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Why Should Hotels Be Any Different Than Airplanes?

David Berry, B.A.Sc.; MBA Professor Co-ordinator Post Graduate Studies Hospitality & Tourism Division, Niagara College, Niagara Falls ON Why should hotels be any different than airplanes? Both have perishable products. Both have high capital cost. Both have low variable cost. Gone are the days when a plane will take off with half the seats empty. Next time you're in an airplane, compare the price of your ticket to the occupied seat beside you. Don't be surprised if the difference is as much as 50%. Airlines know that vacant seats are lost profit. Hotels are exactly the same.

Turning Vacancy Into Profits

Lisa Baum Vice-President in the Real Estate Advisory Services group of PricewaterhouseCoopers LLP

Vacancy is an issue faced by most hotel companies. For reasons such as competition, location, seasonality andor lack of branding, many hotels operate at less than full occupancy during peak seasons. Vacancies also exist because some hotels choose to leave rooms vacant based on the premise that an empty room is better than a full room sold at a reduced rate. This notion may stem from the fear that if some rooms are sold at a discount in the short term, then all rooms will need to be sold at a discount in the long term. Hoteliers may also be reluctant to partner with wholesale travel companies or tour operators out of fear of losing some control.