The Non-Equity Entry Mode Choices of International Hotel Organizations in New Zealand

ABSTRACT

Research on the non-equity entry mode choices of service firms is relatively limited. We use transaction cost economics and organizational capability perspectives to examine the determinants of choosing between franchising and management contracts in the hotel industry. In our analysis of four international hotel organizations operating in New Zealand, we found that both asset specificity and imperfect imitability helped in explaining the choice between franchising and management contracts. Behavioral uncertainty and host country management capabilities explained the entry mode choice of some hotel organizations but were not applicable for others that entered New Zealand via international strategic alliances or used strata titles. Finally, environmental uncertainty and the development of New Zealand’s business environment had a limited effect on choosing between franchising and management contracts.     

Hotel Guest Satisfaction and Brand Performance

ABSTRACT

The value and significance of guest satisfaction, brand management, and franchising in the hotel industry have been well documented and researched as independent topics. While previous research has suggested that franchising has an overall negative effect on hotel quality, it has rarely investigated the important links between hotel brand performance and guest satisfaction, and the role of brand franchising strategy in the relationship between hotel brand performance and guest satisfaction. This study examines the relationships among guest satisfaction, revenue performance and growth, and franchising strategy at the hotel brand level. Results indicate that guest satisfaction is a key to brand growth, while the positive effect of guest satisfaction on brand revenue performance is moderated by the extent of franchising within each brand.     

International franchising: Opportunities for China's state-owned hotels?

The hotel industry in China faces global competition. Most of the state-owned hotels have struggled during the period of transition from a planned economy to a market economy. Furthermore, international franchising hotel chains have entered China with their different operation modes. Could the franchising hotels bring opportunities for state-owned hotels? In an attempt to answer this question, the researchers carried out a study of state-owned independent hotels and state-owned franchised hotels to analyze their external and internal business factors, their intentions to join international franchise operations and the international hotel franchisors in China. The research technique used was qualitative. Two rounds of in-depth interviews were conducted. Content analysis was used in the data analysis. Results indicate that the majority of state-owned independent hotels have intentions to join an international franchise operation in the next 5 years. It also identified major factors affecting the franchising of state-owned hotels in China. However, franchising may not be attractive to those hotels that want to keep their management culture and characteristics. Implications of the study were discussed. Recommendations were provided to the state-owned hotels. Future research studies have been suggested to examine the relationships between franchisors and franchisees.     

International hotel development: A study of potential franchisees in China

Franchising is a strategic partnership formed by the franchisor and the franchisee, and consequently partner selection between the franchisor and the franchisee is critical to the long-term success of a franchise. However, the literature has primarily taken the viewpoint of franchisors, but failed to explore the perspective of the potential franchisees. As China represents a significant growth opportunity for international hotel franchisors, this study examines the perspective of China's domestic hotel operators regarding franchising and analyzes a mix of factors that may affect such perspective. The study of 182 Chinese hotel general managers shows that China's hotel practitioners have considerable interest in franchising and are knowledgeable about the concept as it pertains to hotels. The findings indicate that the length of work experience and educational background of Chinese hotel operators may influence their franchising preferences. Hotel chains that have strong brand awareness, supportive centralized reservation systems, and offer relatively high returns on investment at relatively low franchise fees, are most attractive to potential Chinese franchisees.     

Examining the determinants of hotel chain expansion through international franchising

This study proposes and tests an agency-based organizational model of internationalization through franchising in the hotel sector. Using data obtained from a Franchisor Questionnaire 2001-2008, we analyzed a panel of 117 observations of 17 U.S.-based hotels. Our analysis reveals that a hotel franchisor's decision to internationalize through franchising is positively related to the percentage of franchises, the ratio of franchised units to the total number of units. The article contributes to the literature by empirically modeling international franchising of hotels, which present unique characteristics among franchising companies, with a high investment capital requirement, maturity in the product life cycle, and a high level of standardization and globalization of operations. The unique characteristics of individual chains and their segment in the industry are particularly important, as revealed by both data analysis and expert opinion.     

酒店行业协会的运行机制及其变迁——以广州地区酒店行业协会为例

行业协会在酒店业发展进程中发挥越来越大的作用,但在国内现行条件下,行业协会发展面临多重困难。文章以广州地区酒店行业协会为案例,采用实地调查和深度访谈的方法,讨论行业协会的运行机制及其变迁。研究认为,第一,"政会不分"是目前行业协会管理的主要问题,政府应创新行业协会管理机制,加快"政会分开"的进程,推进部分行业职能向协会转移;第二,酒店行业协会应大胆创新,依据地区、行业发展环境动态调整组织架构,丰富协会职能发挥,以此达到激活协会运行机制的目标。基于此,酒店行业协会可以更好地为会员酒店服务,提升行业专业化管理水平。     

Determinants of Tunisian hotel profitability: The role of managerial efficiency

Using financial data derived from 27 hotel companies operating in Tunisia, the paper reports an analysis of hotel profitability. Using Data Envelopment Analysis (DEA) and the Return On Assets (ROA) analysis managerial efficiency is shown to be important when holding geographical and operating contracts as constants. Nonetheless these two aspects have important implications for hotel profitability. Hotel size, level of indebtedness, exposure to crisis events and levels of managers' education are also influential. The implications for management tenure and optimal age of a hotel are discussed.     

