Cornell Hospitality Quarterly Hotel Revenue Management Study Finds Rescaled Hotels Make More Money...Eventually

New hospitality management research suggests that rebranding and moves in market scale result in positive financial effects after two years or more. A hotel revenue management study of 95 properties, " Rebranding and Rescaling: Effects on Hotel Performance," by Bjorn Hanson, Anna Mattila, John O'Neill, and Yong Hee Kim, is the featured article in the August 2009 edition of the Cornell Hospitality Quarterly. Through a special arrangement with Sage Publishing, the article is available at no charge at www.hotelschool.cornell.edu/research/chr/pubs/quarterly/featured/. Sage manages the journal for the Quarterly's publisher, the Cornell School of Hotel Administration's Center for Hospitality Research.

Sixty-four of the 95 hotels in the hotel revenue management study moved downward in their market scale, and more than half of those downwardly mobile hotels switched from midscale to economy properties. Ten hotels changed brands but not market scale. The hospitality management research analysis found that the hotels' financial performance generally improved in the second year after they rescaled. During the first year after the changeover, net operating income diminished, probably due to temporary occupancy declines and the expenses of making alterations.

The Hanson group found that hotels which moved upward in scale saw higher ADRs, while those that moved downscale generally saw no change in ADR, meaning that they were able to hold their rates even as they moved downmarket. The study found no significant change in financial ratios for the few hotels that rebranded without rescaling. Hanson is an associate professor at New York University, while Mattila and O'Neill are faculty members at Pennsylvania State University, where Kim is a doctoral candidate.

Published by Cornell's Center for Hospitality Research, the award-winning Cornell Hospitality Quarterly is available by subscription from Sage Publishing at cqx.sagepub.com.

About the Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 71 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly (formerly the Cornell Hotel and Restaurant Administration Quarterly). To learn more about center and its projects, visit www.chr.cornell.edu.

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