An analysis of daily occupancy performance: a basis for effective hotel marketing?

An analysis of daily occupancy performance: a basis

for effective hotel marketing?

Douglas Jeffrey

Lecturer in Planning in the Department of Environmental Science, University of

Bradford, Bradford, UK

Robin R.D. Barden

Researcher at the Management Centre, University of Bradford, Bradford, UK

Introduction

The most striking feature of the demand for

hotel accommodation is its temporal

variability. In an industry characterised by

high risk capital investment and heavy fixed

costs in property, facilities, staff and

equipment, this temporal variability

produces a range of problems in resource

usage and management, and results in a

continuing battle to minimise its impact on

the efficiency and profitability of hotel

operations (Buttle, 1986; Danielson, 1987;

O'Neill and Orr, 1996). In this battle an

understanding of the nature of the temporal

fluctuations in demand in different market

segments, and their differential impact on

the occupancy performance of hotels, are

prerequisites for the development of effective

management and marketing responses.

Two principal temporal patterns of

demand are manifest in hotel occupancy

data; the seasonal pattern over the course of

the year, and the within-week pattern over

the course the week. Together, they

constitute the two ``fundamental frequencies''

of demand for hotel accommodation, and for

tourism in general.

The causes and characteristics of

seasonality in tourism have been thoroughly

explored, and broad strategies to reduce its

impact have been proposed (BarOn, 1975;

Witt et al., 1991; McEniff, 1992). In

comparison, within-week fluctuations have

received relatively little attention. Empirical

studies of hotel occupancy have usually

focused on the seasonal variation in hotel

occupancy levels, with within-week

variations being ``filtered'' from the analysis

by aggregating occupancy data into monthly

occupancy rates (Butler, 1961; Ellerbrock and

Wells, 1982; Jeffrey, 1983, 1985; Jeffrey and

Hubbard, 1988; Andrew et al., 1991). However,

it can be argued that it is the within-week

fluctuations in daily occupancy rates,

resulting from the periodicities in demand

over the course of the week, that cause the

greater problems for hotel management

(Holland, 1992; Pender et al., 1994). Within￾week variability in occupancy levels exceeds

seasonal variability in most hotels. Of the 91

hotels on which this study is based, the

variance in daily occupancy rates around the

respective weekly means is greater than the

variance in monthly occupancy rates around

the respective annual means in all but 19

hotels. Within-week variability presents

problems for hoteliers; but it also presents

opportunities, particularly in the light of

recent developments in the nature of the

working week and the recreational weekend.

Changes in the law on Sunday trading,

Sunday drinking, and possibly in the near

future, Sunday nightclubbing (The Sunday

Times, 15 November 1998) will blur the

weekend/working week distinction and

could radically alter within-week occupancy

patterns.

Within-week occupancy patterns

The two broad hotel markets of business

tourism and leisure tourism are temporally

distinct in their behaviour. They produce

weekday occupancy peaks where business

tourists predominate and weekend peaks

where short-holiday tourists predominate

(Pender et al., 1994). Long-holiday tourism is

less subject to daily variations and hotels

substantially dependent on this market

should display reduced weekly fluctuations

around a weekend peak, at least over the

summer months. For the individual hotel the

within-week occupancy pattern can be

complex and erratic, with much depending

on the range and type of markets served.

Bank holidays, local school holidays,

occasional sporting events, one-off

exhibitions or tourism promotions,

unforeseen events, and even unreasonable

The current issue and full text archive of this journal is available at

http://www.emerald-library.com

[ 179 ]

International Journal of

Contemporary Hospitality

Management

12/3 [2000] 179±189

# MCB University Press

[ISSN 0959-6119]

Keywords

Hotels, Planning,

Time series analysis

Abstract

Time series analysis of daily room

occupancy rates in 91 hotels in

England from January 1992 to

December 1994 is used to analyse

within-week occupancy perfor￾mance in the English hotel indus￾try. Two major temporal patterns

are identified: one features a mid￾week peak and Saturday sub￾peak; the other features a broader

weekend peak and midweek

trough. Both are represented in

the occupancy profiles of most

hotels. They are used to define a

two-dimensional daily occupancy

performance space. The position￾ing of hotels within this space is

explained in terms of location,

market and other characteristics

of the hotels, in a stepwise re￾gression analysis. The implica￾tions of the findings are discussed

in a marketing context.