Hotel Investment Research Articles

How market structure and market power shape hotel price discrimination – Evidence from big data

Limited research has addressed market structure and market power in the hospitality context. This study builds on the market structure literature by examining how market structure and power relate to and affect hotel properties’ price discrimination. We collected the published room rates of 583 hotels in Houston, Texas, in 2016 hotels.com . These dyadic price data captured booking windows with varied booking and check-in dates. Estimation results revealed two types of price discrimination, intertemporal and restriction-based, in the hotel industry. We confirmed that market structure and market power each played a role in such discrimination, with price discrimination being more intense in a more competitive market and among hotels with less market power. A sub-group analysis of hotels across different classes indicated heterogeneity in our results. Implications are provided for revenue managers and hotel investors to monitor market structure and power to design and manage proper pricing strategies.

Shirking with good reputation? Evidence from hotel industry

This paper investigates the relationship between reputation and investment in quality within the hotel industry. Utilizing a panel dataset of hotel investment expenditures and online consumer ratings, I employ a regression discontinuity design, which leverages TripAdvisor's rating display system to identify the causal relationship between online ratings and hotels' investment decisions. The empirical findings indicate that higher ratings negatively impact investment expenditures, whereas lower ratings tend to stimulate investment. This observed shirking behavior among hotels with better ratings may be ascribed to diminishing marginal returns on investment and reduced competitive pressures.

Evidence Use in Policymaking: The Case of a Hotel Policy in Western Australia

Summary This case study explores the development of a policy launched in 2011 to incentivise hotel investments in Western Australia, especially in its capital city, Perth. To understand the policy process, we studied relevant documents, including policy plans, promotional material, annual reports, industry reports and records of Parliament debates. This approach allowed us to assess the use of evidence throughout three policy phases: (i) the process of building a case for the development of hotel incentives (the why ); (ii) the design of hotel incentives as part of a broader tourism strategy (the what ); and (iii) the implementation of this policy and the outcomes it achieved (the how ). Information © The Authors 2024

КЛЮЧОВІ АСПЕКТИ МОДЕЛЮВАННЯ БІЗНЕС-ПРОЦЕСІВ У СФЕРІ ГОТЕЛЬНО-РЕСТОРАННОЇ ІНДУСТРІЇ В УМОВАХ НЕВИЗНАЧЕНОСТІ

The article examines modern approaches to modeling business processes in the hotel and restaurant industry in Ukraine. It emphasizes that over the past three decades, strategy has been the primary building block of competitiveness, but in the future, the search for sustainable advantage may shift to the processes of business model formation. The article describes various authors' approaches to this concept and the sequential stages of building a business model under unstable economic conditions. It characterizes the differences between business processes in the hotel and restaurant sectors and proposes an author's approach to the key elements of business modeling. Based on analyzed data, the article concludes that the leading hotel chain, Marriott International Inc., views sustainability as a key aspect of all business processes. Consequently, it highlights major development directions such as investing in the latest technologies, particularly in improving user digital platforms, developing the mid-price segment, and digital transformation, which could be relevant for other hotel and restaurant chains, including those in Ukraine. Different business models in the hotel and restaurant industry are shaped by commercial decisions made by hotel investors and hotel management companies regarding: оwnership of hotel premises and buildings; brand independence or affiliation with a larger hotel network operating under a unified brand; establishing and ensuring compliance with brand standards; risk distribution and profit-taking from hotel business operations; managing the team that makes daily operational decisions in the hotel (including staff recruitment and training). Thus, the further successful development and operation of enterprises in the hotel and restaurant industry will depend on their ability to adapt to changing market conditions, implement innovative solutions, and maintain sustainable development. The key aspects of business process modeling proposed in the article will introduce an element of certainty into the enterprise management process and integrate the latest management approaches into specific business processes, considering their specificity. Depending on the set goals, the methodology for modeling business processes can be narrowed or expanded.

Good or excellent? Factors determining online hotel ratings. A spatial approach

ABSTRACT In a competitive environment, where hotel demand is lower than market supply, it is of interest to determine what factors explain how excellence differentiates certain hotels from others. Using spatial quantile regression, this research investigates the effect of locational factors as well as those related to the management of human capital investment in Spanish hotels rated on Booking.com. The study shows that human capital investment in hotels can significantly increase guest delight. As regards location, hotels in protected natural areas that are far from large cities obtain higher guest review scores. Additionally, a spatial spillover effect due to reputation transfer among nearby hotels with median scores is found. However, this effect is not observed for hotels with very high scores. These results can serve to rationalize the available resources and inform hotel owners and managers about the factors required to achieve high scores. 在酒店市场竞争激烈的环境下，其需求低于市场供给，确定哪些因素更影响酒店评级尤为重要。本文采用空间分位数回归方法，调查了Booking.com上评级的西班牙酒店的地理因素和人力资本投资管理相关的因素的影响。研究表明，酒店的人力资本投入可以显著增加客人的满意度。在地理位置方面，远离大城市的自然保护区内的酒店获得了更高的顾客评分。此外，由于得分居中的临近酒店之间有声誉转移现象，其空间溢出效应被观察到。然而，这种效应并没有在得分非常高的酒店上观察到。这些研究结果可以帮助可用资源合理化分配，并使酒店管理者知晓获得高评分所需的因素。

