How Restaurant Customers View On-line Reservations Cornell Hospitality Report Vol. 9, No. 5, March 2009 by Sheryl E. Kimes, Ph.D. www.chr.cornell.edu Advisory Board Scott Berman, U.S. Advisory Leader, Hospitality and Leisure Consulting Group of PricewaterhouseCoopers Raymond Bickson, Managing Director and Chief Executive Officer, Taj Group of Hotels, Resorts, and Palaces Stephen C. Brandman, Co-Owner, Thompson Hotels, Inc. Raj Chandnani, Vice President, Director of Strategy, WATG Benjamin J. “Patrick” Denihan, CEO, Denihan Hospitality Group Michael S. Egan, Chairman and Founder, job.travel Joel M. Eisemann, Executive Vice President, Owner and Franchise Services, Marriott International, Inc. Kurt Ekert, Chief Operating Officer, GTA by Travelport Brian Ferguson, Vice President, Supply Strategy and Analysis, Expedia North America Kevin Fitzpatrick, President, AIG Global Real Estate Investment Corp. 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Kimes About the Author Sheryl e. Kimes, Ph.D., is Singapore Tourism Board Distinguished Professor of Asian Hospitality Management at the Cornell University School of Hotel Administration, where she has also served as interim dean (sek6@cornell.edu). In teaching restaurant revenue management, yield management, and food and beverage management, she has been named the school’s graduate teacher of the year three times. Her research interests include revenue management and forecasting in the restaurant, hotel, and golf industries. She has published over fifty articles in leading journals such as Interfaces, Journal of Operations Management, Journal of Service Research, Decision Sciences, and Cornell Hospitality Quarterly. She has served as a consultant to many hospitality enterprises around the world, including Chevys FreshMex Restaurants, Walt Disney World Resorts, Ruby’s Diners, Starwood Asia-Pacific, and Troon Golf. 4 The Center for Hospitality Research • Cornell University executive SummAry Restaurant customers appreciate the convenience of being able to make restaurant reservations online, but they also like the personal touch of telephone reservations. A study of 696 restaurant customers found that nearly one-third had made an online reservation. Those who made reservations online tended to be younger than those who did not, and online users also ate out more frequently. Those who made online reservations considered those reservations to be significantly more convenient than telephone reservations, and the online users also thought that websites gave more information about a restaurant than what they learned by calling on the telephone. At the same time, those online users felt that they had a better personal connection with the restaurant when they made telephone reservations. This tradeoff between efficiency and service perceptions points to a strategy of offering reservations via both methods. Emphasizing the convenience of online reservations may encourage customers to use the website, and that will give restaurant operators more information about their customers. Whether a restaurant uses a third-party reservation service or builds its own website, one key to ensuring a successful reservations process is to make the electronic process as straightforward as possible. Cornell Hospitality Report • March 2009 • www.chr.cornell.edu 5 cornell hoSpitAlity report How Restaurant Customers View Online Reservations by Sheryl E. Kimes Restaurants have traditionally relied on telephone calls for reservations, if they accept reservations at all, but the growth of the internet has provided them with the opportunity to also use online distribution channels for guests to make reservations. Some restaurant operators have been reluctant to take online reservations because of concerns about loss of control, diminished personal connection with their customers, and cost. The purpose of this study was to evaluate how online reservation users view telephone and online distribution channels and assess the factors that drive their opinions. 6 The Center for Hospitality Research • Cornell University Exhibit 1 comparison of reservation methods Distribution channel Description hours of reliability/ marketing personal operation Quality cost opportunities connection Non-dedicated Limited to telephone agent opening hours Inconsistent Fairly low Some Depends Dedicated Limited to telephone telephone agent opening hours Consistent Medium Some Strong Relatively Reasonably Call center Longer hours consistent High Medium strong if know restaurant Restaurant website Constant Very consistent Fairly low Some Some connection online Third-party website Constant Very consistent Low Strong None In this study, I compared customers’ views of online have been made personally by customers via a telephone call and telephone reservations. I will first discuss restaurant to a restaurant employee. This contrasts with the hotel and reservations in general with an emphasis on online reserva- airline industries, where (before the internet) many custom- tions and provide an overview of their potential effects on ers relied on travel agents to make their reservations. In a both restaurants and consumers. As part of the discussion, I recent study, the Nielsen Company found that approximately present an overview of the academic literature on perceived 38 percent of