Indicators of hotel profitability: Model selection using Akaike information criteria

Abstract

Research in the important area of evaluating the relationship of hotel room sales with hotel amenities, for instance, food and beverage sales is limited. While this study focuses on differences in overall profitability when considering the transient rate at hotels, the authors have utilized data from hotels with food and beverage operations in order to provide additional insights for this sector. The results show that when modeling the profitability of a hotel, several items are important and should be included when analyzing profitability. The segment of the market, type of hotel, location of the hotel, number of rooms, and average daily rate are all found to be important factors in determining profitability and should be included in models of profit. The transient rate is controlled for in all models but is found to be a significant factor in determining the profitability of a hotel in only some specifications.