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Do you think you would want to incorporate the Hubbart formula if you owned a hotel, why?

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sta112 | Teacher | Salutatorian

Posted April 16, 2013 at 9:38 AM via web

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Do you think you would want to incorporate the Hubbart formula if you owned a hotel, why?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted April 16, 2013 at 1:28 PM (Answer #1)

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I do think that it would make sense to make use of the Hubbart formula if I were running a hotel.  However, its value to me would depend to some degree on the particular situation of my hotel.  In general, the more predictable my market and the more homogeneous my hotel, the more likely I would be to use the formula.

The Hubbart formula is useful in that it helps a hotel manager to determine the sort of average price that he or she needs to charge for a room.  Since pricing is so vital to a hotel’s profits, this is very important.  However, the more complicated the situation, the less helpful the formula is.

The Hubbart formula can give me an optimal average price for my rooms.  However, the more widely the price of an actual room on an actual night varies, the less useful this average is.  For example, if I have many different sizes of room and many different levels of amenities, I will need many different prices and it will be hard to determine how to reach the average given by the Hubbart formula.  This problem is compounded if I have many fluctuations in demand.  If my hotel is in a place where the number of visitors varies widely at many different times of year, it becomes even more difficult to set prices.  In such instances, the Hubbart formula is less valuable.

I would, then, probably choose to use the Hubbart formula, but it would be less valuable to me if my hotel’s market was inconsistent and if my hotel had many different room types. 

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