International franchising: Opportunities for China's state-owned hotels?

The hotel industry in China faces global competition. Most of the state-owned hotels have struggled during the period of transition from a planned economy to a market economy. Furthermore, international franchising hotel chains have entered China with their different operation modes. Could the franchising hotels bring opportunities for state-owned hotels? In an attempt to answer this question, the researchers carried out a study of state-owned independent hotels and state-owned franchised hotels to analyze their external and internal business factors, their intentions to join international franchise operations and the international hotel franchisors in China. The research technique used was qualitative. Two rounds of in-depth interviews were conducted. Content analysis was used in the data analysis. Results indicate that the majority of state-owned independent hotels have intentions to join an international franchise operation in the next 5 years. It also identified major factors affecting the franchising of state-owned hotels in China. However, franchising may not be attractive to those hotels that want to keep their management culture and characteristics. Implications of the study were discussed. Recommendations were provided to the state-owned hotels. Future research studies have been suggested to examine the relationships between franchisors and franchisees.     

Opportunistic behaviour in hospitality franchise agreements

This paper combines agency and social exchange theoretic perspectives to examine opportunistic behaviour in hospitality franchise agreements. It identifies and analyses the opportunistic behaviour of both franchisors and franchisees through a qualitative study of Turkish hospitality franchisees. A model of opportunistic behaviour and social exchange is developed from the study for further empirical testing. The model depicts different categories of franchisee behaviour, how franchisee behaviour is influenced by the behaviour of franchisors, the relevant characteristics of social exchanges between franchisors and franchisees, and the outcomes of those exchanges. As such, the study provides a complementary perspective of franchise opportunism and exchange relationships. A number of implications for hospitality franchise stakeholders are identified as a result.     

Antecedents and consequences of Franchisee satisfaction in the U.S. restaurant industry

This study surveyed 3,177 franchisees from 58 restaurant brands with the purpose of examining the antecedents and consequences of franchisee satisfaction in the U.S. food service sector. Findings indicate that a high level of franchisee income and franchisor care and trust are associated with a high level of franchisee satisfaction. Education had a negative impact on franchisees' satisfaction, suggesting that the higher the level of franchisee education, the less franchisees were satisfied with the franchise. Furthermore, the higher the franchisees' satisfaction was, the stronger the franchisees' intention to remain in the franchise system was, and the higher the likelihood of recommending the franchise to others.     

Selecting franchise partners: Tourism franchisee approaches,processes and criteria

This paper identifies and evaluates the partner selection approaches, processes and criteria use by tourism franchisees to select their franchisor partners. A qualitative study of a sample of Turkish franchisees identifies the partner selection criteria and two distinct approaches used to select franchisor partners. The study contributes to our understanding of franchisee partner selection by demonstrating how the selection criteria, approaches and processes impact on franchisee satisfaction post contract signature. In addition, a framework that depicts the relationship between the criteria, approaches and processes is developed from the study. The study yields a number of implications particularly for prospective franchisees interested in joining a franchise network.     

A sustainable franchisor-franchisee relationship model: Toward the franchise win-win theory

In order for a franchise system to obtain long-term sustainability, balancing the benefits between franchisors and franchisees is critically important. In order to expand this area of research, this study reviewed prior franchise literature and then outlined what a healthy franchise system is. Further, this study also proposed a model for sustainable franchisor-franchisee relationships (SFFR), which supports the ‘franchise win-win theory.’ In developing a model, this study suggested that relationship quality is a vital part of a healthy relationship. This study also identified the three core components of a sustainable franchisor-franchisee relationship (i.e., satisfaction, trust, and commitment), as well as the antecedents and consequences of the relationship. This study conclusively suggested that franchisees are willing to continue their current franchise business only when they are satisfied with a franchisor’s fairness, autonomy, formalization, and support.     

The dynamics and evolution of knowledge transfer in international master franchise agreements

The paper identifies and evaluates the antecedents, contextual factors and inter-organisational processes that influence knowledge transfer in international hotel master franchise agreements and how these evolve from the perspective of both franchisors and franchisees. A single, purposively selected in-depth qualitative case study reveals the specific factors relevant to knowledge transfer at different stages of the franchise agreement. Drawing on the alliance literature, the impact of four partner-specific variables on inter-organisational design processes used to transfer knowledge and on three antecedents to knowledge transfer; shared identity, absorptive capacity and casual ambiguity is identified. The study contributes to our understanding of the dynamics and evolution of knowledge transfer in master franchise agreements by highlighting the relative importance of partner-specific variables and relational management to knowledge transfer evolution and the relative importance of shared identity as an antecedent to knowledge transfer in these agreements     

An analysis of franchisees’ satisfaction with support provided by franchisors in foodservice industry

ABSTRACT

This study validated the scale originally developed in Taiwan for measuring satisfaction of foodservice franchisees with support provided by franchisors in mainland China. Data for validation were collected by means of a questionnaire distributed to foodservice franchisees in Shanghai and Xiamen, China respectively, and analyzed through confirmatory factor analysis. The findings showed that the proposed measurement scale is applicable across the two regions with acceptable model fit indices. In addition, this study examined the differences of franchisees’ perception on support provided by franchisors in Taiwan and China. The findings in this research not only advanced scholarly understanding and theory in franchising but also provided useful insight for foodservice stakeholders seeking to expand their market by franchising in these two regions.     

