A team of MSU researchers in the School of Hospitality Business has worked with hotel industry experts to develop a system that ranks top real estate markets around the country in terms of financial viability.
Arjun Singh, an associate professor of international lodging, finance and real estate, and Raymond Schmidgall, the Hilton Hotels Professor of Hospitality Financial Management, worked jointly with about 30 industry members to implement the Lodging Market Potential Index, a system that ranks potential land investment hot spots.
Using the opinions and insight of industry experts, the two researchers devised a system based on 10 different dimensions and 30 different indicating factors, all of which are used to rank the top 25 major hotel markets in the country.
Singh and Schmidgall presented their findings at the Midwest Lodging Investors Summit this past July, something they’ve done for roughly the past three years, Singh said.
The system’s rankings then can be used to determine the financial solvency of long-term investment in specific cities. Singh said the rankings are available online through www.bus.msu.edu/shb/.
“We’re trying to increase awareness of the index,” Singh said. “(Visitors to the site) could sort of look at the index and see how these cities have been doing.”
Currently, the index is updated at least twice a year, but Singh said it can be accessed on a daily basis.
The index’s summer 2011 ranking lists San Francisco as its top city, due mainly to its “strong hotel market performance,” as well as its economic stability. Phoenix sits in the 25th and final spot, based on weak commercial real estate performance.
Some students have been involved in the process of crafting the system, and Singh’s department works alongside at least one research assistant to update the index each spring and summer with the most recent data.
“The index has given me a great handle on a lot of the metrics and data used in the industry,” said Mike Erlingis, a hospitality business senior who works with Singh on refreshing the index. “Dr. Singh has done an outstanding job of providing students the opportunity to complete industry research.”
Although many faculty members are outside the hotel real estate industry, some think the school’s professors still can provide the industry with valuable knowledge.
“It gives the analysis a third-party, independent observation,” said Ronald Cichy, the director of the School of Hospitality Business. “For 85 years, we’ve always been very focused on identifying and helping to solve the challenges facing our industry.”
Presenting conclusions from their work also can be beneficial to the industry.
“This has been presented now three times over three different years at the Midwest Lodging Investors Summit,” Cichy said. “I think those results speak for themselves.”
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