U.S. consumers had made an online reserva- control, customer convenience, and service reliability, along tion during the previous six months.4 I will first review the with their implications for online reservations. Finally, I various ways in which restaurants can take reservations present the results and implications of my survey. and then discuss online reservations in more detail. Exhibit Restaurant Reservations 1 evaluates the relative strengths and weaknesses of each method. The U.S. restaurant industry will generate $395 billion in eating and drinking sales in 2009, according to an estimate Telephone Reservations by the National Restaurant Association.1 Most fine dining Telephone reservations give a restaurant more control over restaurants take reservations, as do approximately one-third the way it takes bookings and allow it to have a personal of casual dining restaurants.2 Customers prefer to be able connection with their customers. During busy times, how- to make reservations because of the increased control and ever, it may be difficult to take reservations because of other convenience that they provide.3 When reservations are not demands on restaurant staff. From a customer’s perspective, taken, customers have little control over the length of their telephone reservations may be seen as problematic because wait, the time they are seated, or the time they are done. Res- of restricted hours when reservations may be made, dif- ervations help restaurants better manage their capacity, but ficulty in calling the restaurant during busy periods, and some operators are reluctant to take reservations because of sometimes inconsistent service. the possibilities of no shows and late shows. Restaurants can handle their telephone reservations by Online reservations represent a change in the way most having no dedicated reservation agent, designating an in- restaurants do business, since traditionally all reservations dividual reservation agent, or using a dedicated reservation call center. Let me briefly discuss each of these approaches 1 http://restaurant.org/pressroom/pressrelease.cfm?ID=1725. and then examine online reservations. 2 Sheryl E. Kimes and Jochen Wirtz, “Customer Satisfaction with Res- Non-dedicated reservation agent. Some restaurants taurant Seating Policies in Casual-Dining Restaurants,” Cornell Research adopt the low-cost approach of not having a dedicated Report, Vol. 7, No. 16, (2007), Cornell University Center for Hospitality Research, www.chr.cornell.edu. 4 Marketwire.com, 2008, www.marketwire.com/press-release/ 3 Ibid. The-Nielsen-Company-919654.html [downloaded on January 25, 2009]. Cornell Hospitality Report • March 2009 • www.chr.cornell.edu 7 Exhibit 2 Growth of opentable online reservations reservation agent, but instead allow anyone who answers Recordkeeping should be more reliable since reservation the telephone to take a reservation. Although this may be ex- agents typically do not have multiple duties. peditious and reduce customer waiting time (since there will Online Reservations be no need to wait for a designated reservation agent), the associated reduction in reliability is considerable. Online restaurant reservations have been available since the Dedicated reservation agent. Some restaurants assign late 1990s and have grown in importance and acceptance a specific staff member (typically, the maître d’ or manager) over the years. OpenTable.com, the largest online restaurant to field telephone reservation requests. Depending on the reservation provider in the U.S., seats approximately 3 mil- training and professionalism of the employees, this method lion diners per month. By August 2002, after just three years should have a moderate cost and have reasonable reliability. of operation, this site had seated 1 million customers and by Moreover, depending on the quality of the employee, cus- April 2008, that number exceeded 70 million (Exhibit 2). The tomers should feel a personal connection with the restaurant. number of restaurants accepting reservations via this website 5 Sometimes a reservation agent has multiple duties, however, has risen from only ten in 1999 to over 8,500 in 2008. such as greeting guests, seating guests, and assembling take- I reviewed the websites of the top 100 independent 6 out orders. This arrangment interferes with the efficiency U.S. restaurants, as listed in Restaurants and Institutions, to of a dedicated-agent approach, because customers may be determine whether they offered online reservations and if placed on hold, the reservation agent may be rushed, and so, whether they used OpenTable.com, another third-party record keeping may be unreliable. vendor, or the restaurant’s own system. Of the eighty-seven Dedicated call center. This is probably the highest- restaurants on this list that accepted reservations, fifty-five cost solution, but it provides the restaurant with increased (63%) used OpenTable.com to take their online reservations reliability and provides customers with a reduced wait time. and ten (11%) used some other system. The other twenty- Dedicated call centers are typically used by large restau- two of the eight-seven restaurants in the top 100 that do rants, restaurants with multiple locations, and facilities with accept reservations did not do so online. multiple restaurants (such as a large hotel or theme park). If properly trained, the agents should have a good knowledge of the restaurant and achieve a strong rapport with cus- 5 www.opentable.com. tomers. Dedicated call centers often have longer hours of 6 “R&I Top 100 Independents,” Restaurants and Institutions, April 18, operation which make them more convenient for customers. 