Center for Hospitality Research Research Briefs

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Distortionary Effects of PPP Loans on Business Competition: Evidence From the Hotel Industry
Steiner, Eva; Tchistyi, Alexei (2024-09-13)
The Covid-19 pandemic that emerged in 2020 caused a deep, global economic crisis that was especially difficult for the hotel industry. The U.S. government responded to this crisis with an emergency set of economic relief measures on a near-unprecedented scale. The Small Business Administration’s $953-billion Payroll Protection Program (PPP) was a key part of that response. In an effort to reduce layoffs, the PPP offered temporary payroll subsidies in the form of forgivable loans for small businesses. Given the significant cost involved, it is important to evaluate the economic impact of the PPP initiative. While the program was clearly beneficial for businesses that received PPP funds, we found a potential unintended consequence of the PPP—namely, the distortion of business competition. Our study assesses how equilibrium market outcomes change when firms benefiting from government subsidies compete against non-subsidized firms.
Renegotiating Commercial Loans: Getting a Discounted Payoff is Possible But Complicated
Flynn, Sean; Ghent, Andra; Tchistyi, Alexei (2024-09-10)
In times of crisis, some hotel owners find themselves overwhelmed by debt and face a difficult dilemma—either keep putting more of their money into their troubled assets or stop paying their mortgages and lose their hotels to foreclosure. This is an undesirable outcome for both borrowers and lenders. Borrowers lose their investments in the foreclosed property as well as their reputation. On the other hand, lenders recover substantially less than the property’s market value due to various costs and expenses associated with foreclosure.
Hotel Brands’ Competitive Performance Mapping: A New Way to Identify Strong, Troubled and Weak Brands
Dev, Chekitan S.; Bird, Ashley Ellsworth (2024-07-23)
Developing tools with which to assess brand performance is key to gaining an understanding of how a hospitality brand is performing in comparison with its competitive set. This article introduces a new method of competitive performance mapping, which ranks hotel brands’ performance based on the following four measures: revenue per available room, cumulative average growth rate, guest satisfaction, and franchise-fee data. Based on these measures, brands are mapped as leaders or laggards in their brand tier and classified brands as Strong Brands, Troubled Brands, or Weak Brands. This analysis covers a complex period during which the U.S. hotel industry continued its recovery from the Covid-19 interruptions of 2019–2020. It also documents a steep decline in post-Covid guest-satisfaction scores for every brand analyzed in this report, without exception. We suggest that the first step in successfully managing an existing is mapping the brand against its competitive set, using key metrics in order to responsibly steward the brand’s future. Beyond the highly valuable results reported here, the study’s chief value lies in the methodology developed to facilitate comparative analysis of hotel brand performance that could benefit brand managers, owners, asset managers, lenders, and consultants.
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.
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.
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.
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.
Impact of Occupancy Taxes on the Sharing Economy
Wrolstad, Jay; Cui, Yao; Davis, Andrew (2022-07-27)
Efforts to collect occupancy taxes on Airbnb lodging listings, designed by public policy makers to regulate the homesharing market, have put individual hosts at a distinct disadvantage compared to commercial listings, rather than leveling the playing field as intended, new research shows.
Groundedness: Connecting Consumers with Place, People, and Past
Wrolstad, Jay (2022-04-19)
Our fast-paced world keeps picking up speed, with digitization, globalization and mobility recognized widely as signs of progress and innovation—yet for many there is a growing desire to take a step back, catch their breath and establish some emotional roots for a measure of safety and stability. Consequently, businesses that deliver products and services that address this need to be grounded may have a leg up on the competition, new research shows.
Shifting Loyalties: Where Has All the Love Gone?
Corda, Carolyn (2022-03-16)
It’s no secret that the consumers’ connection to their preferred brand has frayed during the pandemic-driven downturn in travel. PwC conducted a survey in 2020 which found that 41% of consumers are likely to switch hotels, while some 40% are undecided, leaving a small minority locked into a preferred brand (Glick and Baker 2020). A 2021 survey from Accenture reported that 45% of consumers are considering shifting some or all of their spending away from current travel providers (Curtis, Quiring, Theofilou, and Bjornsjo 2021). This research and similar studies have focused on travelers overall, most of whom have significantly curtailed their traveling since March 2020. But what about those that have continued to travel at the same relative rate? Have they, too, lost that loving feeling?

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