Optimizing room capacity and profitability for Hong Kong hotels

Ming Chih Tsai, Zheng Gu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

16 Citations (Scopus)


This study estimates optimal guestroom capacity for the Hong Kong hotel industry during 2010–2013 using a single-period inventory model. Using Hong Kong hotel operational data for the period 2000–2009, we identify an issue of serious overcapacity of Hong Kong hotels for 2010–2013, the severity of which ranges from 30.6 to 40.7% above the optimal hotel guestroom counts derived from our study.We further estimate an optimal advertising budget as a percentage of total revenue (3.78%) in maximizing profitability. Attention is called for stakeholders to carefully reexamine existing and future hotel development plans and work on pushing up future room demand. The implications of our study are also discussed.
Original languageEnglish
Pages (from-to)57-68
Number of pages12
JournalJournal of Travel and Tourism Marketing
Issue number1
Publication statusPublished - 1 Jan 2012


  • Capacity
  • Demand
  • Hong Kong
  • Profitability
  • Single-period inventory model
  • Supply

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management
  • Marketing


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