Types of agglomeration effects and location choices of international hotels in an emerging market

When international chain hotels are seeking new locations in which to establish new properties, local knowledge of those locations is essential for success. By incorporating agglomeration and internationalization research, this study investigates how international hotels can acquire that local knowledge from the existing hotels. The study presents two different kinds of hotel agglomerations (same-country-of-origin and higher-differentiation agglomerations) as sources of local knowledge and shows how international hotels might select their locations based on types of agglomerations and their entry strategies. The study employs conditional logistic regression, using a sample of international hotels in China. Results indicate that international hotels, especially those with franchising, are more likely to choose a location where the hotels from the same country of origin are highly located. Because they share the same culture and business practices, new hotel entrants may more easily assimilate the local knowledge that compatriot hotels have accumulated.     

Does managerial ownership influence franchising in restaurant companies?

Although the link between managerial ownership and firm performance is often explained in relation to a firm’s risk-taking behavior, little is known about how managerial ownership affects corporate risk-taking in industries characterized by high financial and operational risks, like the restaurant industry. To understand this important and understudied link, our study draws upon agency theory to examine the relationship between managerial ownership and franchising, typically a risk-reduction strategy of restaurant firms. Our results from panel data analyses using a sample of 962 firm-year observations show that managerial ownership is negatively associated with degree of franchising. Further, we find that after considering the scope of managerial discretion, there is a U-shaped relationship between managerial ownership and degree of franchising such that the degree of franchising decreases as managerial ownership increases up to a certain level, but then increases in tandem as managerial ownership increases to higher levels. Our results indicate that there is an optimal level of franchising associated with managerial ownership, implying that owners can influence their firms’ risk-taking behavior by setting target managerial ownership goals and designing effective incentive contracts.     

Determining factors in entry choice for international expansion. The case of the Spanish hotel industry

The hotel sector, as a service industry where it is possible to separate capital investment from management skills, is a clear example of how internationalisation can be modelled without shareholding involvement through foreign direct investment. This paper is an empirical examination of the key factors influencing the decision process carried out by Spanish hotel companies in choosing an entry mode for international expansion. The main objective is to verify whether the concepts derived from the transaction-cost, agency and the strategic theories of organisational capability and knowledge in companies can really explain the mode of foreign expansion employed by the Spanish hotel sector. This study will allow comparison of findings on holiday resort hotel chains with other analyses on the international hotel industry.     

Failure of play on asset disposals and share buybacks: Application of game theory in the international hotel market

The principal purpose of this study has been to investigate the impact of an asset disposal strategy, often coupled with share repurchase programs, by international hotel companies on financial performance, earnings stability and share values. Utilising ratio analysis, stock returns and risk-adjusted measures, the study analyses the differences in performance, stability and market valuations between asset light and more capital intensive hotel companies. The findings of the study indicate negligible differences in most accounting measures of earnings growth and stability between asset light hotel companies and traditional hotel companies with significant holdings of owned or leased property. Drawing on game theory, we conclude that international hotel companies dispose of their assets in an effort to manipulate financial markets and make their stocks more attractive to investors and traders. Notwithstanding the absence of significant differentiation in accounting measures of performance fundamentals, market based measures show that hotel groups failed in the aim of manipulating financial markets. This study recommends avoiding playing this game as dual asset light/share repurchase strategy generated superior risk-weighted returns to that of more capital intensive traditional hotel companies across the period of the study.     

The Current State of Internet Marketing of UK-Based Multi-Unit Hotel Brands

ABSTRACT

To support the emergence of a solid knowledge base for analysing the e-relationship marketing of hotels, a framework has been developed to analyse and categorise the online capabilities of UK-based multi-unit hotel brands to build customer relationships. The framework was based on the five progressive levels of relationship marketing implementation suggested by Kotler, Bowen, and Makens (2003). The study found that the exploitation of the Internet, as a relational tool, is in its early stages and most brands used the Internet to maintain the lowest (basic) level of relationships. On average, the Web sites of larger and most visible brands were significantly richer in terms of the number of features and more relational orientated. As opposed to previous studies, the managerial structure (ownership, management contract, franchising) of the investigated brands did not prevent the exploitation of the advanced levels of relationship marketing. Since the Web sites of brands that operate hotels under different managerial structures (management contract, franchise) were significantly richer at the proactive level. Suggestions for future research are also discussed.     

