Overcapacity in Shanghai's High-End Hotel Sector: Analysis Based on an Inventory Model.

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]