Important decisions for hotel chains and lodging firms

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Location is one of the most important decisions for hotel chains and lodging firms. A hotel chain that can select good sites more accurately and quickly than its competition has a distinct competitive advantage. Researchers S. E. Kimes (Cornell University) and J. A. Fitzsimmons (University of Texas) studied the site selection process of La Quinta Motor Inns, a moderately priced hotel chain (Interfaces, Mar.-Apr. 1990). Using data collected on 57 mature inns owned by La Quinta, the researchers built a regression model designed to predict the profitability for sites under construction. The least squares model is given below:

All variables were "standardized" to have a mean of 0 and a standard deviation of 1. Interpret the ß estimates of the model. Comment on the effect of each independent variable on operating margin, y. [Note: A profitable inn is defined as one with an operating margin of over 50%.

Reference no: EM131111174

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