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.     

The other side of technology adoption: Examining the relationships between e-commerce expenses and hotel performance

As information technology (IT) increasingly permeates all aspects of the contemporary society, hotels have spent millions of dollars to deploy electronic commerce (e-commerce) tools and develop appropriate strategies to attract and retain guests. Yet, while the literature reflects the drivers of adopting certain e-commerce tools, it does not provide a conclusive answer regarding the effectiveness of e-commerce expenditures. Specifically, it is unclear whether such expenditures affect performance in terms of revenue and gross operating profit, or whether such effects are consistent over time and across different chain scales. Based on financial data reported by a sample of 275 hotels from 2007 through 2012, this study found that e-commerce expenses significantly and positively impacted rooms revenue for all sample years, except in 2007. When subgroup analyses were performed by chain scale, it was found that e-commerce expenses significantly contributed to the gross operating profit for midscale and upscale hotels but not for the luxury, upper upscale, and the upper midscale categories.     

The impact of fees on visitation of national parks

This study assesses the impact of the change in revenue management policy (namely the increased public land recreation fees) on the number of domestic and international travelers that visit the large, mostly well-known US National Park System sites. Baseline, multivariate demand models were developed based on secondary data from 10 years prior to the fee policy change, and were used to predict demand in years following the fee change. The predictions of the baseline demand models were then compared to the sites’ actual visitation. The differences between the actual and the predicted visitation are statistically significant, indicating that the change in the federal agencies’ revenue management policy might have had an adverse effect on the visitation of the largest US national sites.     

How do hotels adapt their pricing strategies to macroeconomic factors?

The hospitality industry is naturally highly sensitive to subtle changes in the external environment, and its performance is affected by various external factors. Therefore, hoteliers should carefully monitor the various macroeconomic indicators affecting the market, when making important strategic management decisions. In particular, hotels’ pricing decisions are important because they play a crucial role in the determination of hotel revenue and in the process of profit maximization. In this paper we classify hotels by business model (i.e., chain management, franchise and independent) and analyze how these different types of hotels in Switzerland adapt their pricing strategies to macroeconomic factors (i.e., exchange rate, room supply and market demand). We find that hotels adopting different business models react differently to the same macro shock. Implications of our findings and future research directions are discussed.     

The hotel sector in Tanzania: A comparison of operating performance

A survey of international hotel accounts for 1976 in Tanzania shows considerable revenue and cost differences between town and holiday hotels. These differences are confirmed by comparisons of equivalent occupancy levels which show that higher revenue and profit are associated with higher operating costs. Town hotels generate more employment and value added, than holiday hotels, and as much foreign exchange, but at a greater use per unit of materials and services. There are also significant differences between state sector and non-state sector hotels. Should hotel-investment policy concentrate more on optimizing returns from town-hotel investments, rather than seeking to maximize returns from more risky holiday-hotel investments? These results should be of interest to tourism planners in several African countries.     

Diversification strategy and financial performance in the Taiwanese hotel industry

This study categorized 25 highly market-diversified international tourist hotels into two sub-groups, based on the highest proportion of hotel revenue generated either by (1) food and beverage (F&B) services; or by (2) room services. We investigated the differences in financial performance of these two sub-groups and concluded that hotels with a major proportion of the revenue from F&B services obtained higher growth but unstable profit margins, compared to another group of hotels with profit mainly from room service. Our study results can serve as a valuable reference for hospitality industries to evaluate the tradeoff between investing more resources in room or F& B service, especially at markets where F&B is highly valued.     

Exploring effective price presentation format to reduce decision difficulty and increase decision satisfaction

Variable pricing is frequently employed by service firms that adopt revenue management practices. This strategy is effective in stimulating and increasing revenue by appealing to customers with different levels of price sensitivity. However, by providing excessive price options, a company may cause choice overload for customers. Within the framework of behavioral economics, this study explores an effective price presentation strategy to mitigate choice overload due to a large assortment size of price options in the context of hotels. The findings of the experimental design study suggest that the number of categories that distinguish and organize price options positively affects consumers' perceived decision difficulty and consequent decision satisfaction when a large assortment size of price options is provided. This research extends the understanding of the effect of variable pricing on consumers' responses and provides marketers with guidance on how to manage variable pricing and its price presentation format.     

