Volatility of hotel market fundamentals and the determinants of variations between markets
Author(s)Cason, Brian (Brian Paul)
Massachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development.
William C. Wheaton.
MetadataShow full item record
How can volatility as well as other dynamics and characteristics in hotel market fundamentals affecting risk be better understood? This paper explores that fundamental question along with other more specific questions that naturally follow: What are the markets and hotel sectors that exhibit the most volatility in RevPAR, and its various components: occupancy, ADR, absorption and completions? How can markets be characterized as more supply driven or demand driven? How can market revenue metrics be characterized as rate or occupancy driven? What determines the variations in these metrics? What markets behave similarly? What do these findings mean in terms of various risk management practices? This paper develops a model for the systematic analysis of hotel markets based on observed trends in historical data. The paper first calculates measures of volatility. It then develops a model to characterize markets based on which fundamentals play a larger role in hotel market dynamics. It then provides a further comparison of markets based on which exhibit similar movements in RevPAR. The findings then are analyzed for their meaning in terms of risk in hotel markets. Finally, the findings are interpreted to reach conclusions about the nature and determinants of volatility in hotel markets, and how to better mitigate these risks in portfolio selection.
Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate , 2010.Cataloged from PDF version of thesis.Includes bibliographical references (p. 79-80).
DepartmentMassachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development.
Massachusetts Institute of Technology
Center for Real Estate. Program in Real Estate Development.