The study found that, on average, a 1-percent increase in gasoline prices results in a 1.74-percent drop in rooms demand. Those deceptively small-sounding numbers would translate into a loss of millions of room-nights for every 1-percent increase in gasoline prices. The connection between increased gas prices and diminished room-nights was anticipated by the researchers, Cornell University professors Kate Walsh, Cathy Enz, and Linda Canina. They expected that their study would confirm the long-held belief that increases in gasoline prices diminish lodging demand. "We were not prepared for the magnitude of the loss in lodging-industry demand," commented Enz, who is executive director of The Center for Hospitality Research. "I must emphasize that this study is based on branded hotels nationwide in all industry segments and comprises 13 years of data—through good times and bad."

To develop their analysis, the researchers examined monthly room-night data from 1988 through 2000 from the Smith Travel Research database, which compiles rate and occupancy data from 98 percent of U.S. hotels. The study analyzed room-night demand and gasoline prices over the study period. The researchers also factored gross domestic product into their analysis to control for the general effects of good or bad economic times and to help isolate the effects of gasoline prices. All prices were adjusted to year-2000 dollars based on the consumer-price index (CPI).

The researchers examined the effects of gas-price increases on various lodging segments and locations. They determined that the effects of rising gasoline prices fall most heavily on mid-market and economy hotels with suburban or highway-oriented locations. One of the benefits of this study is that the researchers were able to quantify the loss in demand as gasoline prices rise.

For example, a 1-percent increase in gas prices would reduce annual economy-hotel demand by about 2.8 percent. Midmarket limited-service properties (that is, without food service), feel nearly as bad a pinch, and stand to lose 2.5 percent of room-nights with every 1-percent increase in gasoline prices. Upscale hotels are also affected by rising gasoline prices, with a likely loss of about 1 percent of room-nights with every 1-percent increase in gasoline prices. Upper upscale hotels were the only segment in which rooms demand was not significantly affected by gas price fluctuations.

Based at the School of Hotel Administration at Cornell University, The Center for Hospitality Research conducts and sponsors research studies aimed at improving the hospitality industry's fundamental operating knowledge. Full details of the study with a segment-by-segment breakdown of the effects of rising gasoline prices can be found on The Center for Hospitality Research web site: www.hotelschool.cornell.edu/chr.