1. There are three possible reasons for building a new hotel: increased demand exceeding supply, demand from a new unserved market, or an inferior existing supply. 2. It is important to analyze the local supply and demand situation to identify the market for a proposed new property. This includes looking at occupancy trends, a list of current hotels by classification, rates and amenities, and sources of room demand like business travelers, conventions, and tourists. 3. The analysis should provide data on conventions like number held annually, size, delegate numbers and spending, as well as tourist numbers, length of stay, and daily spending on lodging and food.

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2. There are three possible
reasons for a new hotel.

3. One is that the demand for rooms is
greater than the supply; another is
that there is a demand from a new
market that is not being served with
the existing supply; and the third is
that the supply is inferior in quality to
the needs of the demand or market

4. It is, therefore, important
that the study analyze
the supply/demand
situation to identify the
market for the proposed
new property.

5. This is preferably done by
looking at the current
situation for the entire local
market and then adjusting
for anticipated future
changes.

6. Certain basic
information should be
included as follows:

7. Occupancy trends in the local area
for the past five years. Occupancy
trends should be broken down by
hotel classification if possible (see
next item).
1.

8. 2.
A list of hotels currently servingthe local market. The hotels
should be listed by type. Three classes are normally listed: those
that would be the most competitive properties, those that would
be somewhat competitive, and those that wouldbe less
competitive. The list should include each hotel by name, the
number of rooms it has, and its current room rates. Any hotels in
this list that were built in the past five years should be highlighted
with added information, such as the facilities they have other
than rooms (e.g., number of seats in their restaurants)and the
quality of those facilities.

9. 3.
In addition, the most competitive hotels should be
further highlighted by including additional information
(if available) about their occupancy rates, food and
beverage facilities’ usage (e.g., seat turnovers and
aver- age checks), and the composition of their
market for rooms, food, and beverages.

10. 4.
The principle sources of demand. Generally, for a city
hotel, the sources of room demand are classified into
three major types of customers: the traveling business
person, the convention delegate, and the general
tourist or vacationer. For each category, relevant
data should be provided that could indicate demand
for rooms.

11. Data concerning the convention or business meeting
delegate wouldinclude the number of conventions held
each year in the area, types of conventions, their size,
total number of delegates, average length of delegates’
stay, and average conventioneers’ daily spending.

12. Data concerning vacationer arrivals would include
number of tourists, average length of stay, average daily
spending on hotel accommodations and meals, and any
change in or extension of the tourist season overthe past
several years