Toward Improving Hotel Prognostications Through the Application of Probabilistic Methodologies
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Date
2020
Journal Title
Journal ISSN
Volume Title
Publisher
Sage
Abstract
Existing and generally accepted methodologies for developing projections of future hotel performance have been recently
described as “grossly inadequate” and we note they have essentially remained unchanged for decades. Notably, current
methodologies result in point estimates of future performance and do not adequately consider the inherent risk in lodging
investments. Borrowing from research in other fields, and particularly from the area of finance, we suggest the use of
probabilistic, that is, stochastic methodologies. In particular, we recommend hotel investors, operators, and analysts use
Monte Carlo simulation. Also, this article provides information regarding why probabilistic methodologies are appropriate
and general guidance regarding how to apply such approaches.
Description
Cornell Hospitality Quarterly 1– 6; 2020
Keywords
lodging; projections; probabilistic methodologies