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Using the single-period inventory model, optimal monthly room capacity was identified for Shanghai's high-end hotels and compared to existing hotel capacity to determine the magnitude of overcapacity in 2011. To cope with overcapacity, this study suggests (a) Shanghai should refrain from developing new high-end hotels to let the demand catch up with the supply; (b) the hotel industry may convert a part of its high-end hotels to condo hotels or time share properties; and (c) Shanghai should take full advantage of the recent World Expo to position and promote itself as a top destination of meetings, incentives, conferences, and exhibitions in the world. [ABSTRACT FROM PUBLISHER]

Disregarding the oversupplied market, Shanghai's high-end hotel sector has been experiencing rapid expansions in past two decades, especially after the city won the bid to host the World Exposition 2010. New projects are in the pipeline and more developments are expected in the future. This study attempts to identify the magnitude of overcapacity for Shanghai's four- and five-star hotels in the year of 2011 by forecasting monthly market demand and comparing the forecasts with expected monthly capacity. It also provides forecasted monthly demand on Shanghai's four- and five-star hotels in the years of 2012 and 2013 to be used as references by stakeholders of the industry. In addition, this study attempts to provide the reasons behind the overcapacity and provides stakeholders with suggestions regarding future hotel developments in Shanghai. Box-Jenkins procedure was used and Seasonal Autoregressive Integrated Moving Average (SARIMA) models were developed for the forecasting. [ABSTRACT FROM AUTHOR]