Effects of restaurant franchising: Does an optimal franchise proportion exist?

Franchising has significantly affected the US economy, contributing to a rapid growth of its retail sales. To identify whether franchising influences a restaurant firm's financial performance, this study investigated (1) the profitability and intangible values of both franchise and non-franchise restaurant firms and (2) the effect of the combination of franchised and company-owned outlets of restaurant firms (i.e., franchise proportion). The results of this study showed that (1) franchise firms had significantly higher profitability than non-franchise firms and (2) the relationships between franchise proportion and firm profitability and intangible value were curvilinear (inverted U-shape), verifying the existence of an optimal franchise proportion. The results propose a possibility that restaurant franchisors could maximize their profitability and intangible value with an optimal franchise proportion when other variables held constant, implying that it is important to pay attention to the franchise proportion together with other management strategies.     

Assessing Hotel Cost Control Through Value Engineering: A Case Study on the Budget Hotels in a Middle-sized City in China

This study employed a value engineering approach to identify and evaluate the factors integral to the efficiency of operation and management of the budget hotel sector in China. A combination of qualitative panel judgments and quantitative statistics was applied in the analysis of a Chinese budget brand which is publicly listed in the USA. Findings reveal that out of the six categories of costs identified, the two items of standard room cost and energy & maintenance achieved the ideal value, while lease rental and human resources are overvalued, with franchise fee and refurbishment cost being undervalued. The implication for hotel investors as well as operators is that for the budget sector to fully realize its potential, a delicate balance needs to be obtained so that resources can be more evenly distributed and customer experiences enriched.     

反垄断法视角中的饭店委托管理

饭店委托管理在我国饭店行业中已经屡见不鲜,从反垄断法角度审视饭店委托管理是一个崭新的视角.饭店委托管理是一种特许经营的经营模式,其价值目标与反垄断法恰恰相反,这就要求界定饭店委托管理在反垄断法方面合法与非法的界限.我国正在制定过程中的反垄断法应充分考虑特许经营和饭店委托管理这种特殊的经营模式,在特定市场认定、市场力量界定等相关问题上深入研究,制定出既符合我国国情,又符合各种产业特点,包括特许经营业和饭店委托管理特征的"经济宪法".     

Efficiency comparison of multiple brands within the same franchise: Data envelopment analysis approach

As the restaurant franchising industry increasingly diversifies its brands, it is pivotal for a firm to accurately assess the efficiency of brands within its franchise system. This research compares and contrasts the efficiency of different brands belonging to the same franchisor using data envelopment analysis (DEA). The sample was drawn from three brands that are in operation under the same restaurant franchisor. The results of the study showed that the efficiency of each establishment, as well as the brands, differed significantly from each other.     

The Non-Equity Entry Mode Choices of International Hotel Organizations in New Zealand

ABSTRACT

Research on the non-equity entry mode choices of service firms is relatively limited. We use transaction cost economics and organizational capability perspectives to examine the determinants of choosing between franchising and management contracts in the hotel industry. In our analysis of four international hotel organizations operating in New Zealand, we found that both asset specificity and imperfect imitability helped in explaining the choice between franchising and management contracts. Behavioral uncertainty and host country management capabilities explained the entry mode choice of some hotel organizations but were not applicable for others that entered New Zealand via international strategic alliances or used strata titles. Finally, environmental uncertainty and the development of New Zealand’s business environment had a limited effect on choosing between franchising and management contracts.     

Does a minimum wage increase endanger restaurant jobs? Examining the role of franchising

This study examined the effect of federal minimum wage increases on the U.S. restaurant industry. Based on the competitive labor market perspective, this study expected that minimum wage increases would negatively (positively) influence restaurant employment (compensation), while franchising would positively moderate the minimum wage-employment (minimum wage-compensation) relationship. The results of the analysis showed that minimum wage increases negatively influence employment, while franchising positively moderates the adverse effect of minimum wage increases on restaurant employment. This study also revealed that minimum wage increases positively influence per employee compensation, but franchising does not significantly moderate the relationship. This study suggested that franchising provides a buffer that absorbs the adverse effects of minimum wage increases on restaurant employment. Conversely, franchise restaurants may face potential service quality issues because franchise firms seem to strategically adjust full-time employees to part-time workers to address minimum wage increases.     

