Applying Game Theory and Time Series in Smith Travel Accommodation Resort (STAR)

Abstract

Although Smith Travel Accommodations Report (STAR) benchmarks hotel performance against its competitive aggregate and local markets, hotel managers consider STAR as a reference document rather than a strategy model for hotel competition. Recent research report managers prefer less information to use it as clues for a decision rather than more information not to be able to make a decision. It is imperative for hotel managers to use STAR as a clue for the competition. Limited research has focused on techniques to build a clue for STAR as a practice strategy. The present study has built two matrices by STAR indices. After that, game theory strategies were conducted to forecast the outcomes whenever hotel mangers change price. A sample of hotel guests who stayed in seven top hotel destinations in the U.S. during the ten-year period was selected in the scenario with two assumptions: (1) there are two players in the U.S. meeting business: Player 1 includes hoteliers in Washington DC, Virginia, and Maryland and player 2 includes hoteliers in Orlando, Los Angeles, Chicago, and New York and (2) customers in a hotel of player 1 prefer staying in the hotel of player 1 rather than staying in the hotel of player 2 and vice versa. Findings indicate that two matrices have provided hoteliers with simple clues of different strategies in each month during the year to maximize their revenue.