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Center for Hospitality Research Publications

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The Center for Hospitality Research (CHR) is the leading source for quality research on and for the hospitality industry. It creates new knowledge—and shares that knowledge to power hospitality forward. The CHR works with business leaders to develop new ideas, theories, and models that improve strategic, managerial, and operating practices. These insights are captured in research reports and industry tools that are available online at no cost. Thousands of academic and business leaders worldwide tap into this research stream. An active knowledge-sharing program further distributes the center’s work around the globe.

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    Hotel Prices Continue to Lose Momentum
    Liu, Crocker H.; Nowak, Adam D.; White, Robert M. Jr. (2023-08-07)
    The price performance of hotels continues to lose momentum, with all regions posting lower year-over-year and quarter-over-quarter performance relative to the previous period. While performance was weaker for hotels in both gateway and non-gateway cities, hotels in the non-gateway cities fared better than those in the gateway cities. While transaction volume declined on a year-over-year basis, transaction volume was up quarterly for small hotels and hotels in non-gateway cities. Based on moving averages, a sell signal is indicated for large hotels, while a buy signal applies to small properties. That said, since the standardized prices of both large and small hotels have softened, this situation calls for keeping your powder dry. Although interest rates for both Class A and Class B&C hotels fell 74 basis points (bps) this quarter, hotel interest rates are higher by 45-50 bps relative to June 2022. Moreover, the delinquency rate on hotel loans rose this quarter. As in the prior period, borrowing costs still exceed returns on hotels. Based on our leading indicators of hotel price performance, we can expect to see hotel prices continue to falter next quarter. This is Volume 12, Issue 2 of the CREF Hotel Indices.
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    Hotel Brand Overload: The Coming Shakeout
    Dev, Chekitan S. (2024-02-08)
    The rise of brands has been the dominant trend in the global hotel industry over the past four decades. During this time, many hotel owners sought brand representation, while most brands themselves exited the business of owning or operating hotels. Starting with some three hundred brands at five price points, the hotel chains have repeatedly created brands that subdivided those price points. With brands now numbering over a thousand, hotel owners and guests face a “sea of sameness” among many of the brands in today’s markets. In some cases, one brand is only marginally distinguishable from another, and the challenge is to discern the differences. One outcome of this growth is greater bargaining power for independent operators who can use social media to attract guests. Another outcome is a search for additional brand concepts, including lifestyle brands. To continue growing, brands will increasingly have to use technology and also apply research and development to assess their brand concepts. In sum, brands must find a way to differentiate themselves and develop “tribes” of customers who identify with particular brands.
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    Year Ends; Trend Continues
    Liu, Crocker H.; Nowak, Adam D.; White, Robert M. Jr. (2024-02-06)
    The price performance of hotels by region was worse this period than in the prior period, with only the Pacific and New England regions posting small single-digit gains. Hotels in non-gateway cities fared better than hotels in gateway cities, although the prices declined for hotels in both types of city. Transaction volume fell year over year but rallied quarter over quarter for both large and small hotels in gateway and non-gateway cities. Standardized prices of both large and small hotels continue to soften, indicating that investors should continue to keep their gunpowder dry. On the bright side, hotel debt financing continues to fall both on a quarter-to-quarter and year-over-year basis. In addition to this, the riskiness of hotels has narrowed relative to other major types of commercial real estate, although the delinquency rate on hotels rose imperceptibly this quarter. As in the prior period, the borrowing costs still exceed the return on hotels. Expect to see a faltering in the price of large hotels and an uptick in prices for small hotels next quarter, based on our leading indicators of hotel price performance. This is Volume 12, Issue 4, of the CREF Indices series.
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    Leadership Style and Incentives
    Casas-Arce, Pablo; Martínez-Jerez, Asís (2024-02-02)
    Effective leadership is essential for a business’s success, but each organization has its own leadership culture, and each team leader has their own management style. The challenge for hospitality firms is to create incentives that work for both team leaders and team members. An incentive plan involving sales contests was implemented at a financial services firm to allow observation of the interaction of incentives, leadership style, and company culture. The test manipulation involved who received the rewards—the employees only or both the manager and employees. In general, the sales results depended on the leaders’ styles. Incentives that included the manager had a greater effect on the employee outcomes for transactional managers (who offer employees specific rewards) than on managers who used a more general inspirational approach. With this knowledge in hand, hospitality firms can work toward identifying and employing managers who fit the firm’s leadership culture.
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    On the Frequency and Detail of Feedback
    Casas-Arce, Pablo; Lourenço, Sofia; Martínez-Jerez, Asís (2024-02-02)
    Instant feedback is the hallmark of our connected society. Customers are frequently requested to give stars to the rideshare that just took them home, the restaurant where they just ate, or the phone app they just used. Likes, emoticons, and reforwarding rates immediately measure the success of both public personalities and private individuals. Further, the seemingly infinite storage capacity of the cloud and the unrelenting progress of computing power have given firms the means to process and synthesize huge information flows that can support decision-making and control processes. In this context, it is natural to think that providing detailed feedback as frequently as possible would improve decision-making. However, that may not always be the case, as we explain in this article.