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.     

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.     

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.     

酒店市场营销:花得越多越好?

本文使用史密斯旅游研究(Smith Travel Research,STR)提供的酒店数据来探寻市场营销开支对酒店将来财务效益的影响.根据荻取的结论,我们有3大发现:1)市场营销支出对酒店一年后财务影响的边际效应呈递减分布;2)在个体酒店这个层次,总经营利润(gross operating profit)、纯经营利润(net operating income)以及总销售(revenue)有很强的自我预测性;3)对总经营利润、纯经营利润以及总销售的构成作进一步分析可以获得更好的预测效果.     

Response to "The One-Way Mirror"

The variable, place attachment, has recently been used by investigators to assist in understanding visitor responses to fee programs on public lands. This paper examines the relationship between place attachment (i.e., place identity and place dependence), attitudes toward paying fees, and visitor preferences for spending fee revenue within the context of social judgment theory. It was hypothesized that both place dependence and place identity would moderate the relationship between recreationists' attitudes toward the site's fee program and visitor support for spending revenue generated by the fee program in the areas of facilities and service development, environmental protection, and environmental education. Data were collected at Mono Basin Scenic Area over the summer of 1998. Results indicated that only place identity was a statistically significant moderator, such that it magnified the relationship between recreationists' attitudes toward the fee program and spending support. As place identity increased and recreationists' attitudes toward the fee program became more positive, support for spending fee revenue also increased. Practical and theoretical implications are discussed.     

Modeling a green supply chain in the hotel industry: An evolutionary game theory approach

Despite extensive discussion of environmental management for hotels, little research has been done on the hotel industry’s green supply chain management. This study uses the evolutionary game approach to examine the generation of green behaviors and a green supply chain by hotels. Results show that most hotels do have an incentive mechanism for green growth; hotels with green behaviors are more profitable than those that are not. Furthermore, governments and hotel customers are critical in the “greening” of traditional hotel supply chains. The findings can assist governments in formulating effective environmental policies, provide a theoretical avenue in governing green practice, and guide stakeholders to understand the formation and evolution of green development in the hotel industry.     

Commitment to Environmental Management in Hotels in Accra

The sporadic development of hotel facilities in a developing West African city like Accra in Ghana, coupled with their consumption of natural resources and generation of waste has implications for environmental sustainability. This article therefore seeks to ascertain hotel managers’ attitude towards environmental management and to examine their commitment to environmental management through the implementation of environmental policies and programs. The study took the form of a survey of managers of 200 hotels, ranging from budget to four-star rated, employing the stratified random sampling procedure. Though a greater number of hotel managers had a positive attitude towards environmental management, it was the upscale and larger hotels that were more committed to environmental management especially in terms of having; a designated officer responsible for environmental management, written environmental policy statement, environmental action plan, a history of implementing environmental programs and ecolabelling or environment related certification. The article proposes interhotel collaboration in environmental management so that smaller hotels could profit from the experiences and resources of larger hotels.     

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.     

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.     

Solid waste management in small hotels: a comparison of green and non-green small hotels in Wales

Solid waste generation and disposal is one of the most negative impacts of small hotels on the environment. Small hotels often pay little attention to their environmental responsibilities. This research builds upon an earlier work by the same authors considering solid waste management (SWM) issues in small Welsh hotels. It considers the Welsh Assembly Government's Green Dragon Environmental Standard (GDES) as an environmental management system developed specifically to target small and medium-sized enterprises and help them with aspects of environmental management, such as SWM. It explores SWM practices in green (i.e. GDES-accredited) and non-green small hotels and develops a best practice SWM model for them. Semi-structured interviews were used to investigate hoteliers’ attitudes and the barriers to implement sustainable SWM practices. The findings revealed that most non-GDES small hotels were highly reliant on landfill for the disposal of solid waste and felt negatively about the implementation of more sustainable SWM alternatives. In contrast, GDES small hotels used landfill as a last resort and targeted other waste hierarchy options in preference. The study develops a best practice model for policymakers (local authorities and UK central government) to influence and encourage better SWM practices in small hotels.     

