Location, location, location – those are the top three attributes of good real estate. The same is true for your hotel business. If you’ve got the location, you’ve got a head start. But what if that location changes – namely what if the neighbors move out?

Such is the case for hotel owners in and around Texas Stadium. Within walking distance of the complex, hotel owners relished the game-day business surges for decades. Then with the decision to build a new stadium in a different location, the same owners are now looking for ways to make up for a major loss.

Plenty of outside factors determine the occupancy levels in your hotel – the neighbors being just one of those. Popular locations can become unpopular rather quickly because of a rise in crime rates, a threat to public safety, or changes in the landscape that impact the hotel’s operations, such as high rise buildings blocking out views, too much construction affecting the environment, or heavy traffic.

Recouping could be tough depending on the situation, but it’s not impossible to still conduct business and turn a profit. The ability of your hotel’s management team to create marketing strategies that leverage the best amenities, including the remaining neighborhood businesses, could help keep occupancy  within acceptable levels.  But beware discounting too much.

A new study by Cornell University shows that discounting rates rarely works to bring in new business. The study results revealed that hotels lowering their prices to fill rooms also lowered their RevPAR (revenue per available room) despite the increased occupancy levels. Hotels that maintained a relative premium of about 2 percent or charged 2 percent less still saw a steady RevPAR result.

No matter what your strategy for reclaiming lost occupancy, make sure to review your hotel insurance policy should your business model or circumstances change. A good hotel insurance broker can help you understand how the change in business affects your coverage needs.

Flickr photo credit: kshun