The Implementation of Saudization in the Hotel Industry

Saudi Arabia's localization policy, “Saudization,” aims to decrease reliance on expatriate workers, but it has been more successful in the public sector than in the private sector. This study explores the issues involved in effectively implementing the policy in the hotel industry in Saudi Arabia, specifically four- and five-star hotels. Tourism professionals, HR professionals, and hotel managers were interviewed and hotel managers and employees surveyed. The research specifies criteria for the effective implementation of Saudization and identifies the issues involved in implementing this policy in four- and five-star hotels. It makes recommendations, which could assist in implementing the policy effectively in the hotel industry.     

How do dynamic capabilities explain hotel performance?

This research study explores the relationship between three dynamic capabilities and their impact on hotel performance. Specifically, we examine the relationship between human resource management (HRM), quality management (QM) and sustainability. In addition, we analyse how QM and sustainability explain hotel performance measured by occupancy rate, average daily rate (ADR) and revenues per available room (RevPAR). These capabilities can generate income, enabling hotels to adapt as quickly as possible to the changing environment. Findings show a significant relationship between HRM, QM and sustainability. The relationship between QM and hotel performance and between sustainability and hotel performance is fully mediated by the differentiation competitive advantage. Our results represent an advance in hotel theory and management because they integrate HRM, QM and sustainability, and show their ability to be a source of competitive advantage and profitability.     

How do advertising expenditures influence hotels’ performance?

Existing studies have shown a positive relationship between advertising and hotel room revenue. However, it is not clear through which channel advertising affects hotel revenue. We contribute to the literature by showing that advertising has a significant positive impact on hotel room price, but not on room occupancy. Thus, advertising affects room revenues through room price, not quantity demanded.     

The signaling and reputational effects of customer ratings on hotel revenues: Evidence from TripAdvisor

This study aims to examine whether customer ratings and online reviews affect hotel revenues, and if so, to quantify the effects. To achieve this objective, we articulate the mechanisms grounded on reputation theories whereby customer ratings exercise the influence on hotel performance through reputational and signaling effects. Using customer rating data from TripAdvisor and hotel revenue data from Texas, we estimate fixed effects regressions and adopt a regression discontinuity design to separate the signaling effect of customer ratings from reputational effect. We found that the signaling effect of a 1-star increase is an increase of 2.2–3.0% in hotel monthly revenues whereas the reputational effect of a 1-star increase is an increase of around 1.5–2.3% in hotel monthly revenues. Our findings are robust across alternative model specifications and provide insightful implications for hotels to manage their customer ratings.     

Conventions and Gaming in Las Vegas: Friends,Enemies, or Strangers?

As cities look at various industries to strengthen their economies, officials have begun to examine conventions and gaming more closely as they have often been considered “recession-proof.” This study utilizes time series regression to analyze the effects of convention attendance and hotel occupancy on monthly gaming revenues for Las Vegas from 2002 to 2013. Three commonly held opposing viewpoints in trade literature are that conventions reduce, augment, or complement gaming. These viewpoints produced the hypotheses for this study. It was found that convention attendance had no significant relationship with gaming revenue; however, citywide hotel occupancy was found to have a significant positive relationship with gaming revenue. This finding rules out the reduction and augmentation hypotheses.     

Investigating the whole picture: Comparing the effects of Airbnb supply and hotel supply on hotel performance across the United States

This study examines and compares the extent to which Airbnb and hotel supply affect key hotel performance measures in the United States. The results show that although both Airbnb and hotel supply adversely affect hotel revenues (i.e., RevPAR), the magnitude of the impact of hotel supply on RevPAR is much larger than that of Airbnb. Airbnb adversely affects hotel room prices (i.e., ADR), however; it does not affect occupancy rates (i.e., OCC). Yet, increasing hotel supply negatively affects OCC but not ADR. The results from the state-level analyses further showed that the negative effects of Airbnb and hotel supply on RevPAR, ADR and OCC persist only in states with high hotel supply. Analyzing the joint effects of Airbnb and hotel supply on hotel performance in a manner that is both geographically-comprehensive and spatially-meaningful, this study provides a more complete and nuanced understanding on the economic dynamics of the accommodation industry.     

Opening the online marketplace: An examination of hotel pricing and travel agency on-line distribution of rooms

This paper studies the optimal pricing strategy of a hotel that establishes an online distribution channel through cooperation with an online travel agency (OTA). The OTA promotes the hotel and sells hotel rooms through its website and receives commission from the hotel for rooms sold. Through a sequence game model, this paper derives the optimal decision on the unit commission of the hotel and the optimal response of the OTA to that commission. The paper notes management implications, including (1) occupancy rate of a hotel before opening online marketing is an important metric for securing cooperation with an OTA; that is, a hotel with lower occupancy rates is more inclined to cooperate with an OTA to achieve an improvement in profits; and (2) a hotel is inclined to establish an online channel through an OTA with many online customers and/or few listed hotels.     