2008, pp. 28–45. 8 The Center for Hospitality Research • Cornell University millions of reservations Exhibit 3 major online restaurant reservation providers company number of restaurants major locations cost structure Specialized hardware reservation transfer or software? to restaurant third-party websites opentable 8,500 U.S., Asia, U.K. Monthly Fee plus Fee per Seated Customer Yes Automatic Dinnerbroker 900 U.S. Monthly Fee No Fax or email Monthly Fee plus Fee eat2eat 900 Asia per Seated Customer Depends Depends or Monthly Fee toptable N/A U.K. Fee per seated guest No Direct, fax, or email reservations providers for restaurant websites opentable 8,500 U.S., Asia, U.K. Monthly Fee and fee per seated guest Yes Direct restaurant Diary 300 U.K. Monthly Fee No Direct, fax, or email magellan 400 U.S. Monthly Fee No Fax or online Guestbridge N/A U.S. Monthly Fee No Fax or email Approximately one-third of U.S. adult consumers have Reservations can be made twenty-four hours a day and are made an online restaurant reservation.7 Surprisingly, this connected directly to the restaurant. Restaurant operators number is fairly similar to that of U.S. consumers who have have the option of putting all or some of their table invento- made a hotel or airline reservation.8 Online users tend to be ry online. Since customers are not contacting the restaurant younger, more educated, and dine out more frequently.9 In directly, though, there may be a loss of personal connection addition, once customers have made an online reservation, with the restaurant. they are more likely to consider online reservations to have Restaurant website. Restaurants can also develop their high value.10 This suggests that restaurants should encour- own website for taking reservations. By doing so, they give age their customers to try online reservations. their customers the convenience of making reservations at Online reservations can be taken either through a third- any time but also control the restaurant information that is party site (such as OpenTable.com or Dinnerbroker.com) provided to the customer. In addition, customers do not see or through the restaurant’s own website, as I discuss below. information on competing restaurants. While the personal Exhibit 3 summarizes information on the major online pro- connection is not as high as if someone calls the restaurant, viders and on selected companies that provide reservations it is higher than that achieved through a third-party website. capabilities for restaurant websites. Restaurants have several choices for taking online res- Third-party site. Third-party sites such as OpenTable. ervations through their websites. Many U.S. restaurants are com or Dinnerbroker.com offer reservations at a number of connected through OpenTable.com, while others use one of restaurants and show customers the availability of reserva- the companies that provide website reservation capabilities. tions at their desired times. Reservations are fairly easy to Online Reservations: Benefits for Restaurants make. When a reservation is made, an email confirmation is immediately sent to both the customer and the restaurant. Restaurants gain the following benefits from online reserva- tions: (1) reduced processing costs, (2) increased volume 7 Michael J. Dixon, Sheryl E. Kimes, and Rohit Verma, “Customer Prefer- and revenue, (3) improved service quality. ences and Use of Technology-Based Service Innovations in Restaurants,” Reduced processing costs. Online reservations can Cornell Research Report, in review for 2009. help to reduce labor costs since not as many employees will 8 Marketwire.com., loc.cit. be required to take telephone reservations. Online reserva- 9 Dixon et al., loc.cit. tions are not intended to completely replace telephone reser- 10 Ibid. vations but to provide an additional distribution channel. Cornell Hospitality Report • March 2009 • www.chr.cornell.edu 9 Restaurant operators have been concerned about the loss of a personal connection with the guest in online reservations, as well as the costs. Increased volume and revenue. Online reservations special events, customer preferences, and no-show history. make restaurants more accessible to customers and assist in By having this additional information readily available, attracting additional customers. Customers can make online restaurants can provide more personalized and consistent reservations any time and are not restricted to a restaurant’s service to their guests without having to rely on the mem- hours of operation. Even when customers are willing to call ory of the manager or maître d’.15 An increase in perceived during regular business hours, they may have difficulty in service and product quality leads to an increase in customer getting through or may be placed on hold. Online reserva- satisfaction and profit.16 tions help alleviate these problems. Many online reservations Online Reservations: Costs to Restaurants are made during periods when restaurants are not