TY - JOUR
T1 - Toward Improving Hotel Prognostications Through the Application of Probabilistic Methodologies
AU - O’Neill, John W.
AU - Bloom, Barry A.N.
AU - Sharma, Amit
N1 - Funding Information:
The author(s) received no financial support for the research, authorship, or publication of this article.
Publisher Copyright:
© The Author(s) 2020.
PY - 2020/11/1
Y1 - 2020/11/1
N2 - 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.
AB - 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.
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U2 - 10.1177/1938965519899927
DO - 10.1177/1938965519899927
M3 - Article
AN - SCOPUS:85078314675
SN - 1938-9655
VL - 61
SP - 373
EP - 378
JO - Cornell Hospitality Quarterly
JF - Cornell Hospitality Quarterly
IS - 4
ER -