ITHACA, NY — The recent rise in gasoline prices may result in big losses in room sales for the U.S. lodging industry, according to a study conducted at Cornell University’s School of Hotel Administration. The study, which was conducted at the Cornell Hotel School’s Center for Hospitality Research, noted that when gas prices rise, fewer people rent hotel rooms, particularly rooms at mid-market and economy hotels with suburban or highway-oriented locations. The study found that, on average, a 1% increase in gas prices results in a 1.74% drop in rooms demand. Those numbers translate into a loss of millions of room-nights in hotels across the country for every 1% increase in gas prices. One major benefit of the study is that it quantifies the loss in hotel-room demand as gas prices rise. It shows, for example, that a 1% increase in gas prices reduces annual economy-hotel demand by about 2.8%. Mid-market limited-service properties are squeezed too, losing 2.5% of room-nights for every 1% increase in gasoline prices. Upscale hotels also are affected by rising gas prices, with a likely loss of about 1% of room-nights for every 1% increase in the cost of gas. Upper upscale hotels are the only segment that does not suffer a significant drop in room occupancy rates when gas prices rise, according to the study. “We were not prepared for the magnitude of the loss in lodging-industry demand caused by rising gas prices,” said Cathy Enz, co-author of the study and executive director of the Hotel School’s Center for Hospitality Research. “I must emphasize that this study is based on branded hotels nationwide in all industry segments and comprises 13 years of data, through good times and bad.” Enz, along with co-author Linda Canina, examined monthly room-night data from 1988 through 2000 from the database of Smith Travel Research, which compiles rate and occupancy data from 98% of U.S. hotels.
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