Prime Hospitality owns, operates and/or manages more than 230properties nationwide, primarily under the AmeriSuites andWellesley Inn & Suites brands. Without ever using InnLink,Prime Hospitality backed away from the agreement and used adifferent reservation system.

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As arbiter, Atlanta-based Hospitality Research Group, anaffiliate of San Francisco-based PKF Consulting, worked withShoLodge's attorneys, Nashville-based Boult, Cummings, Conners& Berry PLC, to determine the loss of fees to ShoLodge fromPrime's failure to use the InnLink service.

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HRG used the Share Down method, a proprietary forecastingmechanism it developed, to project lost revenues on aproperty-by-property basis. Share Down relies on convertingmetro-level lodging market forecasts to econometric forecasts of asingle hotel's performance.

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Specifically, it links hotel property revenue patterns to thepatterns of revenues in the local market in which a hoteloperates.

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Once each property's revenue forecast was determined by ShareDown's objective measure, the individual anticipated revenues wereaggregated into a revenue forecast for the full Prime Propertyportfolio. The total lost revenue fee was applied to determine theamount of damages owed to ShoLodge.

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The two-year timeframe covered by the two parties' contract ranfrom May 2001 through mid-2003, Jack Corgel, managing director ofHRG, tells GlobeSt.com. It spanned the post-Sept. 11 attacks thatimpacted hotel revenues all across the country.

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"Most of the properties in the portfolio are in metro areas,Corgel says. "The altered forecasts for properties in the aftermathof Sept. 11 were calculated into the final determination of damagesto ShoLodge."

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Corgel says HRG used Share Down forecast data prior to Sept. 11and then conducted a second measure that took into account therevised reduction in revenues caused by that event.

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"Arbitration was agreed upon in the initial contract between thetwo parties," Corgel says. "Handling the arbitration gave us achance to test the Share Down method.

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During the course of preparing the forecasts, we learned a lotabout how the revenues of a hotel relate to revenue patterns of thelocal market in which a hotel operates," he adds.

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As a result of this arbitration process, HRG is developing ShareDown as a product for the hospitality market and other relatedindustries.

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