normally open,11 which means that the restaurant is most likely captur- While online reservations certainly have benefits, many ing business it might not otherwise receive. In that regard, restaurant operators have been concerned about the loss of Opentable.com estimates that 25 percent of reservations are a personal connection with the guest, the costs associated made between 10:00 pm and 10:00 am.12 with the reservations, and the potential loss of business. Third-party vendors also provide customers with infor- Loss of personal connection. Some operators are con- mation on multiple restaurants, and customers often make cerned about the loss of personal touch since customers do 17 reservations at restaurants that were previously unfamiliar to not have to contact the restaurant to make a reservation. them. This additional distribution channel can help restau- This lack of personal touch is thought by some to lead to a rants gain incremental business. Over half (59%) of restau- decrease in customer satisfaction. Customers have a more rants using on-line reservations have seen sales increase as a favorable perception of a restaurant’s service orientation 13 18result, and a representative of Opentable.com estimated for when it takes reservations, and it is possible that online me that about 50 percent of its reservations are incremental reservations may lead to a decrease in perceived service reservations. orientation. Improved service quality. Online reservations can also Costs. If restaurants use a third-party vendor for their help a restaurant provide a better and more consistent service online reservations, they will have to pay for those reserva- experience to its guests since each time a reservation is made, tions. For example, OpenTable.com charges a fixed monthly the process is exactly the same. Telephone reservation experi- fee plus $1 for each seated diner. Even if a restaurant has ences may vary according to the training and commitment of reservation capability on its website it will have to either the person taking the reservation. An increase in reliability invest in that capability or contract it out to another vendor. can lead to an increase in customer satisfaction.14 In contrast to OpenTable.com’s blended fee, some online Most online reservation systems track guest name and reservations providers charge a straight monthly fee, and contact information, as well as details on birthdays and other some charge a fee per seated diner (such as TopTable.com. uk). Even though some restaurant operators consider the 11 Thomas Layton, “The Internet Is Changing Dining Out Behavior. Are You Ready?,” Savoir Fare, February 1, 2006 (http://otrestaurant.com/); and 15 Katie Hafner, “Restaurant Reservations Go Online,” New York Times, Julie Ritzer Ross, “Online Reservations Technology Gains Ground,” Na- 6/18/07. tion’s Restaurant News, 6/26/06, p. 68. 16 Roland T. Rust, Anthony J. Zahorik, and Timothy L. Keiningham, 12 Layton, op.cit. “Return on Quality (ROQ): Making Service Quality Financially Account- 13 Joan Lang, “Is the Web Really a Sales Builder?,” Restaurant Business, able,” Journal of Marketing, Vol. 59, No. 2 (1995), pp. 58-70. May 2006, pp. 11–12. 17 Milford Prewitt, “Operators See Pros, Cons in Online Reservations 14 A. Parasuraman, Valarie A. Zeithaml, and Leonard L. Berry, “A Con- Boom,” Nation’s Restaurant News, 2/28/05, http://findarticles.com/p/ar- ceptual Model of Service Quality and Its Implication for Future Research,” ticles/mi_m3190/is_9_39/ai_n12934951. Journal of Marketing, Vol. 49, Fall 1985, pp. 41–50. 18 Kimes and Wirtz, op.cit. 10 The Center for Hospitality Research • Cornell University fees to be high, they are considerably lower than the 20- to Exhibit 4 25-percent commission that hotels and airlines typically pay to third-party websites. construct measurement Potential loss of business. Since third-party vendors construct variable provide potential customers with reservations information I can choose my table. about multiple restaurants, it is possible that restaurants list- ed on these websites may be unwittingly sacrificing custom- I can control the time of my reservation.control ers to their competition. Some restaurants have countered I can control restaurant selection. this by directing their customers to their own website. I have more choices of restaurants. Benefits to Customers I can make the reservation when I want. As I discuss next, online reservations provide customers with This method is fast. the following benefits: (1) increased convenience, convenience I can choose when to contact the restaurant. (2) increased control, and (3) a more consistent and reliable This method is convenient. reservation experience. Improved convenience. Service convenience is related This method is easy. to customers’ desire to conserve their time and effort. An My reservation will be accurate. increase in convenience is associated with an increase in I am given good information about the satisfaction.19 Online reservations can increase convenience restaurant. by giving customers information about reservation avail- reliability The information on my reservation will be ability and by allowing them to make their reservation at correct. any time and from anywhere. Given that customers believe I am confident that everything is correct with that restaurants