Hotel Properties Research Articles

Towards a transaction-based hotel property price index for Europe

Purpose– The purpose of this paper is to fill an existing gap in the field. A transaction-based hotel price index for Europe is constructed to provide a true measure for hotel real estate performance. The index will enable investors enhance investment decisions in many ways: to assess individual property performance; to make an objective decision about where to invest and in which property type; to assess the relative performance of hotel assets to all other sectors and consequently reach optimal funds allocation decisions. This will allow investors to time their acquisitions/disposals according to the hotel property cycle.Design/methodology/approach– Data include 495 hotel property transactions in Europe during the period between 2004 and 2013. Transaction prices and property characteristics were collected from a variety sources published by hotel agents and consultants, property magazines, newspapers, tourist board, individual property and hotel association registers and web sites. Data include property name, sale price, size, time of sale, location, buyers and sellers. A hedonic pricing model is developed where the transaction price is regressed on the different characteristics. The index is calculated by taking the anti-logs of regression coefficients of the year index.Findings– This paper claims that the hotel property price index (HPPI) portrays a more realistic picture of what happened to hotel property prices in 2008 showing a single digit negative growth vs the hotel valuation index which reports a double digit negative growth rate in European hotel prices during the same year. The real impact of recession showed on hotel property prices in 2009. HPPI shows a crash in hotel property prices by -23.7 per cent in 2009. The year 2011 was marked by more sales transacted through administrators and a looming double-dip recession. Unlike appraisal-based indices, HPPI does not suffer from sticky valuation issues and is not desensitise from distressed properties. Therefore, it was more volatile to distressed situations throughout the period between 2011 and 2013.Research limitations/implications– Results of this study should be considered with caution. There are limitations associated with transaction data including incompleteness or inaccuracies regarding price data, financing information for each deal, property tenure, and property characteristics.Practical implications– This work has successfully developed an HPPI for hotel property in Europe. This paper paves the way for transaction-based indices that are more volatile than existing appraisal-based indices. This represents a significant development in tracking price movements of hotel properties in Europe. The index has potential to support research and forecasting of the hotel property cycles.Originality/value– This paper fulfils an identified need to track hotel property prices and timing the hotel property cycle.

Does hotel attribute importance differ by hotel? Focusing on hotel star-classifications and customers’ overall ratings

Hotel guests’ expectations and actual experiences on hotel service quality often fail to coincide due to guests’ unusually high anticipations, hotels’ complete breakdowns in delivering their standard, or the combination of both. Moreover, this disconfirmation could be augmented contingent upon the level of hotel segment (hotel star-classification) and the overall rating manifested by previous guests. By incorporating a 2×2 matrix design in which a hotel star-classification configures one dimension (2 versus 4 stars) and a customers’ overall rating (lower versus higher overall ratings) configures the other, this explorative multiple case study uses conjoint analyses to examine the differences in the comparative importance of the six hotel attributes (value, location, sleep quality, rooms, cleanliness, and service) among four prominent hotel chain brands located in the United States. Four major and eight minor propositions are suggested for future empirical research based on the results of the four combined studies. Through the analysis of online data, this study may enlighten hotel managers with various ways to accommodate hotel guests’ needs.

Hotel location evaluation: A combination of machine learning tools and web GIS

The need for a reliable, unbiased, and objective assessment of hotel location has always been important. This study presents a new approach to evaluate potential sites for proposed hotel properties by designing an automated web GIS application: Hotel Location Selection and Analyzing Toolset (HoLSAT). The application uses a set of machine learning algorithms to predict various business success indicators associated with location sites. Using an example of hotel location assessment in Beijing, HoLSAT calculates and visualizes various desirable sites contingent on the specified characteristics of the proposed hotel. The approach shows considerable potential usefulness in the field of hotel location evaluation.

Lakeview Hotel Investment Corp.

