Center for Hospitality Research Publications

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https://hdl.handle.net/1813/70530

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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Sustainability in Focus: 2022 and 2023 Cornell Sustainability Roundtables
Adalja, Aaron; Varney, Jeanne (2024-07-23)
The Center for Hospitality Research at The Cornell Peter and Stephanie Nolan School of Hotel Administration in the SC Johnson College of Business at Cornell University hosted annual Sustainability Roundtables in fall 2022 and 2023. In many ways, the two sessions were part of an essential conversation. For the 2022 roundtable, participants were back on campus and in person for the first time since 2019. With the most severe public health concerns of the Covid-19 pandemic in the rear view, participants were excited to return to Ithaca and embrace the core element of hospitality—gathering together. In contrast, the 2023 roundtable represented the other side of the communications coin—namely, to remove barriers to give people voice through virtual participation.
Hotel Brands’ Competitive Performance Mapping: A New Way to Identify Strong, Troubled and Weak Brands
Dev, Chekitan; 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 Sustainability Benchmarking Index 2024
Ricaurte, Eric; Jagarajan, Rehmaashini (2024-05-07)
For the first time in the ten annual cycles of the Cornell Hotel Sustainability Benchmarking cycle, we find a general increase from 2021 to 2022 in energy and water consumption among participating hotels. This increase is largely associated with the global recovery from the anomaly of 2021, where occupancy levels were lower than usual and most hotels were not operational for the full year due to the pandemic. The increase in hotel occupancy rates between 2021 and 2022 and recovery to pre-pandemic operating levels contributed to the increase in energy consumption levels in 2022. Comparison between 2019 and 2022 consumption levels show a general decrease in energy and water consumption per square meter, but an increase in energy and water consumption per occupied room. This observation is largely attributed to the lag time between the resumption of hotel operations and the return of travelers.
Large Hotels Reach a New Statistical Low
Liu, 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.
Successful Service Branding: Lessons for Hospitality Managers
Dev, 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.
Proposed Tax Provisions under H.R. 7024: Financial Implications for the Hospitality Industry
Kilic, 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.
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.
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.
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.
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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