that take reservations offer higher service my reservation. convenience,20 online reservations may enhance perceived The restaurant staff treats me with care. convenience. Increased control. When customers perceive that they The restaurant staff addresses me by name. have substantial control over a service encounter, they are Service The restaurant staff remembers me. more likely to be satisfied with that encounter.21 In a reser- orientation The restaurant staff knows my likes and dislikes. vation context, customers can exert control by choosing the I have a strong personal connection with the time they make their reservation, by choosing the restaurant, restaurant. and by selecting the time of the reservation. In previous research, customers indicated that they felt an increased sense of control over their dining experience, their evening’s schedule, and the table at which they will be seated.22 On- Improved reliability. Telephone reservation procedures line reservations may give customers more perceived control vary by restaurant and by restaurant employee. This lack of over the reservation process. This increase in control may consistency may cause confusion for some customers. In lead to an increase in customer satisfaction. addition, when customers call to make a reservation, they may not be sure if their reservation was accurately recorded 19 Leonard L. Berry, Kathleen Seiders, and Dhruv Grewal, “Understand- unless they receive a written or emailed confirmation. In ing Service Convenience,” Journal of Marketing, Vol. 66, No. 3 (2002), pp. contrast, the process of making an online reservation is 1–17; Scott R. Colwell, May Aung, Vinay Kanetkar, and Alison L. Holdern, “Toward a Measure of Service Convenience: Multiple-Item Scale Develop- typically the same each time and customers typically receive ment and Empirical Test,” Journal of Services Marketing, Vol. 22, No. 2 an email confirmation of their reservation. Service reliabil- (2008), pp. 160–169. ity has been shown to be a major component of perceived 20 Kimes and Wirtz, op.cit. service quality.23 Online reservations should offer increased 21 James R. Averill, “Personal Control over Aversive Stimuli and Its reliability over telephone reservations. Relationship to Stress,” Psychological Bulletin, Vol. 80, No. 4 (1973), pp. 286-303; Michael Hui and John E.G. Bateson, “Perceived Control and the The Study Effects of Crowding and Consumer Choice on the Service Experience,” I conducted an online survey with a representative national Journal of Consumer Research, Vol. 18, September 1991, pp. 174-184; sample of 811 respondents. Respondents received a discount Michael K. Hui, and David K. Tse, “What to Tell Consumers in Waits of Different Lengths: An Integrative Model of Service Evaluation,” Journal of coupon redeemable at various shopping malls throughout Marketing, Vol. 60, April 1996, pp. 81-90; Ellen J. Langer, The Psychology of the U.S. in return for their survey participation. Control (Beverly Hills, CA: Sage, 1983). 22 Kimes and Wirtz, op.cit. 23 Parasuraman et al., op.cit. Cornell Hospitality Report • March 2009 • www.chr.cornell.edu 11 E 5 Only the responses of those who had made xhibit a reservation at a restaurant at least once in the online reservation use by age previous year were included in this study. This 90 resulted in 696 usable responses. Since the focus non-user of our research was on online reservations, 80 user the bulk of my analysis included only the 196 70 respondents who had made an online reserva- tion. I asked a variety of questions regarding 60 telephone and online reservations, including 50 questions on eighteen variables that measured different aspects of control, convenience, reli- 40 ability, and service orientation for the two types of reservation. I also asked questions about 30 online reservation usage, restaurant reservation 20 frequency, and several demographic questions. The eighteen statements measured four 10 constructs relating to the customer benefits that 0 I just discussed: (1) control, (2) convenience, < 25 25–39 40–54 55+ (3) reliability, and (4) perceived service orienta- tion of the restaurant. Respondents were asked to indicate their agreement with a statement measuring each variable for both reserva- tion methods (7 = strongly agree, 1 = strongly Exhibit 6 disagree). Exhibit 4 (previous page) summarizes online users’ attitudes towards control in online and phone the variables that were used to measure each reservations construct, and those constructs are also listed in 7 the discussion below. online reservations phone reservations Demographics 6 The sample was fairly balanced by gender (51.1%, female), and the age distribution closely 5 matched the national averages (<25, 12.0%; 25–39, 26.3%; 40–54, 27.4%; and 55+, 34.5%).24 4 Nearly one-third (31.6%) of the respondents had made an online reservation. There was no 3 significant difference by gender, but younger participants were significantly more likely to 2 have made an online reservation than were older participants (Exhibit 5). 