ABSTRACT Lakeview Hotel Investment Corp. (LHIC) is a publicly traded owner and operator of hotel properties located primarily within smaller centers in western Canada. The case provides students with the opportunity to develop research and analytical skills by investigating related party disclosures found within LHIC's financial statements. Students are asked to identify related parties and analyze the transactions between LHIC and its related parties. They are then directed to comment on the underlying value of the transactions. This case illustrates both how much can be learned by careful reading and analysis of related party transaction disclosures and also how many questions about related party transactions remain unanswered based on the information contained in financial statements. Although all information used in the case is publicly available, the degree of difficulty can be adjusted for use within undergraduate and graduate courses by varying the amount of information provided to students. This case is suitable for intermediate financial accounting, accounting theory, and financial statement analysis courses.

Preferences and Willingness to Pay for Green Hotel Attributes in Tourist Choice Behavior: The Case of Taiwan

ABSTRACTAlthough many companies in the hotel industry aim to pursue more sustainable and socially responsible practices, the present literature shows mixed results with regard to tourist reactions to such moves, especially for the service quality perception impacted by implemented green practices and the willingness to pay more for such actions. Unlike previous research examining tourists’ preferences for separate green hotel attributes, this study identifies the determinants of tourists’ choice of green hotel attributes. Additionally, the study measures the willingness to pay (WTP) for such services, in the context of the Taiwanese market, using the stated preference of combined green hotel attribute scenarios. A multinomial logit (MNL) model is employed to estimate the relative influence of behavioral and facility attributes on choice behavior. Furthermore, the study examines determinants influencing respondents’ choice of green hotel attributes. A latent variable class model (LVCM) approach is applied in the estimation of the unobserved heterogeneity, and a total of 390 valid respondents were used in the analysis. The empirical MNL results indicate that while tourists prefer luxury rooms and the provision of personal toiletries, they are also willing to accept reduced service quality. Additionally, sex, income, and age have significant influences on tourist choice behavior. The results of the LVCM model demonstrate that respondents with high levels of the green consumption trait are more likely to choose hotels that have a greater number of environmentally friendly attributes. The implicit amount that tourists are willing to pay for room quality is around US$13, for the provision of personal toiletries is about US$22, and for service quality is US$12, but they also require a discount of approximately US$11 in order to accept the common practices of green hotels. This study is useful in providing the hotel industry and government with quantitative information that can be used to develop and implement better green hotel policies.

Green strategies for hotels: Estimation of recycling benefits

Today is the Green Economy era and green strategies, like recycling can provide a great benefit to hotel industry. However, there is a lack of research to support these financial benefits. Therefore, this study investigates the role of recycling to enhance hotel businesses by contributing to its bottom line. The study uses a waste-audit technique on five hotel properties and conducts cost–benefit analysis based on the waste-audit results. Furthermore, the study estimates potential environmental impacts from recycling in terms of greenhouse gas (GHG) reduction. Findings suggest that hotels should practice recycling more rigorously not only to help the environment, but also to realize some potential monetary benefits. Additionally, participation of the hotel guests in this process is also recommended to make it more affordable and lucrative for the industry.

Research Note: Market Disequilibrium Effect on Hotel Prices

The authors reformulate the hedonic price approach by taking into account market disequilibrium in the hotel market. In the reformulated model, the imbalance between room supply and demand is incorporated into the hedonic price function. The hedonic price function for a hotel facing market disequilibrium is then estimated using data from a national panel of international tourist hotels in Taiwan during the period 1996–2008. They find that market disequilibrium has a positive and significant effect on room rates of tourist hotels in Taiwan; that is, an increase in excess demand may significantly raise the room rates. The effects of other physical attributes of hotels on room rates are also discussed.

