To learn more about center and its = projects, visit http://www.chr.cornell.edu/. =

Center partners and sponsors: AIG Global Real Estate Investment, = American=20 Airlines Admirals Club, Davis & Gilbert LLP, Deloitte & Touche = USA LLP,=20 Denihan Hospitality Group, Expedia, Inc., Four Seasons Hotels and = Resorts, Fox=20 Rothschild LLP, HVS, InterContinental Hotels Group, JohnsonDiversey, = Inc.,=20 Jumeirah Group, LRP Publications, Marriott International, Inc., = Marsh=E2=80=99s=20 Hospitality Practice, Mobil Travel Guide, Nestl=C3=A9, = PricewaterhouseCoopers,=20 Proskauer Rose LLP, Smith Travel Research, Southern Wine and Spirits of = America,=20 Inc., SynXis (a Sabre Holdings Corporation), Taj Hotels Resorts and = Palaces,=20 Thayer Lodging Group, TIG Global, Travelport, WATG, and WhiteSand=20 Consulting.

Center friends: 4Hoteliers.com =E2=80=A2 American Tescor, LLC = =E2=80=A2 Argyle Executive=20 Forum =E2=80=A2 Caribbean Hotel and Restaurant Buyers Guide =E2=80=A2 = Cody Kramer Imports =E2=80=A2=20 Cruise Industry News =E2=80=A2 DK Shifflet & Associates =E2=80=A2 = ehotelier.com =E2=80=A2=20 EyeforTravel =E2=80=A2 Fireman's Fund Insurance Company =E2=80=A2 = Gerencia de Hoteles &=20 Restaurantes =E2=80=A2 Global Hospitality Resources =E2=80=A2 = Hospitality Financial and=20 Technology Professionals (HFTP) =E2=80=A2 hospitalityInside.com = =E2=80=A2 hospitalitynet.org =E2=80=A2=20 Hotel Asia Pacific =E2=80=A2 Hotel China =E2=80=A2 HotelExecutive.com = =E2=80=A2 Hotel Interactive =E2=80=A2=20 Hotel Resource =E2=80=A2 International CHRIE =E2=80=A2 International = Hotel and Restaurant=20 Association =E2=80=A2 International Hotel Conference =E2=80=A2 = International Society of=20 Hospitality Consultants (ISHC) =E2=80=A2 iPerceptions =E2=80=A2 KPMG = Japan/Global Management=20 Directions =E2=80=A2 Lodging Hospitality =E2=80=A2 Lodging Magazine = =E2=80=A2 Milestone Internet=20 Marketing =E2=80=A2 MindFolio =E2=80=A2 PKF Hospitality Research = =E2=80=A2 The Resort Trades =E2=80=A2 RealShare=20 Hotel Investment & Finance Summit =E2=80=A2 Resort+Recreation = Magazine =E2=80=A2=20 RestaurantEdge.com =E2=80=A2 Shibata Publishing Co. =E2=80=A2 Synovate = =E2=80=A2 The Lodging Conference=20 =E2=80=A2 TravelCLICK =E2=80=A2 UniFocus =E2=80=A2 WageWatch, Inc. = =E2=80=A2 WIWIH.COM

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Cornell Hotel Industry Research Finds Discounting Costs Asian Hotels = Money

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