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Hospitality Leadership Through Learning
Faculty & Research

Pricing for Revenue Enhancement in Asian and Pacific Region Hotels: A Study of Relative Pricing Strategies

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Vol 8 No 3
By:  Linda Canina Ph.D. and Cathy A. Enz Ph.D.

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Executive Summary: This report explores pricing strategies for competitive hotels in 14 different Asian-Pacific countries. The research is based on comparing average percentage differences in occupancies, average daily rates (ADR), and revenue per available room (RevPAR) among competing high end hotels in local markets using data gathered monthly between 2001 and 2006. The results reveal that hotels that price below their competitive sets have lower RevPARs, but do not gain concomitant occupancy boosts. Hotels that charge a price premium have substantially higher RevPARs than their competitors, but without substantial reductions in occupancy. Overall, occupancies remain stable while revenues go up or down depending on whether a hotel sets rates above or below those of its competitive set. This report presents an extension of two previous Cornell Hospitality Reports which found that U.S. hotels that discount relative to their competitive set have higher occupancy and lower RevPAR. Examining both U.S. and Asian data over the period of 2001 to 2006 showed that higher occupancies do not necessarily accompany the decision to discount prices, as they did for U.S. hotels in 2001 through 2003.  The study explores the ASEAN, China, and Australian markets separately and finds similar patterns.

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Comments

Would like to congratulate Cathy Enz and Linda Canina for the very interesting and "eye opening" study on pricing for revenue enhancement in Asian & Pacific Region Hotels.A very well done research and straight to the point. This is probably the first study done by a reputable organization on Hotels in Asia and want to thank you for this initiative.

Giovanni Angelini
Chief Executive Officer/Managing Director
Shangri-La Hotels & Resorts, Hong Kong

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About Linda Canina Ph.D.

Linda Canina is an associate professor in the School of Hotel Administration's Finance, Accounting, and Real Estate department. There, she teaches undergraduate and graduate courses in corporate finance. Canina also serves as editor of the Cornell Hospitality Quarterly. Her research interests include asset valuation, corporate finance and strategic management. She has expertise in the areas of econometrics, valuation, IPO's, payout policy, mergers and acquisitions, options and the hospitality industry. Canina's current research focuses on strategic decisions and performance, the relationship between purchased resources, human capital and their contributions to performance, the relationship between various liquidity measures and profitability, and measuring the adverse selection component of the bid/ask spread. Her recent publications include: "Agglomeration Effects and Strategic Orientations: Evidence from the U.S. Lodging Industry" in the Academy of Management Journal. Canina's other work has appeared in the Journal of Finance, Review of Financial Studies, Financial Management Journal, the Journal of Hospitality and Tourism Research, and the Cornell Hotel and Restaurant Administration Quarterly. She holds a Ph.D. degree from New York University.

For more information visit http://www.hotelschool.cornell.edu/research/facultybios/faculty.html?id=10

About Cathy A. Enz Ph.D.

Cathy A. Enz is the Lewis G. Schaeneman Jr. Professor of Innovation and Dynamic Management and a full professor in strategy. She recently served as Associate Dean for Industry Research and Affairs, and served as the Executive Director of the school’s Center for Hospitality Research from 2000-2003. Dr. Enz has published over eighty journal articles, book chapters, and three books in the area of strategic management. Her research has been published in a wide variety of prestigious academic and hospitality journals such as The Administrative Science Quarterly, The Academy of Management Journal, The Journal of Service Research, and The Cornell Hospitality Administration Quarterly. Dr. Enz teaches courses in innovation and strategic management. In addition, she developed The Hospitality Change Simulation, a learning tool for the introduction of effective change, which is available as an online education program of e-Cornell. Three additional courses in hospitality strategic management will be available through e-Cornell in 2008. Dr. Enz also presents numerous executive programs around the world, consults extensively in North America, and serves on the Board of Directors of two privately owned hotel companies. Prior to her academic activities, Dr. Enz held several industry positions including strategy development analyst in the office of corporate research for a large insurance organization, and operations manager responsible for Midwestern United States customer service and logistics in the dietary food service division of a large U.S. health care corporation. Dr. Enz received her Ph.D. from the Fisher College of Business at Ohio State University, and taught on the faculty of the Kelley School of Business at Indiana University prior to arriving at Cornell in 1990.

For more information visit http://www.hotelschool.cornell.edu/research/facultybios/faculty.html?id=27