An Investigation of AAA Diamond Rating Changes on Hotel Performance

Keywords

Hotels, Diamond rating, Key performance indicators, Competitive set indexes, American Automobile Association

Abstract

Despite previous attempts to link hotel rating systems to performance, no prior study has examined the effects of changes in Diamond ratings. Considering the variability in Diamond ratings, and the fact that hotels may gain or lose a Diamond over time, it is important for hotel properties to assess such outcomes on key performance indicators (KPIs). Hence, this study examines the influence of Diamond rating changes on hotels' KPIs (i.e., occupancy rate, average daily rate, and revenue per available room) and competitive set indexes, which allow to benchmark a property's performance against a designated competitive set. Results suggest that in both the short and long-terms, significant differences in KPIs and indexes exist between properties which benefited from an increase in Diamond rating, versus those which suffered from a drop in Diamond rating. Furthermore, despite such improved performances over time, improvements in hotels' KPIs and indexes tended to diminish over time. The current findings yield important contributions to the literature regarding the effects of hotel rating changes on KPIs and indexes and provide valuable insights to hotel owners and operators.

Publication Date

1-1-2019

Original Citation

Nalley, M. E., Park, J., & Bufquin, D. (2019). An investigation of AAA diamond rating changes on hotel performance. International Journal of Hospitality Management, 77, 365-374

Number of Pages

395-374

Document Type

Paper

Language

English

Source Title

International Journal of Hospitality Management

Volume

77

College

Rosen College of Hospitality Management

Location

Rosen College of Hospitality Management

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