I was not able to find much on the economics of the hospitality industry however, I did read that taxing hotel guest could create a fair amount of revenue. One man, Al Samuels, in favor of the tax wants to put the money generated toward tourism in the County. I found this article especially interesting because it relates to where most of us grew up.
http://www.lohud.com/article/20110825/NEWS03/108250389/Vanderhoef-puts-hotel-tax-mortgage-tax-hike-table-cut-Rockland-deficit
I also found this smaller bit of information. This small piece briefly talked about hotel discounts. The research is questioning whether discounts are a successful source on revenue. This small bit of information sates that hotels are not marking money by offering lowing rates to their guest. Hotels need to charge rates that match or even exceed that of their competitors.
That is very interesting to be. It seems as though in other industries the way to bet your competitors is to undercut their prices but that is not the case in the hospitality industry. I wonder if this is because of the type of service the customers is buying. If a hotel is too inexpensive then the customer may thing it is a cheap hotel and not want to stay there.
http://www.hotelschool.cornell.edu/about/pubs/news/newsdetails.html?id=345
~Nia McCarthy
*RevPAR: revenue per available room- refers to the revenue generating effectiveness of a hotel property. It is calculated by multiplying the average daily room rate (ADR) by the occupancy rate. (www.hotelsforsalenyc.com)
*ADR: Average Daily Rate- metric measuring the average amount paid per room over the total rooms occupied over that period. (www.wikiinvest.com)
I like the point that is made at the end of this post regarding pricing strategy in the hotel industry. In order to maintain a certain reputation hotels must strategically decide how much to charge for their services. Take Las Vegas for example, 20 hotels can be found within yards of each other. Each one of these hotels prides themselves on their reputation and the type of customer they attract. A luxury hotel is going to charge relatively high prices compared to the hotel that attracts younger, "less sophisticated" customers. Each hotel will also have different amenities and attractions, such as retail shops and restaurants, and the caliber of those can also affect price. Each hotel is like a mini company. The economics of the hotel industry is just as much about the customer as about attaining or maintaining a reputation.
ReplyDelete- Laura Iaffaldano
I also liked the fact that you mentioned the pricing strategy followed by hotels as it is an extremely competitive sector especially in a recession where customers would have lower purchasing power. I would like to add on the points you mentioned through an article I have read. This article talks about the economy for the InterContinental group and how it depends on its expansion projects as a source of revenue yet the costs of expansion are high furthermore, the costs of being ethical and socially responsible are very high too. Yet establishing a good reputation and brand loyalty would increase demand and therefore cover the costs spent on being ethical.
ReplyDelete-Lila Al-Refai