Prioritisation of the hotel attributes according to their influence on satisfaction: A comparison of two techniques

Concerning the critical role of customer satisfaction in the success of hospitality enterprises, researchers have long been investigating customers' quality perceptions about hotel attributes and their influence on overall customer satisfaction. However, for any quality improvement efforts, the limited company resources have to be allocated according to the priority of attributes. Importance-Performance Analysis (IPA) and Asymmetric Impact-Performance Analysis (AIPA) are the quantitative techniques used by academics for this purpose. In this study, IPA and AIPA are compared to each other in terms of their abilities for predicting the prior hotel attributes of improvement for achieving higher customer satisfaction. Analyses results of IPA and AIPA offer different managerial implications, although the same data were used. Results presented in the paper suggest that AIPA is a more efficient analysis technique than IPA, by the reasons summarised in discussion section.

How does hotel attribute importance vary among different travelers? An exploratory case study based on a conjoint analysis

Travel review websites, along with online travel agencies and hotel websites, are salient components of a travel sector positioned at the top echelon of e-commerce categories. This study investigates the comparative salience of six hotel attributes (value, service, rooms, sleep quality, location, and cleanliness) in accordance with (1) an overall travelers group, (2) five different trip-purpose groups (business, families, friends, couples, and solo), and (3) two different country-of-residence groups (domestic and foreign travelers). A conjoint analysis was applied to a total of 405 reviews on one particular hotel from the website of TripAdvisor. The results of the study indicate that “value” and “rooms” are the most important attributes that contribute to a high overall rating for the hotel. In addition, large differences in hotel attribute importance are revealed among various types of traveler groups. Three major and ten minor propositions are postulated from the discussion of the study.

The financial impact of loyalty programs in the hotel industry: A social exchange theory perspective

With increased competition across the hotel industry for frequent travelers, who generate a disproportionate portion of revenue, loyalty programs appear to be a rational response to the competitive environment. The question remains, however, as to whether these programs are effective at increasing the profitability of hotel operators. This study analyzes the impact of customer loyalty programs on the industry specific performance metrics of occupancy rate, revenue, and operating margin. Utilizing a comprehensive database of 36 different hotel brands (e.g., Marriot, Hilton) encompassing 31 loyalty programs and 435 different hotel properties, we examine whether a loyalty program is indeed an effective tool to increase operating margin. In summary, empirical results suggest that investment in hotel loyalty programs has a positive impact on occupancy rates and profitability. And although the overall effect is modest, these results have several managerial implications for the hotel industry.

Corporate Social Responsibility and the Operationalization Challenge for Global Tourism Organizations

Tourism businesses have increasingly sought to contribute to society through corporate social responsibility (CSR) initiatives. Larger tourism organizations normally seek to institutionalize CSR under their corporate CSR policy and strategy that is common for their whole organization. This presents challenges for organizations with global operations. This article examines the operationalization of CSR policy by hotel properties in coastal destinations in Thailand. The research found that stakeholders other than the hotels played pivotal roles in the implementation of CSR programs and that there was a preference for involvement by hotels in local projects, over those situated elsewhere in the country or internationally. These hotels tended to partner with other non-hotel stakeholders to execute their external CSR programs and for these to be directed at social issues rather than environmental issues. Overall it was concluded that there are limits to the extent that corporate headquarters may direct the implementation of CSR.

Eco-efficiency of Service Co-production

This study investigates the relationship between eco-certifications (second or third party certified with an audit requirement) and resource efficiency in the U.S. hotel industry. Hotel properties become eco-certified by voluntarily conforming to environmental practice guidelines established by a certifying body, which assesses and recognizes the properties that meet their criteria. Eco-certifications therefore are key environmental sustainability initiatives that address both the internal operations and external customers. Based on regression analysis of 2,893 U.S. hotel properties for the year 2011, this analysis shows that eco-certified hotels maintain higher operational efficiency, as well as greater customer-driven resource efficiency, in comparison with properties with lesser or no eco-certifications. These results suggest that eco-certifications influence the resource consumption behavior of both the operators and the customers, although these effects are not consistent for all properties. The improvement from the operational effect is most pronounced in lower-tier properties, while the customer efficiency effect is most noticeable in upper-tier properties.

