Prime Hospitality owns, operates and/or manages more than 230 properties nationwide, primarily under the AmeriSuites and Wellesley Inn & Suites brands. Without ever using InnLink, Prime Hospitality backed away from the agreement and used a different reservation system.
As arbiter, Atlanta-based Hospitality Research Group, an affiliate of San Francisco-based PKF Consulting, worked with ShoLodge's attorneys, Nashville-based Boult, Cummings, Conners & Berry PLC, to determine the loss of fees to ShoLodge from Prime's failure to use the InnLink service.
HRG used the Share Down method, a proprietary forecasting mechanism it developed, to project lost revenues on a property-by-property basis. Share Down relies on converting metro-level lodging market forecasts to econometric forecasts of a single hotel's performance.
Specifically, it links hotel property revenue patterns to the patterns of revenues in the local market in which a hotel operates.
Once each property's revenue forecast was determined by Share Down's objective measure, the individual anticipated revenues were aggregated into a revenue forecast for the full Prime Property portfolio. The total lost revenue fee was applied to determine the amount of damages owed to ShoLodge.
The two-year timeframe covered by the two parties' contract ran from May 2001 through mid-2003, Jack Corgel, managing director of HRG, tells GlobeSt.com. It spanned the post-Sept. 11 attacks that impacted hotel revenues all across the country.
"Most of the properties in the portfolio are in metro areas, Corgel says. "The altered forecasts for properties in the aftermath of Sept. 11 were calculated into the final determination of damages to ShoLodge."
Corgel says HRG used Share Down forecast data prior to Sept. 11 and then conducted a second measure that took into account the revised reduction in revenues caused by that event.
"Arbitration was agreed upon in the initial contract between the two parties," Corgel says. "Handling the arbitration gave us a chance to test the Share Down method.
During the course of preparing the forecasts, we learned a lot about how the revenues of a hotel relate to revenue patterns of the local market in which a hotel operates," he adds.
As a result of this arbitration process, HRG is developing Share Down as a product for the hospitality market and other related industries.
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