1 Online users dined out more frequently choose control time control restaurant more choices than non-users did. About 55 percent of respon- table of reservation selection of restaurants dents who dined out more than once a month had made an online reservation. About one- third (32.2%) of online users had dined more than once a month at a restaurant that took reservations, and about half (49.8%) dined at such a restaurant at least once a month. Results The reliability of the four proposed scales (that is, control, convenience, reliability, and service orientation) was evalu- ated using Cronbach’s alpha. I used paired sample t-tests to 24 Based on 2000 U.S. Census figures (www.census.gov). 12 The Center for Hospitality Research • Cornell University extent of agreement (1 is low; 7 is high) percentage of respondents by age group compare how online users viewed online and Exhibit 7 telephone reservations. The results for the four constructs are presented below. online users’ attitudes toward convenience of online and phone reservations Control. Control was measured using the following four variables: (1) I have control over 7 online reservations the time of the reservation, (2) I have control of phone reservations restaurant selection, (3) I can choose my table, 6 and (4) I have more choices of restaurants. The scale was reliable (Cronbach’s alpha: online = 5 0.85; telephone = 0.83). Online users found no significant differences in perceived control 4 between online and telephone reservations (on- line, 20.39; telephone, 20.56). In addition, there 3 were no significant differences between any of the scale components (Exhibit 6). 2 Convenience. Convenience was measured using these five variables: (1) This method is 1 easy, (2) I can make reservations whenever I easy can’t make when Fast choose when convenient want, (3) This method is fast, (4) I can choose i want to contact when to contact the restaurant, and (5) This Exhibit 8 method is convenient. The scale was highly reli- online users’ attitudes toward reliability of online and phone able (Cronbach’s alpha: online = 0.94; telephone reservations = 0.93). Online users found online reservations to 7 be significantly more convenient than tele- online reservations phone reservations (online, 27.9; telephone, 6 phone reservations 26.7). Online reservations were considered to be significantly faster (online, 5.57; telephone, 5 5.34) and more convenient (online, 5.67; tele- phone, 5.47). In addition, online users felt that 4 online reservations allowed them to contact the restaurant when they wanted (online, 5.61; 3 telephone, 5.34), and, further, that they could make the reservation when they wanted (online, 2 5.58; telephone, 5.13, see Exhibit 7). Reliability. Reliability was measured using the following four variables: (1) My reservation 1 Accurate confident of restaurant info Good info will be accurate, (2) I am confident of the cor- correctness is correct about restaurants rectness of my reservation, (3) I am confident of the correctness of the information given me about the restaurant, and (4) I am given good information about the restaurant. The scale was highly reliable (Cron- bach’s alpha: online = 0.93; telephone = 0.92). Online users found online reservations to have the same level of reliability as telephone reservations (online, 20.51; telephone, 20.59). The one exception was that online reser- vations were considered to provide better information about the restaurant than telephone reservations did (online, 5.20; telephone, 4.92, see Exhibit 8). Service orientation. Service orientation was measured using these five variables: (1) The restaurant staff treats me with care, (2) The restaurant staff remembers me, (3) The Cornell Hospitality Report • March 2009 • www.chr.cornell.edu 13 extent of agreement extent of agreement (1 is low; 7 is high) (1 is low; 7 is high) E 9 perceived control they experienced to be the xhibit online users’ attitudes toward service orientation of online same for both distribution channels. and phone reservations The tradeoff between customer convenience and the personal connection with the restaurant is worthy of consideration from both a practical 7 online reservations and research perspective. phone reservations From a practical perspective, restaurant 6 operators should continue to use both telephone and online reservations, so customers have 5 a choice in how they make reservations. The convenience of online reservations may appeal 4 to one group of customers, while the personal connection associated with telephone reserva- 3 tions may appeal to an entirely different group. I believe that restaurateurs should emphasize the 2 convenience associated with online reservations and encourage customers to use online reserva- 1 tions as much as possible. In that way, restaurant restaurant restaurant Address me restaurant better personal treats me with remembers me by name knows my likes connection operators can use the customer information care and dislikes from online reservations by customizing their service to their guests’ particular needs. Appro- priate use of this information can help provide restaurant staff addresses me by name, (4) The restaurant an enhanced customer experience which should in turn lead staff knows my likes and dislikes, and (5) I feel a strong per- to higher customer satisfaction. sonal connection with the restaurant. The service orientation Restaurants have much to gain from taking online res- scale was highly reliable (Cronbach’s alpha: online = 0.92; ervations. The increased customer convenience may attract telephone = 0.88). additional