Assessing the Effects of Leadership Styles on Employees’ Outcomes in International Luxury Hotels

This study examines the effects of transformational, transactional, and non-transactional leadership on hotel employees’ outcomes including extra effort, perceived efficiency, and satisfaction with managers. Employees from eleven 4-star hotels in Spain provided the collected data. A series of statistical analyses (1) identify the elements of three leadership styles using a multi-factor leadership questionnaire (MLQ-5X); (2) examine the effect of leadership styles on employees’ outcomes. The results of this study indicate that “idealized attributes” of transformational leadership and “contingent reward” from transactional leadership are the most important factors that positively affect all three outcomes (i.e., extra effort, perceived efficiency, and satisfaction); and (3) to assess the moderating effect of different types of ownership of hotel properties on the relationship between styles of leadership and outcomes of employees’ activities other than these two elements, the significant factors indicating positive or negative relationships vary depending on the types of individual outcomes as well as ownership of hotel properties. The discussion sections indicate theoretical and practical implications of the findings.

Hotel managers' perceptions of the value of diversity training: an empirical investigation

Purpose – Recent research identifies several attributes that lead to the value proposition of a diversity-training program: corporate engagement in diversity training; participants' perceptions of how such programs aid their peers; self-analysis of participants in training; and perceptions regarding the benefit of diversity training for subordinates. The aim of this paper is to test a corresponding four-antecedent model of the value of diversity training from the point of view of hotel managers. Design/methodology/approach – A survey instrument was devised and sent to a random sample of hotel properties that asked managers questions related to the value of diversity training. Multiple regression analysis and t-tests were used as methods of data analyses. Findings – Results from 242 responses returned by managers of 96 hotels indicated that managers perceive themselves and the corporate executives to significantly add value to the organization through diversity training. Furthermore, ethnic minority managers do not value diversity training significantly more highly than their non-minority counterparts do; similarly, little difference exists between genders on the four indicators of diversity-training efficacy. Research limitations/implications – This study examined only one aspect of diversity management – diversity training. Among other limitations are the small sample and low response rates, which made it difficult to compare ethnic groups to one another. Practical implications – Through this study, managers' perceptions about which groups of employees add value following diversity training are presented. The findings are likely to help hospitality corporations to implement diversity training more efficiently. Originality/value – This study indicates that hotel managers value diversity training and suggests the need for organizations to understand how to prioritize various organizational levels for such training.

The Impact of Environmental Certification on Hotel Guest Ratings

In this article, we analyze the impact on hotels of the ISO 14001 environmental certification system from the customers’ perspective. Based on a comparison of customer ratings of 6,850 hotels in Spain with and without ISO 14001 certification, overall guests rate the hotels with ISO 14001 certification higher than those without the certification. These results are stronger for hotel comfort and hotel services compared with other hotel attributes. Moreover, the most significant differences were found in the upscale four-star hotels. While the study does not reveal causes for these findings, the implication is that the highest end five-star luxury hotels do not gain distinctive differentiation by having the ISO 14001 certification, while for three-star hotels, guests’ price sensitivity overrides environmental concerns. At the four-star level, however, hotels seem to be able to gain a distinct market advantage from environmental certification. For all hotels, the management discipline provided by ISO 14001 can provide a competitive advantage.

Opinion mining of hotel customer-generated contents in Chinese weblogs

Customer-generated contents in weblogs provide tourism organisations with valuable market intelligence and ongoing market research opportunities. In this study, an opinion mining method based on feature-based sentiment classification is proposed to extract the online electronic word-of-mouth on weblogs in Taiwan. For opinion extraction, a supervised semantic orientation using the point-wise mutual information (SO_PMI) algorithm based on the extension of Turney's unsupervised SO_PMI algorithm is proposed to extract the opinion words. In addition, a heuristic n-phrase rule is proposed to find out customer opinions about hotel attributes, including hotel image, services, price/value, food and beverage, room, amenities, and location. The experimental results show that the proposed approach mixed with supervised SO_PMI algorithm and heuristic n-phrase rule can demonstrate its effectiveness with acceptable classification and forecasting performances. Furthermore, a perceptual map based on correspondence analysis visually presents opinions comparison to provide the insight of competitive positions.