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    Empowering Customer-Facing Employees: Learnings from the Casino Industry
    Martínez-Jerez, Asís (2024-02-01)
    One essential tactic used by the gaming industry to encourage players to increase their handle is to offer complimentary room upgrades, show tickets, and upscale dinners, as well as other comps, such as product discounts. Sales force members on the floor, at the front desk, or in group meeting contract discussions often must decide on the spot whether to comp a guest and how much to offer. Although casinos have a general framework to guide employees in their comping decisions, sales managers are also called on to provide training and guidance for their sales force. Based on the outcomes from operational exception reports, this study compares the outcomes of two different approaches to sales force empowerment. One approach is relatively tight, point-by-point analysis of staff members’ comping decisions, and the other is a looser, more general approach that touches on essential knowledge regarding the outcomes of comping. The resulting model found that the looser approach fostered greater staff learning and generally stronger financial results. In sum, this study of the casino industry suggests that the way to empower and monitor your customer-facing employees is to let them try an activity and learn from the results.
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    CHR Analytics Roundtable 2023
    Scher, Emma; McGuire, Kelly (2023-12-11)
    Participants in the 2023 Cornell Analytics Roundtable focused on the changes that will be wrought by the rapid expansion of artificial intelligence applications, such as Open AI and ChatGPT. These industry leaders expect that sophisticated analytics can assist in providing improved operations that better reflect guests’ desires. Although challenges remain, the potential for applying AI to improve operations is considerable. Chief among the challenges are rapidly changing guest expectations and uneven staffing. Both public and private artificial intelligence applications can support hotels’ responses to guests’ changing expectations. Public applications are generally less costly, but the most effective approaches will involve privately developed AI applications. Through all of this, hotel operators and brands must develop new levels of trust so they can work together to apply analytics throughout their operations.
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    The Entry and Exit of Investors: Hospitality Transactions during the Covid Period
    Mao, Yifei (2023-11-28)
    The market turbulence incited by the recent Covid 19 pandemic caused a substantial, albeit brief, disruption in the hospitality and travel industry. Nevertheless, players in the hotel real estate market continued trading during this time. While it’s true that a substantial number of owners exited the industry during the pandemic—well over 5,300—nearly as many entered the industry—more than 4,500, according to figures recorded in the CoStar database. Despite the many exits and entrances, the overall distribution of ownership type remained essentially the same in the wake of the pandemic. The preponderance of owners continues to be single firms that hold a single hotel. However, an analysis of the hotel transactions from the Covid period finds one notable change in hotel ownership distribution, due to the interest in the industry by private equity investors. Taking advantage of hotel price weakness early in the pandemic, private equity investors increased their market share from 1 percent to 3 percent, even considering the substantial number of private equity investors that exited the hotel industry.
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    Higher Interest Rates Hinder Hotel Price Momentum
    Liu, Crocker; Nowak, Adam; White, Robert M. (2023-11-08)
    The price performance of hotels by region was mixed in the third quarter of 2023. The Midwest, Mid-Atlantic, Mountain, and West South Central posted positive quarterly and year-over-year results. In contrast, New England and the South Atlantic regions struggled, and the Pacific region recorded only slight year-over-year gains. Hotels in non-gateway cities continued to outperform those in gateway cities. Transaction volume fell year-over- year and quarter-over-quarter. However, volume is up this quarter for large hotels and hotels in gateway cities. Based on moving averages, a “hold” signal is indicated for large hotels, with a “buy” signal for small properties. That said, the situation calls for keeping your gunpowder dry, given that the standardized prices of both large and small hotels have softened. Hotel interest rates for both Class A and Class B and C hotels rose about 3.6 percent this quarter and approximately 4 percent year over year, even as credit spreads tightened and the delinquency rate on hotel loans fell this quarter. Looking at commercial property categories, the delinquency rate on hotels is now lower than both retail and office properties. As in the prior period, the borrowing costs still exceed the return on hotels. Expect to see an uptick in the price of large hotels in the next quarter, while prices for small hotels falter, based on our leading indicators of hotel price performance. This is volume 12, number 3 of the hotel indices series.
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    Sustainability in the Hospitality Industry
    Varney, Jeanne (2023-10-09)
    Data gathering and sharing have become essential functions in the hospitality industry. As explained and examined by a panel of industry leaders, travelers, travel agents, and investors all seek data regarding hotel firms’ carbon, energy, and water usage. The five panelists are directly connected to or responsible for sustainability and corporate responsibility in worldwide hotel firms, and are participants in the Hotel Sustainability Benchmarking Index (CHSB), a ten-year effort led by Greenview and published exclusively by the Center for Hospitality Research to develop industry benchmarks for greenhouse gases, water use, and energy consumption.