John W. O’Neill

The Role of Brand Affiliation in Hotel Market Value

The notion that a hotel’s brand contributes significantly to the property’s market value is supported by an analysis of nearly eleven hundred hotel transactions over the past fifteen years. The analysis found that brands added value beyond the usual contributors to a property’s value, such as net operating income and revenue per available room. The effects of branding were most noticeable in midmarket and upscale hotels. Based on per-room sales statistics, certain brands added significantly more value to their franchisees’ properties than others.

Strategic Hotel Development and Positioning The Effects of Revenue Drivers on Profitability

A study of more than nineteen hundred U.S. hotels for the years 2002 and 2003 found that a hotel’s net operating income percentage is most closely tied to its occupancy, although average daily rate (ADR) has a strong influence, as does market segment (also known as chain scale), the age of the property, and brand affiliation. A hotel’s size (that is, number of rooms) and location (e.g., urban or highway) also influence net operating income (NOI), but a hotel’s region does not significantly affect NOI percentage. The year 2002 data particularly show the importance of heads in beds. Hoteliers cut ADR heavily in that recession year, and those hotels that maintained strong occupancy were the ones that enjoyed strong NOI. While resorts and urban hotels generated the highest NOI in raw dollar volume, economy hotels had the highest NOI percentage and midscale hotels with food and beverage service (F&B) had the lowest NOI percentage.

Hotel Branding Strategy: Its Relationship to Guest Satisfaction and Room Revenue

U.S. hotel brands and international hotel brands headquartered in the United States have increasingly evolved away from being hotel operating companies to being brand management and franchise administration organizations. This trend has allowed for the accelerated growth and development of many major hotel brands and the increasing growth of franchised hotels. There are numerous strategic implications related to this trend. This study seeks to analyze some of these strategic implications by evaluating longitudinal data regarding the performance of major hotel brands in the marketplace, both in terms of guest satisfaction and revenue indicators. Specifically, the authors test whether guest satisfaction at variousU.S. and international brands influences both brand occupancy percentage and average daily room rate 3 years later. In addition, the authors investigate whether the percentage of franchised hotel properties influences both guest satisfaction and occupancy 3 years later. Also, they test whether overall brand size has a positive or detrimental effect on future hotel occupancy. Finally, whether the change in guest satisfaction for hotel brands effects the change in average daily rate during the same 3-year period is tested.

Strategic Issues and Determinant Factors of an Interorganizational Macroculture in the Lodging Industry

This article presents an empirical study of lodging industry executives’ beliefs regarding strategic issues that they consider to be most important. The authors theorize that fundamental factors exist indicating certain commonalties regarding executives’mental models about strategic issues.The possible influence of an industry macroculture is investigated as a source of similarity of mental models among executives competing in the lodging industry, and hypotheses are developed and tested regarding the sources of the macroculture. The results of an exploratory factor analysis indicate that among 20 potential strategic issues rated by executives in the study, 3 fundamental strategic directions exist. Furthermore, the results of the study indicate that professional journals, associations, conferences, and previous employment may be sources of the macroculture. Implications for research and practice are presented.

Hotel Values and Strategic Implications: — One Year after 9/11 —

© 2002, CORNELL UNIVERSITY The purpose of this article is to estimate the present and future quantitative effects of the events of September 11, 2001, on hotel market values. The hospitality industry has yet to fully recover from that day. Flight schedules were cut back, travel decreased dramatically, and hotel business volume fell sharply. In response—prompted by occupancy levels that were initially well below the breakeven levels—hotel owners and managers quickly moved to a price-driven marketing strategy and offered dramatic discounts to attract patrons. The magnitude of the discounts and their relatively easy availability through internet sources actually accomplished what hoteliers had in mind. The discounts created some — One Year after 9/11 —

ADR Rule of Thumb

Most hotel-industry observers are familiar with the commonly used valuation rule of thumb that hotels should generate

Effects of economic conditions and other factors on hotel sale prices

1 in ADR per

Attraction to Hospitality Companies: How Processing Fluency Moderates Value Fit

1,000 in value per room. That technique is also referred to as the

Hotel assets: an analysis of brand attributes, franchise fees, hotel age and performance

1-per

Reducing Longitudinal Attrition Through Facebook

1,000 method, the building-cost-rate formula, the general rule-of-thumb method for determining room rates, and the ADR rule-of-thumb approach. I have seen no empirical evidence, however, that this rule-of-thumb’s validity has been tested in at least ten years, even though it continues to be taught to hospitality managers as a valid method for establishing hotel rates. Further, previous research regarding this rule has not sought to provide hospitality managers with information regarding how to apply effectively this particular ratio. This article presents research that both tests the validity of the ADR rule of thumb and provides guidance to managers regarding how to apply it. BY JOHN W. O’NEILL