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| Author: | O'Neill, J.W. |
| Title: | ADR rule of thumb: validity and suggestions for its application |
| Journal: | Cornell Hotel and Restaurant Administration Quarterly
2003 : AUG, VOL. 44:4, p. 7-16 |
| Index terms: | Hotel and catering industry Discounted cash flow Property Valuation Models |
| Language: | eng |
| Abstract: | This article tests the validity of the commonly used ADR rule of thumb which implies that hotels should generate 1$ in ADR per $1000 in value per room. Using data drawn from Penn State database the article finds out support for continued use of the ADR rule in five types of hotels. However, to most types of hotels the ADR rule does not directly apply. To managers seeking guidance, it is suggested that they apply the data presented in the article by hotel type, and use it with more sophisticated analyses such as discounted cash flow (DCF) analysis, and the data collected in the field. |
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