customers and may help retain existing custom- Online users felt that the service orientation associated ers. The reduced labor costs may also prove beneficial. The with online reservations was lower than that of telephone costs associated with online reservations obviously need to reservations (online, 22.62; telephone, 24.14). In particular, be considered, but in most cases, are more than offset by the online users felt that they had a better personal connection increase in business. with the restaurant when they made a telephone reservation Advice to Managers (online, 4.53; telephone, 5.08) and that they were treated Given that it seems that online reservations are here to stay, I with more care when they made a telephone reservation offer the following suggestions regarding how should a savvy (online, 4.92; telephone, 5.23, see Exhibit 9). restaurant operator manage online reservations, based on Implications the results of this survey. To review the findings, about 31 percent of the 696 respon- Encourage your customers to try online reservations. dents to this online survey on restaurant reservations had Research shows that once customers make an online reserva- made an online reservation. Given the relative newness of tion that they are more likely to consider online reservations online restaurant reservations, this percentage is remark- to have higher value.26 ably high, but as I mentioned at the outset it is similar to the Make it easy for your customers. Don’t force customers percentage for hotel or airline reservations.25 Online use did to hunt through your website to determine how to make not vary by gender, but online users tended to be relatively a reservation. If customers are visiting your website, they young, frequent diners. are probably interested in dining with you. Don’t turn your Online reservation users view online reservations to be website into a treasure hunt. significantly more convenient than telephone reservations, Use multiple distribution systems. If customers can see but that they do not provide as much of a personal connec- your restaurant on both your website and through third- tion with the restaurant as telephone reservations do. Online party websites, you are more likely to generate additional reservation users found the reliability and the amount of business. Not everyone is going to know how to find your 25 Marketwire.com, loc.cit. 26 Dixon et al., loc.cit. 14 The Center for Hospitality Research • Cornell University extent of agreement (1 is low; 7 is high) website, but they might find it using some other third-party important to different segments of customers. This question provider. was not addressed in this research, but could be readily Continue to offer a telephone reservation option. Not studied using choice modeling.27 A related question to study everyone will want to use online reservations, so be sure to is whether the tradeoff between convenience and personal offer an option for those guests. Be sure that staff members connection varies by whether customers are familiar with who take telephone reservations are well-trained and that the convenience associated with the technology. you have accurate record-keeping procedures in place. While still in its infancy, reservations made through Consider using a third-party website. Even though third- mobile devices such as cellphones will most likely become party web reservations have specific costs, it’s a worthwhile more prevalent in the future. A study similar to this on investment since these sites can bring in customers who may mobile device reservations would be extremely interesting not have previously known about your restaurant, who then and useful. may decide to dine with you. Also, restaurant websites are still relatively young. It If you use multiple distribution channels, make sure that would be interesting to use Hitwise or Google to investi- you receive regular updates on which tables have been sold gate the presence and use of search by restaurants and the and at what times. If you only receive updates once a day, it prominence of third-party sites such as OpenTable.com might not be frequent enough for particularly busy days. In and Dinnerbroker.com. The objective would be to analyze addition, make sure you have procedures established for the linkages among these sites and to evaluate downstream regularly updating your reservations book. Failure to have search paths. This might lead to further research of both this procedures in place may result in an oversold situation. general online use and more specific aspects of search re- Take advantage of the reminder capabilities associated lated to restaurant reservations.28 with online reservations. It’s quite simple to send an email As with all studies, this one was not without limita- reminder to customers before their reservation. By doing so, tions. The study was only conducted in one country (USA), you may be able to cut back on your no-show rate. and the findings might not be generalizable to other parts Take advantage of the information you gain from online of the world. Although the research was conducted with a reservations. You can use the customer names and emails to representative, national sample, it was conducted online, and launch email promotions. In addition, if the online system respondents