Rate Cuts Do Not Increase Occupancy – Researchers

7th February 2008 (Last Updated February 7th, 2008 11:58)

A new study claims that Asian hotels which raised rates above their competitors increased revenues. Conversely, Asian hotels that priced below their competitive sets did not gain concomitant occupancy boosts and saw revenue reductions. The study - Pricing for Revenue Enhanc

A new study claims that Asian hotels which raised rates above their competitors increased revenues.

Conversely, Asian hotels that priced below their competitive sets did not gain concomitant occupancy boosts and saw revenue reductions.

The study – Pricing for Revenue Enhancements in Asian and Pacific Region Hotels: A Study of Relative Pricing Strategies – is written by Linda Canina and Cathy Enz, faculty members at the Cornell University School of Hotel Administration.

Canina says the research showed relative occupancies stayed stable even when hotels undercut their competitors.

“At the same time revenues went up when a hotel priced above its competitive set and down when it undercut competitors,” she says.

Canina says although the study looked at a small sample of upmarket Asian hotels, similar results have been seen in the US market.

The study compared percentage differences in occupancies, average daily rates and revPAR between individual upscale Asian hotels and their competitive set between 2001 and 2006.

By Elizabeth Clifford-Marsh