Do regional factors matter? Determinants of hotel industry performance in China

The hotel industry is deeply embedded in local regional conditions, though the influence of regional factors is seldom investigated. Three key hotel industry metrics, Revenue per Available Room (RevPAR), Average Room Rate (ARR), and rooms rented, were examined for their determinants using ordinary least squares and negative binomial regression models on key endogenous and exogenous (regional) factors, including Destination Attractiveness and Capacity, Business and Commercial Environment, Image and Openness, and Tourism Professional Specialization. Using China as a case study, and at different hotel star designations (2- to 5-star hotels), the results show that RevPAR is determined mainly by labor quality and Tourism Professional Specialization. Particularly, regional factors significantly affect ARR and rooms rented. The influence and sophistication of regional factors increases with higher star designations. This paper highlights links between the hospitality industry and regional economic development, which should be considered by both the hotel industry and tourism policy makers.     

Employee Relation Programs and Hotel Performance

Abstract

The purpose of this study was to examine the impact of employee relations programs (ERP) on organizational performance in the lodging industry. ERP provides employees with opportunities to participate in planning and improving work-related tasks. Four items were used to measure employee relations: formal complaint-resolution programs, participation programs, attitude surveys, and suggestion systems. Further, three types of organizational performance measures, namely employee turnover, labor productivity, and revenue per available room (RevPAR) were used. Findings indicated that ERP led to higher labor productivity and RevPAR.     

New performance indicators for restaurant revenue management: ProPASH and ProPASM

Measuring business performance is the first step of the improvement process but without knowledge there can be no purposeful action. Revenue per Available Seat Hour (RevPASH) is an effective and reliable indicator of a restaurant's performance, however, it may not provide the whole picture of a restaurant's business performance. In restaurants, the contribution margin of each menu item is different and it should be taken into consideration when evaluating restaurants’ performance, because the goal of restaurant revenue management is to maximize profit, not just revenue. Although several researchers have explored various issues regarding restaurants’ revenue management (RM) strategy, there has been little discussion on how to measure the performance of RM strategies as they apply to restaurants, except RevPASH. Therefore, this study proposes new metrics, ProPASH (Profit per Available Seat Hour) and ProPASM (Profit per Available Square Meter) and discusses how they can be applied to measure the effectiveness of restaurants’ RM strategies.     

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.     

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.     

Does Airbnb have a homogenous impact? Examining Airbnb’s effect on hotels with different organizational structures

Although a number of studies have examined Airbnb’s impact on hotels, previous studies have yielded mixed results and are limited in their geographical scope. Additionally, the impact of Airbnb on hotels with different organizational structures has not been previously analyzed. Accordingly, the purpose of this study is threefold: 1) to add to our understanding of the impact of an increase of Airbnb inventory by clarifying previously inconclusive results; 2) to examine the extent to which Airbnb listings affect hotel performance measures in the overall U.S. hotel market; and 3) to investigate the influence of Airbnb on key hotel metrics by elaborating the effect of Airbnb on hotels operated under different organizational forms- chain-managed, franchised, and independent. Our results show an adverse impact of Airbnb on hotel RevPAR and ADR metrics across different organizational structures. However, interestingly, Airbnb listings did not negatively affect occupancy numbers. Theoretical and practical implications are discussed.     

The effects of the minimum wage on the operating performance of hotels in the U.S.

The economic effects of the minimum wage have been the focus of ongoing contradictory debates among policymakers and researchers. This study finds a positive effect of the minimum wage on the operating profitability of hotels in the U.S. However, the pricing practices of full-service hotels are dissimilar to those of limited-service hotels. Although the burden of the minimum wage is substantial, full-service hotels can spread the weight onto other departments, while limited-service hotels mainly rely on rooms revenue. Thus, the effects of the minimum wage on room price (average daily rate; ADR) are more substantial at limited-service hotels than at full-service hotels even though operating profitability (gross operating profit per available room; GOPPAR) is not substantially different between them. Eventually, increased minimum wage can play a beneficial role not only for the hotel industry but also for local society, since minimum wage employees take home a larger salary.     