may have systematic differences from respon- you use allows you to track guest preferences, be sure to use dents who do not use the internet. n it to help customize your service. Future Research and Research Limitations 27 Rohit Verma, “Unlocking the Secrets of Customer Choices,” Cornell Research Report, Vol. 7, No. 2 (2007), Cornell University Center for Hospi- From a research perspective, the tradeoff between conve- tality Research, www.cornell.edu. nience and the personal connection is intriguing. An inter- 28 The author would like to thank one of the reviewers for this helpful esting question to consider would be to learn which is more suggestion. Cornell Hospitality Report • March 2009 • www.chr.cornell.edu 15 Cornell Hospitality Reports Index www.chr.cornell.edu 2009 Reports Vol 8, No. 17 The Importance of Vol. 8, No. 8 Exploring Consumer Behavioral Integrity in a Multicultural Reactions to Tipping Guidelines: Vol 9, No. 4 Key Issues of Concern in Workplace, by Tony Simons, Ph.D., Ray Implications for Service Quality, by the Hospitality Industry: What Worries Friedman, Ph.D., Leigh Anne Liu, Ph.D., Ekaterina Karniouchina, Himanshu Managers, by Cathy A. Enz, Ph.D. and Judi McLean Parks, Ph.D. Mishra, and Rohit Verma, Ph.D. Vol 9, No. 3 Compendium 2009 Vol 8, No. 16 Forecasting Covers in Hotel Vol. 8, No. 7 Complaint Communication: http://www.hotelschool.cornell.edu/ Food and Beverage Outlets, by Gary M. How Complaint Severity and Service research/chr/pubs/reports/abstract-14965. Thompson, Ph.D., and Erica D. Killam Recovery Influence Guests’ Preferences html and Attitudes, by Alex M. Susskind, Ph.D. Vol 8, No. 15 A Study of the Computer Vol 9, No. 2 Don’t Sit So Close to Me: Networks in U.S. Hotels, by Josh Ogle, Vol. 8, No. 6 Questioning Conventional Restaurant Table Characteristics and Guest Erica L. Wagner, Ph.D., and Mark P. Wisdom: Is a Happy Employee a Good Satisfaction, by Stephanie K.A. Robson Talbert Employee, or Do Other Attitudes Matter and Sheryl E. Kimes, Ph.D. More?, by Michael Sturman, Ph.D., and Vol 8, No. 14 Hotel Revenue Management: Sean A. Way, Ph.D. Vol 9, No. 1 The Job Compatibility Today and Tomorrow, by Sheryl E. Kimes, Index: A New Approach to Defining the Ph.D. Vol. 8, No. 5 Optimizing a Personal Wine Hospitality Labor Market, by William J. Cellar, by Gary M. Thompson, Ph.D., and Carroll, Ph.D., and Michael C. Sturman, Vol 8, No. 13 New Beats Old Nearly Steven A. Mutkoski, Ph.D. Ph.D. Every Day: The Countervailing Effects of 2009 Tools Renovations and Obsolescence on Hotel Vol. 8, No. 4 Setting Room Rates on Prices, by John B. Corgel, Ph.D. Priceline: How to Optimize Expected Tool No. 12 Measuring the Dining Hotel Revenue, by Chris Anderson, Ph.D. Experience: The Case of Vita Nova, by Vol. 8, No. 12 Frequency Strategies and Kesh Prasad and Fred J. DeMicco, Ph.D. Double Jeopardy in Marketing: The Vol. 8, No. 3 Pricing for Revenue Pitfall of Relying on Loyalty Programs, by Enhancement in Asian and Pacific 2008 Reports Michael Lynn, Ph.D. Region Hotels:A Study of Relative Pricing Vol 8, No. 20 Key Elements in Service Strategies, by Linda Canina, Ph.D., and Innovation: Insights for the Hospitality Vol. 8, No. 11 An Analysis of Bordeaux Cathy A. Enz, Ph.D. Industry, by, Rohit Verma, Ph.D., with Wine Ratings, 1970–2005: Implications for Chris Anderson, Ph.D., Michael Dixon, the Existing Classification of the Médoc Vol. 8, No. 2 Restoring Workplace Cathy Enz, Ph.D., Gary Thompson, Ph.D., and Graves, by Gary M. Thompson, Ph.D., Communication Networks after and Liana Victorino, Ph.D. Stephen A. Mutkoski, Ph.D., Youngran Downsizing: The Effects of Time Bae, Liliana Lelacqua, and Se Bum Oh on Information Flow and Turnover Vol 8, No. 19 Nontraded REITs: Intentions, by Alex Susskind, Ph.D. Considerations for Hotel Investors, by Vol. 8, No. 10 Private Equity Investment John B. Corgel, Ph.D., and Scott Gibson, in Public Hotel Companies: Recent Past, Vol. 8, No. 1 A Consumer’s View of Ph.D. Long-term Future, by John B. Corgel, Restaurant Reservation Policies, Ph.D. by Sheryl E. Kimes, Ph.D. Vol 8, No. 18 Forty Hours Doesn’t Work for Everyone: Determining Employee Vol. 8, No. 9 Accurately Estimating 2008 Hospitality Tools Preferences for Work Hours, by Lindsey A. Time-based Restaurant Revenues Using Building Managers’ Skills to Create Zahn and Michael C. Sturman, Ph.D. Revenue per Available Seat-Hour, by Gary Listening Environments, by Judi Brownell, M. Thompson, Ph.D., and Heeju (Louise) Ph.D. Sohn 16 The Center for Hospitality Research • Cornell University www.h.hootetelslscchhooool.lc.coornrneelll.le.edduu/e/exexceecedd The Oce of Executive Education facilitates interactive learning opportunities where professionals from the global hospitality industry and world-class Cornell faculty explore, develop and apply ideas to advance business and personal success. The Professional Development Program The Professional Development Program (PDP) is a series of three-day courses oered in nance, foodservice, human-resources, operations, marketing, real estate, revenue, and strategic management. Participants agree that Cornell delivers the most reqarding experience available to hospitality professionals. Expert facutly and industry professionals lead a program that balances theory and real-world examples. 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