Lodging Market Potential Index (LMPI) - 2011
July 1, 2011
You are currently viewing an old version of the Lodging Market Potential Index (MPI).
It is generally accepted that hotel development, investment and acquisition follows three basic steps (Rushmore, 2001);
- Identifying market areas that show long term potential for hotel investment
- Choosing a lodging product that takes advantage of the dynamics of the local supply and demand characteristics
- Search and selection of a suitable site
Whereas, there is value in the individual data and information sources to identify potential markets for lodging investment decisions, a systematic and formal analysis of aggregate market potential can be a useful tool for hotel developers and investors. As a joint research project between The School of Hospitality Business, MSU-CIBER, and globalEDGE, we have developed this objective measure in the form of a Lodging Market Potential Index (L-MPI©)
As a first step in hotel development, investment and acquisitions decisions, this index identifies market areas that show long term potential for hotel investment. It will enable hotel developers and investors to conduct a relative comparison of the 25 largest lodging markets (as tracked by Smith Travel Research) along 10 Dimensions Dimension are measured using 30 different indicators and are weighted to determine their contribution to the overall market potential index. The Lodging Market Potential is based on a scale of 1 to 100.
The School of Hospitality Business Real Estate Advisory Council members were instrumental in working with the faculty researchers in The School, in determining the ten dimensions, associated indicators and their corresponding weights. To measure the performance of each dimension, objective, credible, reliable and quantifiable indicators were identified and are listed below the index.
Dimensions and Measures of Lodging Market Potential Index for 2011
|Size of Economic Base||5 %||
|Growth of Economic Base||6 %||
|Economic Stability (Standard Deviation)||5 %||
|Market Consumer Purchasing Power||5 %||
|Tourism Trends||7 %||
|Growth in Tourism Trends||8 %||
|Performance of Commercial Real Estate||7 %||
|Hotel Market Supply and Absorption||17 %||
|Hotel Market Performance||20 %||
|Hotel Market Performance Growth||20 %||
|Data used are those available for most recent