Northampton Group Inc Harvard Case Solution & Analysis


The hospitality industry, especially the hotel industry is cyclical in nature and room occupancy ratio drops and rises on multiple factors such as economic condition, spending power of the consumers and the person's preference of travel destination. The other factors also affectthe hospitality industry such as currency of that country.If the visiting country’s currency is strong then there are chances that visitors will wait till currency is depreciated. Other reasons such as law and order situation will also impact the traveling destination.

Northampton Group Inc.operates in hotel and service industry with 2200 rooms in 17 hotels across Canada and USA. As Northampton Group, Inc. operates in the hotel industry, the business is mainly flourished when there is improved economy and people spend money on tourism and willing to use hotel service.(Agency)

Northampton Group is currently trading at 55 cents; the all-time high was $1.55 before the financial crisis. The performance metrics of the hotel industry include occupancy rate, daily rate and revenue per available room. Through these matrices Northampton Group can assess the performance of its hotel business.(UNO)

Northampton Group’s major asset consists of its properties under hotel and Northampton Group took major steps to protect the value of its portfolio of properties. The methodology of Northampton is that it carefully selects the location of the property that fits within existing portfolio of property and valued the property as per hotel norms thus, by carefully choosing the location of the property and carefully valuation of the property increases the overall portfolio value of the property.(Markowitz)(Council, 2013-2023) 

Literature review

In 2008 and 2009, global hospitality industry was badly affected by the global financial crisis. After the crisis hit the region, it was once again expected to start growing,as there are global sign of recovery and so the hospitality and hotel industry as well.

Canadian economy recovery will be supported by many factors such as improved activity in the USA and house hold in comes. There will be more job creation and increase in household income will lead more economic activity and will flourish the travel and tourism industry.(Lane)

Canadian national accommodation average before the financial crisis, occupancy rate in year 2006 was 65%, average daily rate was $123 and revenue per room was $79 while post financial crisis result in year 2009 occupancy rate was declined to 58%which was last seen in year 2004 and revenue per room decline to $73.(Hotel Industry Association of Canada)

Canadian hotel performance has eroded as a result of a drop in international demand. Average revenue per day and accommodation rate is not meeting the industry potential.

There is a volatile investment volume such as in the year 2007, investment in this industry was $4.58 billion, which declined in the year 2009 due to the recession. In 2008, the investment declined to 1.072 billion and in the year 2009, the investment further declined to 414 million. A huge outflow of investment resulted in financial distress.

Northampton Group Inc Case Solution

Canada is struggling to keep up with its own pre-recession performance, but also it is among the weaker investment performers in the world for long-term tourism investment.(Council, 2013-2023)

Tourism is a robust sector with much potential, however, there is weakness in it. A set of ten performance indicators was chosen to assess the economic and financial performance of the tourism sector as well as the “sub” industries that make up the sector. The study looked at both economic indicators such as GDP, employment, labor productivity and wages and more foundation financial indicators such as investment, revenues, costs, profits and bankruptcies.For the sector travel and tourism factors such as transport and accommodations are important in order to flourish this industry and different sector within the industry. Furthermore,these indicators are the most important as compared to other sectors and industries in the economy.(Conference Board of Canada)(Council, 2013-2023)

Critical reflection

This case analysis is about hotel industry in Canada and how the general state of the economy impacts the service industry. This was seen in the year 2008 and 2009 when the global economy was affected by financial crisis.When the global industry was affected, travel and tourism, transport and hospitality industry were affected as well.

Due to the global financial crisis; Northampton Group, which operates in the hotel service industry is affectedas it is listed in the stock market.The shares tend to be undervalued then they are increased in other peer companies.............

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