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.     

Determinants of customer loyalty and purchasing behavior for full-service and limited-service hotels

This study investigated factors that influence consumer purchasing decisions for two hotel segments: full-service and limited-service. Results from an online survey indicated that full-service hotel guests were more likely to be reward program members and be emotionally attached to their preferred brand. Price was the most important factor for limited-service guests’ purchase decisions, while both price and utility were important for full-service guests. Limited-service guests had lower switching costs, that is, they required less of a discount to switch to a non-preferred brand than full-service guests. The findings have implications for hotel pricing and marketing strategies.     

An Examination of Job Satisfaction of General Managers Based on Hotel Size and Service Type

ABSTRACT

Because of the flatter organizational structure and decentralized hierarchical configuration of limited-service and extended-stay hotels, managerial job responsibilities may differ between these types of hotels and their full-service counterparts. As job responsibilities vary, so too might approaches to ensuring job satisfaction. This study examined how hotel size and service type affect the job satisfaction of general managers. After hypotheses testing and an analysis of the item correlations, it was concluded that neither hotel size nor service type significantly impacted general manager job satisfaction and gender, age, educational level, and longevity in the hospitality industry or as a hotel manager all had minimal impact on job satisfaction.     

A stochastic cost efficiency analysis of international tourist hotels in Taiwan

The one-stage stochastic frontier approach (SFA) is used in this study to simultaneously estimate cost efficiency scores and factors of cost inefficiency for 66 international tourist hotels in Taiwan during 1997–2006. An SFA model with three outputs and three inputs is defined. The three outputs are room revenue, food and beverage revenue, and other operation revenue while the three inputs are price of labor, price of other operation, and price of food and beverage. This model also takes into account five environmental variables, including dummy variable of the hotels located in non-metropolitan area, dummy variable of chain hotels, the number of tourist guides, the minimum distance from each hotel to Taoyuan international airport and the minimum distance from each hotel to Kaohsiung international airport. Empirical results show that international tourist hotels in Taiwan are on average operating at 91.15% cost efficiency. All nominal variables are transformed into real variables in 1997 prices by GDP deflators. Chain systems, tourist guides, and international transportation can significantly improve the cost efficiency of international tourist hotels in Taiwan.     

Determinants of Customer Satisfaction in the Hotel Industry: An Application of Online Review Analysis

This study illustrates that determinants of customer satisfaction in hospitality venues can be identified through an analysis of online reviews. Using text mining and content analysis of 42,668 online traveler reviews covering 774 star-rated hotels, the study found that transportation convenience, food and beverage management, convenience to tourist destinations and value for money are identified as excellent factors that customers booking both luxury and budget hotels consider important and for which the performance is much satisfactory to them. Customers paid more attention to, but were less satisfied with, bed, reception services and room size and decoration. Most determinants of customer satisfaction also showed a consensus over luxury versus budget hotels, except for factors referring to lobby and sound insulation. As per its findings, the article concludes by presenting theoretical and managerial implications.     

Systematic effects of crime on hotel operating performance

We examine the systematic effects of crime on hotel operating performance based on data from a sample of 404 Houston hotels from January 2009 to December 2014. Econometric results show that Part I crime (i.e., violent and property crime) incidents have a significantly negative impact on hotel operating performance (measured by revenue per available room), ceteris paribus. Also, the marginal effect of crime declines as crime density level increases. Separate examinations of violent and property crimes show that they exert significant and negative impacts on hotel operating performance, with the impact of violent crimes being more substantial. In addition, the results reveal that both nighttime and daytime crime incidents significantly and negatively impact hotel operating performance. Finally, as evidenced by the insignificant impact of crime incidents occurring on hotel premises, the results suggest that hotels are generally effective at maintaining systematic security measures and preventing crime incidents from occurring.     

Investigating Rate Integrity in Convention Cities

Abstract

Yield Management (YM) is the utilization of tactics to align a consumer product within the market for profit maximization. By evaluating how rates are quoted to consumers, the effectiveness of YM tactics can be delineated. This study compared central reservation (CR) telephone and Internet room rates by city. The CR centers for full-service hotels in 19 different cities were contacted by telephone to request a room. The CR rates were compared to rates obtained from the hotels' Internet sites. The data analysis found significant differences in reservation rates by city and by size of the lodging property. Hoteliers can use the information to evaluate the effectiveness of their YM systems.     

