Bangkok four-star hotels’ Average Daily Rate (ADR) prediction model

Abstract

Abstract This research aims to propose a prediction model for the Average Daily Rate (ADR) for Bangkok four-star hotels. The model was developed using the hedonic price model, which was calculated from 158 four-star hotels in Bangkok. The variables in the model were derived from a literature review and suggested by an expert panel. Factor Analysis was adopted to merge the highly correlated variables. The best-fit model is a log-linear form with a .576 Adjusted R2 value. The top five most sensitive variables are (1) staff performance score from Agoda’s review, (2) location score from Agoda’s review, (3) room standard score from Agoda’s review, (4) fitness availability (presence or absence), and (5) the number of hotel outlets. The model was verified by a paired-sample t-test from 30 hotels with similar criteria. From the analysis, the observed ADRs were not significantly different from the predicted ADRs at the .05 significance level (p-value = .849). Furthermore, Theil’s U statistic was .578, which could suggest that the model has high accuracy. In summary, this model can give useful information to investors or developers in the decision-making process for hotel investment, hotel renovation, hotel room pricing, and rechecking the ADRs of operating hotels.