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.     

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.     

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 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.     

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.     

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.     

Quality,Satisfaction and Customers’ Future Intention: The Case of Hotels’ Fitness Centers in Cyprus

In an era of fierce competition, financial hardship, and volatile customer expectations the hospitality industry is seeking out new revenue centers that can both enrich the customer experience, and contribute to financial success. Capturing the attention of the industry, fitness centers have become a fundamental component of the contemporary hospitality experience with numerous strategic, operational and tactical implications. Responding to the need for further empirical investigation, the study, by adopting a quantitative methodology, holistically investigates quality, satisfaction, and behavioral intention in fitness centers currently operating in upscale hospitality establishments in Cyprus. Findings suggest that satisfaction with the provision of fitness services in hotels is primarily associated with the dimensions of employee behavior and workout facilities. Moreover, workout facilities was the only quality dimension which was significantly associated with the respondents’ intention to renew their membership, whereas a strong relationship between satisfaction and future intention was substantiated.     

A yield management model for five-star hotels: Computerized and non-computerized implementation

The purpose of this study was to propose an enhanced yield management (YM) model that was developed based on the previous models and to test the applicability on five-star lodging properties in Turkey to identify the related problems. The proposed model overcomes some of the limitations of previous ones. It was specifically developed for full service, upscale hotels, namely for five-star lodging properties with or without a computerized yield management system (CYMS). Examination of the actual implementation stages provided useful insight in determining the applicability and the problems related to the application of the model. Findings indicted that the proposed YM model can be used by all upscale properties (with or without a CYMS) to manage their revenue and yield. Findings suggested that the application of the model is likely to improve the operational and financial performance for both type of properties.     

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.     

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.     

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 impact of gasoline price fluctuations on lodging demand for US brand hotels

Analyzing US brand hotels, over a 13-year period, this study provides empirical evidence of a significant negative relationship between gasoline prices and demand for certain lodging products, controlling for economic factors (i.e. gross domestic product and population density). Applying principles from microeconomic demand theory to the literatures on gasoline price elasticities, consumer demographics and lodging demand, a set of hypotheses were devised to test the relationship between gasoline prices and lodging demand for specific hotel locations and price segments. Using fixed effects models, the results reveal that lodging demand decreases as gasoline prices rise in all segments except upper-upscale and all locations except urban areas. Hotels in midscale without food and beverage and economy market segments, in resort, suburban and highway locations, exhibit the greatest association between gasoline price shifts and demand. Implications of these findings are discussed for both hospitality research and practice.     

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.     

Quantitative Approaches for Location Decision Strategies of a Hotel Chain Network

Accommodation revenue and demand are affected by hotel location, leading a lot of research to perform theoretical, empirical and operational approaches to analyze and determine the ideal location of hotels. However, operational approaches such as mathematical modeling based optimization have not received sufficient interest in hotel location research while it has been widely used for various kinds of facility locations. Therefore, two mathematical models for opening of new hotels and the closing of existing hotels to a manage hotel chain network are developed using the demand estimation and existing hotel information. In this research, hotel demand is estimated based on the accessibilities to sightseeing, transportation, business points, and market share. Gaining and/or losing of demand and the agglomeration effect are introduced as the objective of two models. Proposed mathematical models are tested to design a hotel chain network with the real data in Seoul, Korea.     

Revenue functions for hotels within clusters

In this note, we propose a flexible revenue function that considers the characteristics of hotels that operate within competitive clusters. We show that without a need to estimate a demand function one can estimate elasticities of demand, conjectural variations, revenue efficiency, technical change, efficiency change, productivity growth, as well the Lerner index. We use a Bayesian approach to fit the model on a sample of US hotels.     

