Business Computing Template

How the Cornell Plaza compares with its competitive set

The Cornell Plaza is competing poorly against the other lodgings in its competitive set. We believe that with specific changes to the hotel’s product management and by implementing yield management techniques, the Cornell Plaza will outperform its competitive set by 15% within one quarter.

Hotel performance is typically measured in four ways:

ADR Index (and a lot more text that is being used to show the behavior of one bullet when it goes to a second line)

Occupancy Index

RevPAR Index

Department Income

Each of these indices compares is used to compare one hotel to a competitive set of hotels. In this case, the Cornell Plaza is compared to five other properties. High performing hotels use these indices as benchmarks for decision-making, and they are used here to support the management changes herein.

ADR Index (102%)

The Cornell Plaza has an ADR Index of 102%. This means that the average daily rate of the Cornell Plaza is higher than its competitive set—in this case it is the highest of the competitive set. The new management plan—particularly through product management—is designed to lower the ADR Index to approximately 99% and increase total revenue by enhancing occupancy.

Management sees a direct correlation between occupancy index and ADR in the competitive set. Table 1.1 is a scatter diagram that plots the relationship between ADR and Occupancy index in the Ithaca market. The plot reveals price sensitivity in the market that was unnoticed during the initial management period.

With a high ADR of $81.11 the Cornell Plaza is struggling with the lowest Occupancy Index at 93%. The occupancy index is up to twelve percent lower than hotels in the market that offer an ADR less than eighty dollars.

By reducing the ADR by $1.15 the hotel could increase its market penetration of total market demand by twelve percent. Because the Cornell Plaza rarely sells out its rooms, the increase in occupied...