A Reexamination of Current Hotel Valuation Techniques – Which Approach is More Realistic?

This study revisits the issue of accuracy in contemporary hotel valuation. Along with the hotel valuation techniques used by Rushmore (1992) and Chen and Kim (2010), this study uses the cost approach and the automated valuation model (AVM) in its examination of contemporary hotel valuation techniques. Fourteen randomly selected hotel firms are analyzed using nine valuation approaches. The valuation results are then compared to the market values of these firms to assess which technique provides the most robust and supportable estimate. Research results reveal that, at least for the analyzed sample, the discounted cash flow (DCF) technique provides the most realistic estimate of a hotel firm's value. Results also show that the valuation estimate of AVM is significantly different from both Band of Investment methods. As such, the process of valuing hotel properties is better understood.

A Portfolio Approach in Lodging Firms’ Investment Behavior

The investment behavior of lodging firms is not adequately explained by conventional investment models due to the lodging firms’ practice of acquiring some properties while disposing of others. This practice makes it difficult to apply decision models based on marginal productivity and the costs of fixed assets to lodging firms. Using data on U.S. lodging firms between 2000 and 2008, this study provides an alternative explanation of hotel firms’ simultaneous investment and disinvestment behavior. Taking the view that hotel properties are analogs to financial assets (given that a hotel investment has bond-like characteristics), the study applied the financial portfolio theory to develop a theoretical framework that would explain how lodging firms can understand their investment options as components of a portfolio of assets. Through empirical testing, the study also found significant investment–disinvestment interdependency for lodging firms, which supports the alternative theory to asset management. An important consideration in lodging companies’ investment decisions is residual fees from franchise or management agreements that are attached to assets even after they are sold.

The healthcare hotel: Distinctive attributes for international medical travelers

Despite rapid growth in the medical/healthcare-tourism industry, research on the concept of the healthcare hotel, which can be a significant part of this industry, is rare. This study was designed to identify the distinctive attributes of a healthcare hotel—those facets unlikely to be available in regular medical clinics—and to test the role of these identified attributes in building visit intention among international travelers by considering the impact of perceptions/cognitions, affect, and trust. Qualitative and quantitative approaches generated three dimensions (monetary and convenience advantages, personal security, and availability of products/services) involving 23 attributes and validated the assessment tool for them. The results from the structural model revealed that the proposed relationships among study variables are positively and significantly associated. In addition, perceptions/cognitions, affect, and trust were found to be mediators in the proposed theoretical framework. Implications related to the identified attributes and tested relationships are discussed.

The Effect of Perceived Corporate Social Responsibility on Hotel Employee’s Attitude and Behavior toward the Organization

This study seeks to explore how corporate social responsibility (CSR) activities are perceived by employees and how the perceived CSR influences on employees’ organizational attitude and behavior in the hotel context in the Republic of Korea. Non-management employees from five hotel properties in the Republic of Korea were selected as study samples and structural equation modeling (SEM) was used to test the hypotheses. This study revealed that CSR was an antecedent of affective organizational commitment (AOC) and organizational citizenship behavior (OCB). CSR perceived by employees showed an indirect effect on OCB through a full mediation of AOC, indicating that employees who believe that their hotel has a strong commitment to community outreach and charitable giving are more likely to engage in OCB. This study focused on the social dimension of CSR and the hypotheses were tested on four-and five-star hotels operating in the Republic of Korea. The findings have implications for promoting positive employee attitude and behavior through active CSR initiatives and intra-firm communication efforts by hotel firms. This study is one of the pioneering studies that empirically investigate the antecedent role of corporate social responsibility on employees’ attitude and behaviors in the hotel sector.