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.     

Organizational Climate of Food and Beverage Employees

Abstract

Seven dimensions of organizational climate and measures of perceived customer satisfaction were gathered from food and beverage employees of 14 hotels. Regression analysis revealed organizational climate to explain 26.9% of the variance in customer satisfaction with food and beverage and only two organizational climate dimensions, professional and organizational esprit, and conflict and ambiguity, displaying a unique relationship to customer satisfaction with food and beverage. Customer satisfaction with food and beverage was found to explain 18.45% of the variation in RevPAR among the hotels. Recommendations are made as to which dimensions of organizational climate should be targeted for intervention programs attempting to increase hotel financial performance.     

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.     

SCP-relevance and class-effect in performance – A comparative analysis of restaurants and petroleum firms

The importance of industry-specific factors for a firm's performance has often attracted the attention of researchers, managers, and investment analysts. This research uses random-effect variance component analysis to examine the relevance of structure-conduct-performance (SCP) paradigm in the context of restaurant and petroleum/natural gas firms. The study further investigates class-effect in firm performance by analyzing whether the relative importance of industry-and-firm-level effects varies across different performance groups. Results suggest a direct relevance of the SCP paradigm and industry-specific factors for firm performance, and a distinct dominance of industry-effect over firm-effect regardless of the choice of accounting or value based performance measures. Results further reveal varying roles of industry and firm-level factors (corporate or strategic) across middle-of-the road and non-average (exceptional) performance groups. As such the importance of SCP paradigm and the strategic role of both industry-and-firm effect factors for value creation in US based restaurant firms is better understood.     

Antecedents,mediation effects and outcomes of hotel eco-innovation practice

Eco-innovation is essential if we are to improve the environmental impacts of tourism firms. Building on the natural-resource-based view (NRBV) of the firm, we hypothesize that eco-innovation is the mediating factor between four firm-level antecedents (opportunity-recognizing and opportunity-capitalizing capabilities, top managers’ attitudes and stakeholder pressures) and three outcomes (cost and differentiation, with respect to a firm’s competitive advantage, and its resulting organizational performance). Partial least squares structural equation modelling is applied to the data from a survey with hotel managers in China, and confirms all of the hypotheses, except two, namely: i) that cost competitive advantage is positively related to hotel performance, and ii) that eco-innovation fully mediates the relationships between opportunity-recognizing capability and both dimensions of competitive advantage. Our contribution to the NRBV theory with a novel, integrated model to predict the mediating role that eco-innovation plays between firm-level resources and capabilities, and competitive advantages.     

Yearly,monthly and weekly seasonality of tourism demand: A decomposition analysis

Annual seasonal variations in tourism demand have been a central theme in literature. However, annual seasonality is not the only time-based inequality in tourism flows that has important implications on policy-making decisions at destinations. Within the context of tourism, this study aims to make an in-depth analysis of intra-monthly and intra-weekly tourism demand using the entropy and relative redundancy measures as alternative seasonality indicators to the Gini coefficient in order to provide new tools to manage tourism and propose new action policies at these frequencies. In comparison with the Gini coefficient, the entropy measure is simpler to compute and it is easily decomposable. Using the case study of air arrivals and departures to and from the Balearic Islands, results show the appropriateness of entropy and relative redundancy as seasonal indicators but also as a new information tools for tourism seasonality analysis.     

Quantifying the economic impact of COVID-19 on the U.S. hotel industry: Examination of hotel segments and operational structures

The COVID-19 pandemic has had substantial negative impacts on the global economy. While all sectors of the economy are expected to be adversely affected, the economic implications of this pandemic for the hotel industry have not yet been widely investigated. The purpose of this study is to examine the extent to which the COVID-19 pandemic has affected the U.S. hotel industry. The results showed that daily room OCC, ADR and RevPAR have plunged about 74%, 47% and 86%, respectively. Although the impact is observed across all hotel segments, economy-scale hotels were more resilient, whereas luxury-scale hotels experienced the largest decline. Also, chain-managed hotels are the most affected by the COVID-19 pandemic as compared to franchise and independent hotels. Quantifying the magnitude of this impact, we found that the U.S. hotel industry's revenue losses accumulated to over $30 billion between March-2020 and May-2020. Implications for practitioners, policy-makers, and researchers are discussed.     

