Solutions by Industry

Hotel Network Planning: A Case Study

A large, multi-brand hotel franchisor sought to implement a more objective and successful approach for its site selections. 

  • Management was concerned that poor locations were increasingly jeopardizing the quality of certain brands.
  • The company used APT to develop a "Winner’s Profile" for each brand, identifying the specific characteristics associated with strong performance across each brand.
  • This analysis revealed hundreds of previously unidentified high-potential target locations and enabled the development team to focus their efforts in line with the expected performance of each target locations.
  • This more rigorous and quantitative network planning process captured opportunities worth tens of millions dollars per year to the company – and even more to franchisees.
The Company:

A global hotelier franchising thousands of hotels across several brands

The Challenge:

The hotel company had grown rapidly over the previous few years and was concerned about the increased incidence of opening new hotels in suboptimal locations. Developer intuition and experience were important factors in identifying high-performance locations and the company sought a way to complement local market knowledge with a more scientific approach to site selection.  Management believed that site quality could be significantly improved without sacrificing continued growth.

The Solution:

Management selected APT’s Network Planner software suite to enhance its existing site selection process. The company sought a process with the following characteristics:

  • The flexibility to incorporate the large number of always-changing factors required to identify and assess sites
  • A robust analytical engine to identify the key performance drivers for each brand and accurately predict future site performance
  • An easy-to-use workflow to assist the development team through the site evaluation process
  • A wide variety of reporting outputs that could be tailored for different audiences, including key executives and the developers in the field

APT software’s "Winner’s Profile" functionality automatically evaluated thousands of hotel characteristics and identified the key factors associated with above-average hotel performance. Given the volume of data available for analysis, it was critical that the company be able to assess which characteristics were correlated with site performance and, more importantly, which would be reliable predictors of future site performance.

These robust models predicted key performance metrics – including RevPAR and length of stay – for a site location. To comprehensively support deal evaluation, developers used APT’s model to predict a new hotel’s impact on same brand hotels and other brands in the company’s portfolio. In addition, developers used the APT model to answer questions, such as determining the incremental revenue and profitability for the company under scenarios where different company brands or competitor brands would be built on a given site.

Management used APT to formulate the development strategy and identify target markets across the company’s brands. The development team worked with APT to rank the top MSAs and to identify specific target locations within target MSAs. As part of this effort, the developers came to appreciate that a more scientific approach could highlight opportunities in areas that they had not yet considered. The team also gained confidence in the predictive quality of the performance models as they understood exactly how predictions were being generated and observed that the projections meshed well with their local market knowledge.

The Results:

Using APT's Network Planner, the company:

  • Directed their development efforts against higher opportunity locations, shifting away from lower quality opportunities
  • Identified numerous additional target locations
  • Better aligned each location with the brand that was best positioned for that location
  • Allowed their development team to spend more time developing the hotel network and less time searching for information and compiling reports

These key levers and other applications of APT Network Planner generated opportunities worth tens of millions of dollars per year to the company – and even more to franchisees.