Case Study: Hotel Occupancy Rates Jennifer McCoy GBA 305 Case Study: Hotel Occupancy Rates The U. S. hospitality industry has recently experienced the highest rate of business failures since the ‘Great Depression’. Hundreds of businesses have declared bankruptcy. Even more have gotten into financial distress such as earnings slumps, cash flow deficiencies and mismanagement of resources that could lead to bankruptcy. These problems will not go away. They must be managed away.
This case study examines the major contributing factors to the declining performance of lodging firms in the recent past, explores the current economic environment in the industry and addresses the challenges that it will most likely continue to face in the future. The focus of the case study will be on the importance of operational analysis as a management tool to identify problem areas that need corrective action thereby leading to a business turnaround. |Total |By Year |By Quarter | |Minimum |57. 2000 |69. 7167 |70. 7315 | |Maximum |84. 7667 |81. 0595 |78. 8701 | |Mean (average) |75. 2613 |75. 2613 |75. 2613 | |Median |75. 4483 | | | |Standard |5. 8007 | | | |Deviation | | | | [pic] | |Increase in Occupancy Rate by Year | | | | As with most things in the economy lately, tourism has been hurting the last year or two. Hawaii is a major tourist destination and they happen to post lots of good data on their state website.
Here is the hotel occupancy for the years 2000 through 2007 by month: [pic] You will notice an obvious seasonality to the hotel occupancy in Hawaii which peaks in February and July. There is also an apparent trend up through 2005 and then ’06 and ’07 trend down from there. Notice how 2001 was lower than 2002 across the year but the spread widened in the summer as the recession and financial crisis was coming to light. June and July is when the seasonal summer peak occurs. So based on this analysis, I will go out on a limb and say I think Hawaii hotel occupancy will turn up in the next few months.