Identification of the reactions of hotel managers to new competition

This paper arises out of research carried out recently on the impact of a new hotel on the other hotel businesses which are operating in the same market. To ascertain the possible reactions of hotel managers to new competition and the relative importance of alternative price and non-price strategies a postal survey of 250 three-and four-star graded hotels across the U.K. was undertaken. It was found that a change in published tariff rates is regarded as being relatively unimportant whilst sales promotion is given the highest priority. Disaggregation of the sample by hotel size and occupancy rates does not reveal any significant changes in the relative importance of possible strategies. While the survey indicates that both non-price and price competitive strategies are seen by managers as essentially complementary, nevertheless, price competition in the form of secret discounting of published room rates to mass market intermediaries (tour operators and travel agents) and corporations is particularly important. While price discounting is the ‘private’ face of hotel competition much more research is needed on both the ‘public’ and ‘private’ nature of competition in the hotel industry and how these inter-link.     

Management fees and hotel performance in the U.S.

A management company takes care of the day-to-day operations of a hotel and thus has a great amount of influence on the hotel's financial performance. Adopting models from O’Neill, Hanson, and Matilla (2008) and Hua, Morosan, and DeFranco (2015), a set of empirical models, with same-store data from 1471 hotels from 2011 through 2017, was used to test the impact of the total management fee and its subset of the base management fee and the incentive management fee on the hotels' rooms revenue and gross operating profit while controlling for potential confounding factors including chain scale and location.This is the first paper to empirically validate the value of a management contract for both the owners and the management company, including the positive and significant effects that base management and incentive management fees have on hotels’ room revenue and gross operating profit.     

Re-examining the market structure effects on hotel performance using market share inequality

Previous studies have suggested that the Herfindahl–Hirschman Index (HHI) does not adequately account for market structure. To remedy this problem, this article further decomposes the HHI into two components: the number of competitors and market share inequality. Using the metropolitan-level data of tourist hotels in Taiwan, this article estimates the effect of these variables on hotels’ profits. This article shows that while a single measure of the HHI does not have a significant effect on hotels’ profits, decomposing HHI leads to different results. It shows that increasing the number of competitors may improve hotels’ profitability, and by contrast, greater inequalities in market shares may be detrimental to the profit in the room market.     

The cause-effect relationship between negative food incidents and tourists’ negative emotions

Tourists often experience negative food incidents at tourism destinations, which can elicit negative emotional reactions. However, this important topic has been examined only in the narrow context of restaurants with a particular focus on customers’ negative restaurant experiences. This study is the first to incorporate three types of food establishments, namely, full-service restaurants, limited-service restaurants, and street stalls, to investigate the effects of negative food incidents on tourists’ negative emotions. Using a qualitative approach to capture the cause-effect relationship between negative food incidents and tourists’ negative emotions, this study found that food-related issues trigger tourists’ sadness and shame; queue management leads to fear; and high prices, unethical business practices and poor service quality result in anger. The three types of food establishments are correlated with different negative food incidents. In addition to providing theoretical contributions, this study also provides practical suggestions for food outlets at any destination.     

Emerging Definitions of Boutique and Lifestyle Hotels: A Delphi Study

Despite growing interest in the boutique and lifestyle sector of the lodging industry, there is not an accepted definition of either “boutique hotel” or “lifestyle hotel.” Boutique and lifestyle hotel strategies provide hotel companies with important points of differentiation in an increasingly competitive marketplace. The current study determined definitions using a Delphi analysis of responses from a diverse group of experts from the lodging industry. Forty-one panel members were involved in the process that was undertaken with three rounds of questions. The study determined that boutique hotels are best characterized as small, stylish hotels that offer high levels of service. Lifestyle hotels are described as innovative and provide more of a personal experience than so-called “branded” hotels.     

The future of the State-owned hotels in China: Stay or go?

Hotel sector was the first one to employ joint venture in China after its ‘Open Door Policy’ in 1978. In transition from production unit to business unit, the operating system of China's State-owned hotels (SOHs) has changed greatly. Though its hotel industry has become more open, many of the tourist hotels are still State-owned enterprises (SOEs) today, and they account for over half of the loss of all hotels in the country. This study aims to find out: first, critical issues causing those problems facing the SOHs; second, factors affecting the development of SOHs, and third, their future. Government ownership and its related problems, such as complicated ownership, bureaucratic structure and control, add difficulty to restructure SOHs. The future of the SOHs in China regarding whether to stay or to go very much depends on government policy and commitment on restructuring the industry which is vital to success and sustainability of SOHs in the socialist market economy environment.     

