ITHACA, NY— According to a recent Cornell University study, the industry performance averages commonly used by hotels throughout the United States are not reliable as the only gauge of how hotels are doing. The study was conducted by Cathy Enz, Linda Canina, and Kate Walsh, faculty members at Cornell’s School of Hotel Administration, in conjunction with the Hotel School’s Center for Hospitality Research, and Smith Travel Research. The researchers scrutinized the ADR, RevPAR, and occupancy averages at virtually all name-brand hotels in the United States from 1988 through 2000, and found that the overall industry averages were skewed by the extreme values at some hotels. The averages for ADR and RevPAR were distorted upward by the extremely high rates charged at certain hotels, while occupancy was skewed downward by the exceptionally low rates recorded by other properties. “On a practical level, what those distortions in the averages mean is that the typical hotel actually has a lower average daily rate and revenue per available room, and a higher occupancy rate, than found in the industry average,” says Enz. While the researchers found that the analysis held true for individual lodging segments, they noted that the greatest distortions occurred in the luxury segment and the most consistency was found in the economy and budget hotels. The researchers warned that, as a result, operators and analysts of upscale hotels must be more careful in their use of overall industry statistics than those who are dealing with economy and budget properties. In addition, because many of the extreme values are found in the top 25 markets, the researchers found that the overall RevPAR statistics from these markets were distorted by high-priced hotels.
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