The impact of corporate charitable giving on hospitality firm performance: Doing well by doing good?

While corporate charitable giving (CCG) may have a positive or negative effect on corporate performance (based on value enhancement theory and agency cost theory, respectively), CCG could also have no impact at all. This article tests the extent to which CCG can influence corporate performance of Taiwan's publicly traded hospitality companies. The variable of CCG is defined as the ratio of the total value of corporate giving to total sales revenue. The measures of corporate performance are profitability (return on assets and return on equity), stock performance and Tobin's Q. Panel regression test results reveal that CCG can affect all measures of corporate performance except for stock return. In particular, the impact of CCG on return on assets, return on equity and Tobin's Q is an inverted U-shape, implying that an increased CCG can enhance corporate performance, but as the level of CCG reaches its optimal point, an increase in CCG could have a negative influence on corporate performance. Empirical test results can offer valuable managerial insights for the hospitality industry.     

How does social capital influence the hospitality firm's financial performance? The moderating role of entrepreneurial activities

Although previous studies have examined the relationship between social capital and firm performance under boundary conditions such as firm age, industry characteristics, and institutional conditions, the literature is silent on the types of firm activities linking social capital to financial performance. This study investigates the moderating role of firm-level entrepreneurial activities (service innovation, corporate venturing and strategic renewal) on the relationship between social capital and financial performance in a sample of Chinese hotels. The findings indicate that the interaction of external and internal social capital has a positive effect on financial performance. In addition, innovation and corporate venturing enhance the relationship between financial performance and social capital. To achieve a competitive advantage, hospitality firms should not only accumulate social capital but should also deliberately implement strategies that enhance entrepreneurial activities to fully unleash the potential of social capital.     

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.     

Measuring comparative destination performance: A study in Spain and Turkey

Abstract

Competitiveness between tourist destinations has increased due to the development of international tourism activity over the last two decades. This brings the importance of the assessment of destination performance vis‐à‐vis other similar and competing destinations. Therefore, this study attempts to develop an approach for the measure of destination performance and its comparison with another destination by using the data obtained from the actual tourists visiting both places. Two types of questionnaire are developed and their findings are found to be consistent. Empirical findings indicate that each destination has its own strengths. Implications and limitations of the study are also discussed.     

Limitations of Cross-Cultural Customer Satisfaction Research and Recommending Alternative Methods

SUMMARY

Cross-cultural research in tourism is receiving increasing attention from academics. Little, however, has been done with regard to the assessment of cultural differences in tourist satisfaction. Research in tourism marketing has recognized the need for further research in cross-cultural satisfaction research, and specifically, in equivalence issues regarding the measurement of tourist satisfaction. Consequently, the aim of this conceptual paper is to focus attention on the importance of exploring cross-cultural differences in customer satisfaction research. The principal contributions are three-fold: (1) to emphasize the significance of exploring cross-cultural differences while attempting to measure customer satisfaction in tourism, (2) to recommend alternative research methodology to analyse cross-cultural tourist satisfaction, and also (3) to point out limitations of conducting cross-cultural research in tourist satisfaction from both the theoretical and practical point of view.     

A round trip on decentralization in the tourism sector

Although the performance of the tourism sector has been investigated extensively, the effects of institutional governance have largely been unexplored. This study uses a quasi-natural experiment setting owing to differences in tourism policy devolution between special and ordinary statute Italian regions. Using panel data for the period 1995–2010, we first assess the efficiency of each region by a smoothed bootstrapped Data Envelopment Analysis (DEA) and an order-m frontier estimator. Next, we adopt a difference-in-difference strategy and a fully non-parametric approach to assess whether decentralization affects the performance of regions as tourism destinations. We find that regions affected by decentralization worsened their performance, compared to unaffected regions. The results are robust to different estimators and empirical specifications.