Astor Lodges Case Study

Due 4 April by 11.59pm

Astor Lodge & Suites, Inc (10%) – Kerin & Peterson page 338

1. How would you characterize the U.S. hotel industry in early 2005

The U.S. hotel industry for early 2005 was already occupied with 4.4 million hotel rooms and the previous year had just recorded industry revenues of $114.7 billion and grossed $16.7 billion in pretax. It is estimated that two-thirds of all U.S. hotel rooms were associated with a brand; the remaining one-third were independently owned and not brand affiliated. Within the U.S., the hotel industry is highly fragmented, with no one brand or company dominating a majority of hotel rooms. Based on revenue, occupancy and average daily rate per available room, all hotel segments have displayed improved performances when compared to the results of 2003.

As of 2004, the typical occupancy for all hotel segments was 61.3%, the average daily rate was $86, and the average revenue per available room was $53. Though, it is important to take into consideration that the five major hotel segments indicated significant developments based on their performances; in the luxury hotel segment, they exhibited the most progression from 2003-2004 as there was an increase of 39% in revenue per each available room and also an increase of 3.5% in occupancy, while presenting the least form of improvement was the economy hotel segment which from 2003-2004, there was only a 1.4% increase in occupancy and a 4% revenue increase per available room.

According to the American Hotel and Lodging Association, in 2004 approximately one-half of all guests stayed in hotels for leisure/vacation purposes and the other half stayed for businesses purposes. The typical occupant for a business room night was used by one male adult between the ages of 35-54 who was employed in a managerial or professional position, earning an average yearly household income of $81,000. The guests of business rooms predictably would make a reservation for...