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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Item Large Hotels Reach a New Statistical LowLiu, Crocker H.; Nowak, Adam D.; White, Robert M. Jr. (2024-04-12)Only the Midwest, South Atlantic, and West South-Central regions posted moderate single-digit hotel-price gains in the first quarter 2024 (Midwest, 3.2%; South Atlantic, 3.8%; and West South-Central, 1.6%). Hotels in gateway cities experienced a reversal, exhibiting better performance than hotels in non-gateway cities this quarter. Transaction volume fell year over year and quarter over quarter for both large and small hotels in gateway and non-gateway cities. Standardized prices of large hotels continue to soften while those of smaller hotels remain relatively stationary. The cost of hotel debt financing and the delinquency rate for hotels rose in the recent quarter, even though credit spreads continued to tighten and relative risk narrowed. As in prior periods, borrowing costs still exceed the return on hotels. Expect to see a rise in the price of large hotels and a decline in prices for small hotels next quarter based on our leading indicators of hotel price performance.Item Successful Service Branding: Lessons for Hospitality ManagersDev, Chekitan; Huang, Ming-Hui (2024-04-12)Hospitality brands today face a brutally competitive environment characterized by a “sea of sameness” that threatens to drive all brands in a race to the bottom.1 However, little empirical information exists on how to best manage service brands in general and hospitality brands in particular. We have long understood successful goods branding, but we have not studied how successful services branding differs from that of goods branding. This article attempts to fill that void by analyzing 11 years of data in an empirical study of goods and service brands to determine how service brands succeed. Analyzing three factors—namely, service quality, service personalization, and service relationships—we found that service brand success can be achieved through relationship-based personalization accompanied by a level of quality that is consistent and meets customer expectations. Consistency in quality is a key to successful brand and firm outcomes. We conclude that either falling short of or exceeding customer quality expectations can have deleterious consequences for brands and firms. Moreover, we found that quality improvements should be achieved gradually.Item Proposed Tax Provisions under H.R. 7024: Financial Implications for the Hospitality IndustryKilic, Gizem; Paz, Michael T.; Brady, Jessica (2024-04-02)H.R.7024, the Tax Relief for American Families and Workers Act of 2024, was introduced in the 118th Congress on January 17, 2024. The House approved the bill on January 31, 2024. The legislation is now pending before the Senate. The legislation will make tax-related changes in areas that include business tax deductions and credits, the child tax credit, special taxation rules for certain residents of Taiwan, tax relief for certain Federal disasters, low-income housing credit, and other tax incentives. This report focuses on three tax incentives proposed under the title “American Innovation and Economic Growth,” applicable to the hospitality industry. The three incentives are (1) the extension of the 100-percent bonus depreciation, (2) an increase in limitations on expensing of depreciable business assets, and (3) extension of the allowance for depreciation, amortization, or depletion in determining the limitation on business interest deductions.Item Hotel Prices Continue to Lose MomentumLiu, 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.Item Hotel Brand Overload: The Coming ShakeoutDev, 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.Item Year Ends; Trend ContinuesLiu, 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.Item Leadership Style and IncentivesCasas-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.Item On the Frequency and Detail of FeedbackCasas-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.Item Empowering Customer-Facing Employees: Learnings from the Casino IndustryMartínez-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.Item CHR Analytics Roundtable 2023Scher, 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.