Hotel chain affiliation as an environmental performance strategy for luxury hotels

Stakeholders are increasingly aware of the potential of environmental performance to benefit their health; however, there is a paucity of sustainability studies addressing the relationship between corporate social responsibility (CSR) performance and the brand equity of hotel chains. Unlike traditional economics that treat undesired outputs such as carbon emissions as costless, this research presents an accurate, concise and clear empirical examination of hotel chain affiliation strategy through the Malmquist-Luenberger index to measure the brand competitiveness of the strategy while considering carbon emissions reduction using objective official panel data from Taiwan. The findings reveal that a group of hotel chains has a significantly higher average energy efficiency and branding value than those of a group of independent operators when holistic carbon emissions reduction is considered. Thus, this study encourages stakeholders to promote green hotel policies to independent hotel operators to achieve a higher brand value with lower carbon emissions and to adopt greater use of business intelligence to assist the decision-making of hotel operators in conformity with the United Nations (UN) Sustainable Development Goals (SDGs).     

Knowledge transfer and isomorphism in franchise networks

This study draws on institutional and organisational learning theories to evaluate how knowledge transfer (KT) practices contribute to the development of isomorphism in franchise networks. It also analyses how the characteristics of franchise partners influence this process. Research conducted across a sample of hospitality and retail franchisees in Turkey reveals how the transfer of explicit knowledge aids in the realisation of coercive isomorphism and the transfer of tacit knowledge supports mimetic isomorphism. Additionally, the study identifies the factors that influence the extent to which these types of isomorphism are achieved. In doing so, it identifies the importance of franchisor institutionalisation, or the degree to which a strong and supportive infrastructure is developed, to isomorphism within franchise networks. Institutionalisation impacts on the antecedents to KT. Differences between the KT practices of hospitality and retail franchise networks are also identified.     

On-Job Training—A Critical Human Resources Challenge in China's Hotel Industry

Abstract

The strategic role of human resources function in China's hotel industry is more important than ever before. An increasing number of hotels begin to recognize its significance of such role in sustaining growth in the competitive hotel marketplace. This study focuses on the on-job training aspect of the human resources by first identifying the major problems faced by the industry. The underlying factors of the problems are then investigated; and possible solutions are recommended. The discussion is in the context of five stakeholders in the on-job training function of China's hotel industry. They include hotel employees, hotel management, government agencies, universities, and non-university training institutions.     

Does better service induce higher profitability? Evidence from Taiwanese Hospitality Industry

We adopt Wang et al. (2006) service quality measure to examine how the qualities of various hotel services affect hotel's profitability using panel data in the Taiwanese international tourist hotel sector. The empirical results indicate that there is a non-linear relationship between food and beverage service quality and hotel profitability, while the effect of room service quality on hotel profitability is not significant.     

Destination characteristics that drive hotel performance: A state-of-the-art global analysis

The increased market saturation and competition in both domestic and international tourism destinations have renewed interest among hotel operators in identifying the key drivers of hotel performance. This paper presents a comprehensive analysis of the determinants of hotel performance and their relative importance across multiple tourist destinations. We employ a two-step estimation method to identify key determinants of hotel performance, using a rich sample of international hotels. Our empirical analyses show that the main drivers of hotel performance are the quality of the educational system, government support, disposable income, and number of international arrivals within a tourism destination. Results indicate that the most important barriers to hotel performance are the competition among accommodation providers, tax rate and fuel price. We argue for the need for hotel providers to develop strategies that take cognisance of the key drivers and barriers to enhancing hotel performance in an ever-changing global tourism sector.     

Is restaurant franchising capital a substitute for or a complement to debt?

Since Oxenfeldt and Kelly’s 1969 study, the resource scarcity hypothesis has been considered a representative theory to explain franchising motivations. Whether franchising capital is a substitute for or a complement to debt has been discussed in the franchise literature but the relationship remains unclear. Using Frank and Goyal’s (2003) financial deficit model along with trade-off and pecking order theories, this study shed light on whether franchising capital acts as a substitute for and/or to complement debt in the restaurant industry. This study discovered that the adjustment speed of long-term debt leverage was faster for franchise restaurant firms than non-franchise restaurant firms. Further, the average long-term leverage target was lower for franchise restaurants. Consequently, this study revealed that franchising capital functioned as a substitute for long-term debt. In contrast, the adjustment speed of short-term debt leverage was slower for franchise restaurants and, thus, franchising capital complemented short-term debt.     

The effects of Airbnb on hotel performance: Evidence from cities beyond the United States

Although Airbnb's impact on hotels has been quantified for major hotel markets in the United States, these effects have not been quantified in international hotel markets. Accordingly, the purpose of this study is to examine the effects of Airbnb listings on key hotel performance metrics in an international context. In particular, we examine the effects of Airbnb listings on hotel revenue per available room (RevPAR), average daily rate (ADR), and occupancy rate (OCC) in major international hotel markets, namely London, Paris, Sydney and Tokyo. The results show that Airbnb listings in these major cities have been increasing more than 100% year over year and that the effect of Airbnb on hotel RevPAR and OCC is negative and statistically significant. In particular, a 1% increase in Airbnb listings decreases hotel RevPAR by between 0.016% and 0.031% in these hotel markets. The implications of these findings for destinations and hoteliers are discussed.