The effects of environmental and luxury beliefs on intention to patronize green hotels: the moderating effect of destination image

Recent research has demonstrated a disconnect between environmental beliefs and behavior when it comes to the consumption of hospitality products. Unfortunately, while many consumers believe that hotels should engage in green practices, there is mounting evidence that such beliefs do not necessarily translate into actual purchases of sustainable products. The purpose of this research is to examine this issue by developing an integrated framework establishing the relationships among the beliefs, attitudes, and behaviors associated with the consumption of the green hotel product. In particular, we are concerned with the effects of consumers' beliefs regarding the luxury-based trade-offs associated with staying in green hotels. Additionally, we seek to establish the role of destination image as a determinant of the relationships specified in the proposed nomology. The results support our overall hypothesis that the established disconnect between environmental values and sustainable hospitality consumption behavior is at least partially attributable to the cognitive evaluation of the attributes of the hotel's destination. Specifically, our results show that, while the belief that green hotels are less luxurious translates to unfavorable attitudes toward green hotels in urban tourism destinations, this relationship does not occur in nature-based tourism destinations.     

Loyalty Runs Deeper than Thread Count: An Exploratory Study of Gay Guest Preferences and Hotelier Perceptions

Alongside many global businesses, hotels have recently shared in the movement to serve the gay market. If the perception of being gay-friendly is not the same for hoteliers and their gay guests, a marketing discrepancy may exist and loyalty of the gay segment could be at risk. To address this issue, a sample of 188 gay guests and 48 hoteliers was explored. Differences tests were conducted to evaluate the hotel attribute importance ratings of gay guests versus hoteliers when considering that segment. After conducting a factor analysis, a regression determined the impact of each factor on gay guest loyalty, with the social environment component having the greatest impact. Most importantly, hotels should support the gay community beyond simply offering a room, an intangible yet important display of social responsibility. This study augments previous hospitality research on the gay guest segment and provides avenues for future qualitative and quantitative studies.     

Diversification strategies and failure rates in the Texas lodging industry: Franchised versus company-operated hotels

This research examines the relationship between geographic, brand, and segment diversification and hotel failure rates based on ownership structure, i.e. franchised and company-operated hotels, in the Texas lodging industry. Literature on diversification strategies is mainly based on financial measures of performance and offers mixed results; only few studies have assessed firm failure rates directly based on distinct diversification strategies at the establishment level. The performance outcomes are significantly heterogeneous not only based on the strategies, but also on the ownership structures, which are yet to be examined. Using data from the Texas Comptroller of Public Accounts from 2000 to 2018, a semi-parametric Cox proportional hazard model is estimated, and the findings reveal that failure rates are not significantly tied to particular types of diversification and ownership structures. This research provides insights on hotel diversification strategies and their relative dominance on hotel failure rates based on franchised and company-operated hotels.     

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 Use of Consumer-Generated Feedback in the Hotel Industry: Current Practices and Their Effects on Quality

Consumer-generated feedback is hard to ignore these days. Word-of-mouth has expanded beyond a customer’s immediate friends and family; with the help of technology it reaches thousands of current and prospective guests. In light of this, scholars and practitioners are exploring the subject of consumer-generated feedback. Today, most of the research regarding this subject focuses on the use of consumer-generated feedback to make purchase decisions. In contrast, the present study explores the use of such information for the purposes of improving hotel operations. This article examines the amount of value placed on consumer-generated feedback, the relative importance placed on positive and negative feedback, and its effects on perceived quality. Furthermore, this study inquires as to the specific uses given to consumer-generated feedback in the hotel industry. It is the researchers’ contention that valuing feedback has positive effects on perceived quality. The findings conclude that hotels can use consumer-generated feedback to take actions such as modifying training programs and operating procedures, as well as identifying patterns of complaint and praise.     

Effects of hotel employees' perception of wage justice: the case of South Korea

The purpose of this study is to examine whether the results of the previous studies on the relationship between wage justice and employees' attitude are also found within Korean hotels that have adopted a unique wage system. The data were collected through a survey done with employees of five Korean hotels. The results are similar to those of previous studies. However, the present study found that employees' satisfaction with the wage system is also important, and job insecurity partially affects the relationship between wage justice and employees' attitude as well as the relationship between employees' satisfaction with the wage system and their attitude. Managerial implication, limitations and directions for future studies are suggested.     

Hotel guests’ perceptions of environmental friendly practices in social media

Despite hotels’ managers spend substantial time and money on environmental initiatives; they are not sure whether their guests perceive their green efforts appropriately. The purpose of this study is to analyze guests’ perceptions of hotels’ environmental practices expressed through social media. Main results suggest that even though customers perceive green efforts regarding six items: Energy, Water, Purchasing, Waste, Site and Education & Innovation, they do not discern hotels' level of environmental commitment. Moreover, guests' perceptions of hotel efforts in environmentally friendly practices do not significantly differ by the mode of travel nor by the reviewer's experience in travel platforms. A relevant implication is that the communication about environmentally friendly practices needs to be redesigned and intensified by hotel managers in order to take advantage of these efforts.