Why does empowering leadership occur and matter? A multilevel study of Chinese hotels

To address the question of why empowering leadership occurs and matters, this study develops an integrated model including both antecedents and consequences of empowering leadership in hospitality organizations. Drawing on data from 558 employees and 86 department managers in 24 Chinese hotels, results of hierarchical linear modeling support person–situation interactionist theory by suggesting that top-level empowering leadership and middle-level leaders’ self-efficacy have main and interaction effects on middle-level empowering leadership. Main and mediation effect results support service profit chain theory and motivational and exchange-based models by demonstrating that middle-level empowering leadership has positive effects on employees’ service-oriented behaviors directly and indirectly, and employees’ psychological ownership mediates these indirect effects. This study is among the first to explore antecedents of empowering leadership from both personal and contextual perspectives, and mediation by psychological ownership in the relationship between empowering leadership and employee service-oriented behaviors.     

Strategic alignment leverage between hotels and companies: The buyer–supplier relationship perspective

Hoteliers are seeking ways to increase their revenue by working with travel agencies to costeffectively expand sales. In addition, they are simultaneously turning to hotel bookings to bolster their revenue in the face of decreasing airline commissions. The research objectives of the present study included determining how the strategic decisions of cooperating contract companies and travel agencies of the hotels are influenced by the service vision and standard service communication. Data were obtained via a mailed questionnaire survey from a sample of travel agencies and contract companies in Taiwan. Of the 300 questionnaires sent, 201 responses (67%) were received, yielding a usable response of 192 fully completed questionnaires. The use of the structural equation model to test the theoretical model of collaboration relationship could lead to a greater understanding of the nature and determinants of choice and decisions related to cooperation between firms. From the perspective of buyer–supplier relationships, hotels are seeking ways to develop long-term relationships and to increase their revenue by collaborating with travel agencies and contract companies, and through the firm's service vision and service-standard communication, hotels can develop services to align with their needs. Moreover, service trends affecting hoteliers may include adapting customer demands, increased expectations of value and quality, and an increasingly highly competitive environment. Hotels would therefore need to be able to make these changes in order to continue this alignment relationship, with substitution possibly being an option for these firms when hotels cannot do this. That is, hotels generally face fierce competition, and to be able to compete they must make continuous efforts to maintain product and service quality; they also need to be innovative to be the leading performers.     

BayesRec: Personalize search ranking with customer attribute-level willingness-to-pay using heterogeneous booking choice data

The ongoing travel restrictions owing to the COVID-19 shutdown continue to impact the hospitality sector. This pause on travel has led to a bigger regime shift in the customer's preferences for hotel selection. Therefore, this study aims to help understand customers’ evolving preferences by assessing the customers’ attribute-level willingness-to-pay (WTP) to tailor the booking experience. Furthermore, the study accounts for customers’ behavioral heterogeneity and decision choices while estimating WTP. The proposed approach utilizes multi-stage online modeling: (i) Segmentation to create behavioral customer cohorts; (ii) Hierarchical Bayesian modeling to estimate customer-level WTP; and (iii) Multi-criteria decision optimization to rank-optimize the hotel alternatives by leveraging the assessed attribute-level WTP. This continuous assessment provides personalized hotel recommendations and enhances customer’s booking experience, thereby allowing hotels to accelerate revenue recovery and aid in proactive demand generation for the next wave of travelers in a post-COVID economy.