Global strategies in the international hotel industry

A two stage qualitative research methodology is used to evaluate the forces driving the adoption of global strategies in the hotel industry and the strategic response of international hotel chains to those “drivers”. Information gathered from industry experts is used to develop a set of hypotheses which are then tested against evidence provided by interviews with senior executives and other data.The results indicate that global strategy is most influenced by market factors, other drivers having much less influence. Cost drivers are constrained by limited economies of scale and standardization opportunities. Globalization is most marked in the thrust for a broad geographic presence in key overseas markets, the pursuit of global branding, positioning and uniform service standards. At the same time, customers expect “responsive” policies in areas such as facilities and services provided. Opportunities for greater integration and concentration of “back-office” functions, where information-based systems allow for cost economies and enhanced coordination, often remain relatively unexploited, primarily due to institutionalized management practice and control constraints.     

Packing for the trip: A model of competencies for successful expatriate hospitality assignment

This paper aims to propose a model to assist international hotel companies to prepare expatriate executives for their overseas assignments to minimize expatriate failure. Survey questionnaires measuring competences and skills of expatriation were administered to 66 representatives of the lodging associations and properties who are members in the International Hotel & Restaurant Association. Exploratory factor analysis findings indicate that three categories of attributes are keys for successful overseas assignments: personal competencies, global management skills, and expatriate adjustment. Human resource development professionals should be especially cognizant of identifying personal competencies as the distinguishing elements for selecting high-potential expatriate managers. Educational programs preparing students for work in international hospitality business should strive to expose students to all of the behavioral aspects of international hospitality business identified in this study.     

Hotel and catering economics: a new approach

The paper suggests that economics within hotel and catering education is at a watershed. It is right to examine closely why economics should be included in hotel and catering education and to discuss the possibility of alternative or complementary approaches. Certain problems with present economics teaching are examined and more attention, it is argued, should be given to the recent developments in economics especially the analysis of business behaviour and the overlap between economics, decision sciences and management in the areas of control, planning and decision making. The possibility of integration remains an exciting one both for teaching and research.     

Influencing stakeholders to reduce carbon footprints: Hotel managers’ perspective

Reducing the carbon footprint is an important strategy in addressing the greenhouse effect. Some businesses in the hotel industry have started to consider implementing programmes that involve their stakeholders so that they can reduce their carbon footprints together. However, little research into how hoteliers influence their key stakeholders has been conducted. The aim of this study is to identify who hotel managers consider to be their key stakeholders and what strategies they use to encourage the stakeholders to act co-operatively. These issues are examined by taking a qualitative research approach, in which data were collected from 22 hotel executives through in-depth interviews. The findings reveal the stakeholders identified by the executives are hotel owners, employees, customers, hotels/hotel owners’ associations, governments, consultants, investors, suppliers, environmental NGOs and the wider community. The different influencing strategies used with these stakeholders are discussed.     

以理性思维构建旅游学科

文章从对旅游学科尴尬处境的分析入手,讨论了如何以理性思维构建旅游学科问题.文章回顾了国内外旅游学术研究历程,提出并分析了旅游学科得以建立的三大基础,即文献基础、理论基础、人才基础以及各自的内容和特点.文章认为,旅游学科的文献基础包括学术研究文献、旅游实业界经营管理运作文献和政府的政策法规文献,以学术研究文献为核心和重点.最后,文章讨论了旅游学科的理论框架和研究方法论问题,认为旅游学科的理论框架由基础理论、专业理论和应用理论三个层面构成,最能体现旅游研究特点的方法论是跨文化比较研究.     

How human resources management best practice influence employee satisfaction and job retention in the Thai hotel industry

Human resources management (HRM) practices are hotel management tools that contribute to organizational success. The purpose of this study was to evaluate how soft HRM practices in the Thai hotel industry affect job satisfaction and job retention. This study focuses on soft HRM practices, which draws on theories of commitment and motivation. Soft HRM refers to human relations between staff and the hotel organization. A quantitative approach was employed using multiple regression technique with a stepwise method for data analysis. It was found that employee satisfaction is not fostered by increasing remuneration, but is more related to the quality of working life, good leadership style, regular training, employment security, the hotel's brand image, and employees' personal traits, a most important aspect. The findings from this study provide a comprehensive framework for both academic and managerial responses to resolve the labor and skill shortage crises. Equally important is the extrinsic and intrinsic motivation and personal attitude theory that underpins employee job satisfaction in this study.     

Stock market reactions to entry mode choices of multinational hotel firms

This paper contends that when entry mode choices are aligned with the characteristics of the host country, investors are likely to respond more positively to the expansion announcement than when there is no or little alignment. Empirical results from the international hotel industry support this contention. The findings specifically reveal that the announcements of new management contracts in developing countries, and new franchise agreements in developed countries, cause superior abnormal returns. The study also further supports the notion that control and ownership need to be treated as separate dimensions in the entry mode literature.