Data Mining For Hotel Occupancy Rate: An Independent Component Analysis Approach

The recent global financial crisis and the threat of a worldwide H1N1 influenza epidemic have greatly affected the tourism and hospitality industries around the world. Both hospitality practitioners and researchers are interested in finding analytical methods that enable forecasts to be made of hotel room demand under the uncertain conditions likely to affect the industry. In this article, a novel data mining technique called independent component analysis (ICA) is proposed to establish the major factors determining the hotel occupancy rate in Hong Kong. Then, extension of the model is suggested, incorporating these factors to decompose hotel occupancy rates and examine the effect of each factor on the hotel occupancy rate. Empirical findings show that outbreaks of infectious diseases, economic performance, and service price were the major determinants of the hotel occupancy rate in Hong Kong over the period studied.     

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.     

Change or perish: Examining the role of human capital and dynamic marketing capabilities in the hospitality sector

Many researchers have endeavored to explain which factors contribute to sustainable competitive advantage. Toward this end, this study contributes to the marketing and hospitality management literature by providing empirical evidence on how human capital, dynamic marketing capabilities, and market dynamism influence competitive advantage in the hotel sector. We collected cross-sectional survey data from marketing and sales managers in 165 hotels, along with in-depth interviews in three hotels, based in four Gulf Cooperation Council (GCC) countries, namely, Saudi Arabia, Qatar, United Arab Emirates and Bahrain. The findings reveal that human capital directly, and indirectly through dynamic marketing capabilities, plays a critical role on developing competitive advantage. To contextualize this role, our research reveals that market dynamism moderates the mediated relationship between human capital and competitive advantage via market sensing capabilities. We discuss how the findings offer theoretical and managerial implications for the development of competitive advantage in the hotel sector.     

Competition and lodging room rates

Though an important component of commerce and tourism, the accommodation industry has received little economic analysis, particularly in terms of predictive modeling. This paper develops an empirical model of pricing in the lodging industry based on traditional microeconomic price theory. Additionally, three questions are addressed: Do establishments with low occupancy rates tend to raise price to increase revenues, or lower price to increase business? Which approach should they choose? How much competition exists in the industry?     

An investigation of AAA diamond rating changes on hotel performance

Despite previous attempts to link hotel rating systems to performance, no prior study has examined the effects of changes in Diamond ratings. Considering the variability in Diamond ratings, and the fact that hotels may gain or lose a Diamond over time, it is important for hotel properties to assess such outcomes on key performance indicators (KPIs). Hence, this study examines the influence of Diamond rating changes on hotels’ KPIs (i.e., occupancy rate, average daily rate, and revenue per available room) and competitive set indexes, which allow to benchmark a property’s performance against a designated competitive set. Results suggest that in both the short and long-terms, significant differences in KPIs and indexes exist between properties which benefited from an increase in Diamond rating, versus those which suffered from a drop in Diamond rating. Furthermore, despite such improved performances over time, improvements in hotels’ KPIs and indexes tended to diminish over time. The current findings yield important contributions to the literature regarding the effects of hotel rating changes on KPIs and indexes and provide valuable insights to hotel owners and operators.     

Do brands matter? A comparison of branded and independent hotels’ performance during a full economic cycle

By analyzing longitudinal data of more than 51,000 hotels operating in the United States during the previous economic cycle, it is possible to draw conclusions regarding the performance of branded hotels compared to independent operations under various economic conditions. The results of the study indicate that while branded properties experience significantly higher occupancy rate during the different phases of the economic cycle, independent hotels experience significantly higher average daily rate (ADR) and rooms revenues per available room (RevPAR) during the same time period. While branded hotels are faced with various payments attributable to the brand, such as royalty payments and other franchise fees, those fees do not have a deleterious effect on net operating income (NOI) compared to NOI for independent hotels, suggesting that independent hotels are unable to bring their ADR and RevPAR premiums to the bottom line despite their savings in franchise expenses. Instead, the results indicate similar NOI for branded hotels and independent hotels during economic expansion, but significantly higher NOI for branded hotels during economic recession. The results of this study suggest that the intangible asset value of hotel brands may not be a static construct, but may vary by time. Sources of such intangible value of brands may include shared resources, guest loyalty programs, and yield management systems. These results contribute insight into the complex hotel owner decision of choosing between a brand affiliation and independent operation.     