Good but not so great: The impact of chain affiliation on guest satisfaction and guest satisfaction extremeness

Chain affiliation is widespread in the hotel industry. It has also attracted a lot of academic attention. While a large number of studies have examined whether affiliated hotels outperform independent hotels in terms of occupancy, ADR and RevPAR, research on the chain affiliation - guest satisfaction relationship is scarce. In this study, we explore the impact of chain affiliation on guest satisfaction and guest satisfaction extremeness, which is defined as the extent to which a hotel’s guest satisfaction deviates from the industry average. We also examine whether the relationships between chain affiliation, guest satisfaction and guest satisfaction extremeness are contingent on market segments. Using a large sample of 35.000 hotels, we find evidence that chain affiliation increases guest satisfaction, but decreases guest satisfaction extremeness. In addition, the positive chain affiliation - guest satisfaction relationship and the negative chain affiliation - guest satisfaction relationship are stronger in higher quality market segments. Taken together, our findings suggest that chain affiliation is a double-edged sword for hotels, particularly in higher quality market segments.     

How “green” are North American hotels? An exploration of low-cost adoption practices

This study analyzed the so-called “green,” or environmentally friendly, practices of American hotels. As such, it examined how green hotels in the United States are regarding no-cost or low-cost practices. Respondents included 166 hotels, which were identified through a random sample of hotels from the American Hotel & Lodging Association and included chain and independent properties as well as properties of various sizes (based on the number of rooms). The study findings show that chain hotels were at the time of the study stronger adopters of green practices than independent hotels were, likely due to leveraging economies of scale through uniform corporate practices. In addition, hotels in the Midwest were found to be the most environmentally friendly in terms of their use of no-cost or low-cost green practices. Additional results indicated that size (classified by number of rooms) had little effect on the extent to which hotels were trying to manage energy consumption.     

Analysis of E-commerce and information technology applications in hotels: Business travelers' perceptions

Numerous research studies have been conducted that are related to e-commerce and information technology (IT) applications in the hospitality industry with regard to business operation, profit, output, and management perspective. The focus of this study is to examine current e-commerce and IT applications in the hospitality industry and to identify the business travelers' perceptions in order to improve customer service. One of the problems in the hospitality industry is that customers want advanced e-commerce and IT applications, but restaurants and hotels are not necessarily implementing them. This study discusses the typical problems and obstacles of implementing e-commerce and IT applications in hospitality, using the lodging e-commerce and IT applications to satisfy customers, and developing the lodging e-commerce and IT applications as a corporate competitive advantage. Moreover, this study investigated a variety of e-commerce and IT applications related to customer service, satisfaction, and retention as well as e-commerce and IT applications as a distribution channel for receiving travelers' information and accommodation booking. This study provides valuable implications for hospitality practitioners about customer perceptions relative to e-commerce and IT applications.     

如何成为男人？高星级酒店男性职员的性别气质建构--广州案例

在转型期的中国，随着男性与“男性危机”的焦虑“，如何成为男人”不仅仅是一个社会问题，也是一个学术问题。该研究以广州市高星级酒店男性职员为研究对象，综合运用多种质性研究方法，深入探讨高星级酒店男性职员的性别气质建构过程，发现酒店男性职员通过职业规训逐渐从“被动的绅士”演变成“主动的绅士”；通过“他者”规训逐渐从“形式美的绅士”蜕变成“内涵美的绅士”；通过“自我”规训，完成“全方面的绅士化”建构。研究呼应了男性气质身份政治的结论，同时补充了男性气质建构的内涵，认为男性气质建构是一个与空间、职业互动的过程，回应了“如何成为男人”的环境决定论观点。在实践方面，研究对于酒店人力资源管理具有一定的借鉴意义。     

Incorporating satisfaction measures into a restaurant productivity index

The increasing stature of the foodservice industry in the global service economy suggests that productivity analyses—similar to those performed in non-service-based settings—would benefit multi-unit operators by maximizing their desirable operational outcomes while minimizing expenses and other detrimental conditions such as low job satisfaction. This paper suggests that such analyses might be possible through the application of a holistic productivity metric—one that includes traditional operational variables such as revenue, profit, food cost, and labor cost, and previously ignored variables such as guest and employee satisfaction as well as retention equity. Through data gathered from a single chain's 36 corporate-owned, same-brand casual-theme restaurants located in metropolitan centers across the United States, we found that factors leading to maximum outputs such as controllable profit and retention equity include employee satisfaction in addition to expected variables such as cost of goods sold and number of seats. Most notably, employee satisfaction as an input proved to be the most volatile variable in maximizing operational outputs.