By understanding and implementing a few basic principals, owners and managers can potentially avoid costly miscalculations in revenues and expenses by building it correctly or by reconfiguring an existing property. Some basic principals are:

Know your targeted market(s), i.e. who they are and what they expect

Sometimes, by trying to be all things to all people, the room product becomes diluted, and does not satisfy the need of the core market, resulting in an underperforming hotel. For example, upon new ownership of a high-end, all-suite hotel in West Hollywood, California, it was observed that the large suites had twin beds and the small suites had king beds. The core market was entertainment groups, typically comprised of a lead singer and his/her band. The original room configuration was based on accommodating several guests in the larger suites, which is why there were more beds. But, the core business required the larger suite for the lead performer who expected a king bed. The price sensitive groups would double up to save money. By switching the king beds with the twin beds, and charging accordingly, the hotel was able to capture its core business, impacting occupancy and average rates.

Another example of ineffective planning is that ...