Modelling growth and revenue for Swedish hotel establishments

This paper provides first estimates of the determinants of output growth of Swedish hotels based on establishment data. Growth of overnight stays is modelled as a function of initial size, age, type of accommodation, location and hotel prices measured as average revenues per guest nights. The empirical model accounts for potential endogeneity of hotel prices through the two-stage least absolute deviation model (2SLAD) and the instrumental variable quantile regression method. 2SLAD estimates show a positive and significant relationship between hotel prices and subsequent growth. The relationship is nonlinear with a decreasing impact as the price level increases. Growth of establishments is significantly higher for smaller and younger hotels. An important result is that city hotels, in comparison to tourist and other hotels – which are mainly located outside urban areas (in the mountains and at the sea) – exhibit significantly higher growth rates with a gap between 2.2 and 3.4 percentage points. Furthermore, the positive impact of hotel prices on growth is larger for high-growth establishments. Accommodation prices significantly decrease with the number of local competitors with a non-linear form and increase with size. City hotels and accommodation in the capital city have the highest revenues per guest night.     

Developing a Forecast System for Hotel Occupancy Rate Using Integrated ARIMA Models

Abstract

International tourist hotels play a consequential role in the development of the tourism industry. The occupancy rate is usually considered a pertinent indicator in measuring the performance of the hotels. This study employs the ARIMA and ARIMA transfer function model incorporated with the Box-Cox transformation function for the forecasting of occupancy rate. The results of this research find two explanatory variables strongly affect the occupancy rate: one is the numbers of tourists and the other is the Taiwan/ Japan foreign exchange rate. The forecasting shows slow rising of the occupancy rate for the international hotels in Taiwan; it will reach 64.67% by the year 2000. The forecast of the occupancy rate provides important information tor both government agencies and hotel managers so that corresponding management strategies can be made.     

An analysis of asymmetry in dynamic pricing of hospitality industry

The paper analyzes the influence of changing tourist arrival on various hotel performance measures related to prices, such as price charges per room, revenue per available room, occupancy rate, and total revenue using price dynamics of Oslo as a case. It also measured whether there is an asymmetric relation between the above performance measures in response to the increase and decrease of tourist arrival. While the presence of a significant long-run relationship between tourist arrival and revenue per available room, capacity utilization, and total revenue has been confirmed, it was found that the price per room does not have such a relationship, and it suggests that the price adjustments are made only on short-run considerations. Another interesting observation is that the magnitude of asymmetric influence is high for revenue per available room and occupancy rate when tourist arrival declines, compared to the corresponding magnitude when tourist arrival increases. These findings indicate that there lies a scope to improve the dynamic pricing model currently being followed.     

Travel Package Modeling: Optimal Bidding Strategy of Tour Operator to Cooperative Hotels

In the travel package industry, in order to obtain stable and sufficient source of hotel rooms for package products, the tour operators would like to cooperate with hotels located at the tourism destination. Meanwhile, the hotels also appreciate the cooperation as a way to improve occupancy rate and then revenue. This paper develops models of travel package in several scenarios to analyze the relationship between the tour operator and the hotel. Through theoretical analysis and numerical studies, this paper finds that the tour operator will bid a low wholesale room rate to the hotel with high capacity or/and a small number of individual tourists. On the other hand, the hotel with large capacity or/and less individual tourists will reserve more rooms for the travel packages, while the one with high room rate and stable source of individual tourists is not likely to remain so many rooms for the tour operator.     

Operating synergy and marketplace performance of dual-branded hotels

Dual-branded hotels have received great attention in the industry recently. Our study uniquely examines the dual branding effects in two dimensions of synergy (operation and marketplace) and the role of dual branding composition in creating synergy. Based on the property-level data, this study conducts a systematic analysis to verify these benefits using a fixed-effects model and a matched-sample analysis. There are three key findings. First, the benefit of dual branding mainly comes from operating synergy. Dual branding could lower revenue volatility for all dual-branded hotels and reduce operating costs for those paired with the same-class hotels. Second, dual branding on marketplace performance varies by property characteristics. Third, the anchoring effect is asymmetric. In a different-class dual-branded hotel pair, the higher-class hotel’s occupancy is anchored down but the lower-class hotel’s occupancy is not anchored up.     

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).     

How does hotel pricing influence guest satisfaction by the moderating influence of room occupancy?

Whether the product price increases customer satisfaction or rather decreases it has been actively debated for some time. A non-linear correlation between the hotel price and guest satisfaction, explored empirically in this paper, implies that the two phenomena are actually not inconsistent with one another At the low price level, room price and food and beverage (F&B) price leads to an increase in guest satisfaction whereas the high price level could have just the opposite effect The results suggests an inverse U shaped relationship between price level and guest satisfaction On the other hand, the room price guest satisfaction link could be affected by the moderating influence of room occupancy to be a U shaped function This paper reports results from a study on the influence of hotel pricing on guest satisfaction in the context of room products and F&B products in Taiwanese international tourist satisfaction It is found that the hotel pricing has a quadratic effect on guest satisfaction