High-resolution hydrodynamics of coral reefs and tracing of pollutants from hotel areas along the west coast of Unguja Island, Zanzibar

A rapid increase in population size along with expansion in hotel investment have been identified as key drivers of marine pollution in Zanzibar coastal waters. A validated high-resolution hydrodynamic tracer model was used to estimate the dispersal and impact range of pollutants from the main hotel areas along the western coastline of Unguja Island. The model showed the highest impact of pollutants from land during the northeast monsoon season due to the weakening of the main current. Marine protected areas with short distances to hotel areas and weak tidal currents were more likely to be impacted by pollutants from land than the more remote areas with higher flushing in agreement with water quality and seagrass health measurements. Cumulative effects of pollutants instead of single sources are important to consider for integrated wastewater treatment plans and management strategies to reduce pollution for the protection of biodiversity and guide future monitoring.

Benchmarking Hotel Investment Risk: Differences Based on Types of Hotels

Commercial real estate (CRE) investment involves risk, and hotels are perceived as the riskiest CRE assets because of the high turnover of guest room occupants and are the most operation-intensive of all types of CRE properties. Furthermore, that risk may vary significantly across types of hotels based on different dimensions. The existing academic literature regarding CRE investment performance generally lacks such investigation of hotels at the establishment level. The purpose of the current study is to investigate the volatility of operating profit (risk) of different types of hotel assets. Using relative standard deviations of historical performance (gross operating profit [GOP]) to measure hotel risk, we examine various property characteristics and the extent to which they affect the volatility of GOP at the unit level from 2015 through 2020 of over 3,000 U.S. hotel properties. We find that different types of hotels have carried different levels of risk. Specifically, we find significant differences in risk based on hotel brand affiliation status, class, property type, location type, region in which the hotels are located, age of the hotels, size of the hotels, and their occupancy and average daily rate levels. This study provides practitioners and researchers with an understanding regarding the relationships between the risk of different types of hotels, and provides practitioners with information regarding risk and a benchmarking methodology that may be applied to evaluate risk to aid hotel investment decisions. Furthermore, we provide researchers with information regarding various hotel characteristics that may lead to relatively greater/lesser risk.

Proposed Risk Mitigation for PT ABC to Maximize Income (Hospitality Industry Sector)

The questions on the research are what are the risks that influence business PT ABC, what are the impacts of these risks, what are the mitigation techniques used to reduce the severity of the impacts. This study aims to identify and examine the risks that influence the business continuity and operations of the company PT ABC, aims to examine the impact of these risks and to investigate risk mitigation in reducing risk. Despite the global economic downturn, Indonesia continues to create increasing number of tourists. As tourists and businesspeople come to visit Indonesia, hotel demand is expected to grow in the next years and decades. Cotah (2019) why hotel investment fails because of not aligned with the right people / team, poor service and maintenance, inflexible management, blasted by new competition, cost overrun to starting any construction or renovation project and poor projection and not understanding location that weakening over time. However, without careful risk management the chance of failing is relatively high. The concept used is the risk management guideline by ISO 31000 which contains the scope, definition, principles, framework and process of risk management. The sources for risk identification research come from interviews and brainstorming. The Analytical Hierarchy Process (AHP) is used to make a risk analysis with the help of Expert Choice version 11 software to analyse the weight of the respondent’s perspective, after obtaining the results of the risk evaluation then create a risk mapping to get the level of risk. Next, the final step is to create risk mitigation and implementation plans to reduce risk. Based on this research, 29 risk factors were found from 4 risk categories, which are Operational, People, Construction and Finance. There are 14 risk factors that are categorized at high risk level, then there are 7 risk factors that are categorized at a moderate risk level, and there are 8 risk factors that are categorized at a low risk level.

ОСОБЛИВОСТІ ПРОЕКТНОГО ФІНАНСУВАННЯ ДЛЯ ПІДПРИЄМСТВ ГОТЕЛЬНОГО І РЕСТОРАННОГО БІЗНЕСУ В УМОВАХ ЕВРОІНТЕГРАЦІЇ

The article examines project financing as a separate type of activity of credit institutions involved in the organization of financing hotel investment projects. The systematization of the world experience in the development of project financing made it possible to highlight the fundamental principles of project financing in relation to the hotel business. The principle of increased risk. Any project, the financing of which is carried out based on future cash flows, involves the distribution of risks among the maximum number of participants. The principle of adequate debt coverage. Compliance with this principle by the capital provider is based on the debt coverage ratio, which is determined by the ratio of expected revenues from project implementation to the total amount of debt. The principle of market viability of the project. The market principle requires a credit institution to conduct a detailed analysis of the market situation when concluding a credit agreement. Such market analysis is carried out in order to determine the dynamics of prices and demand for the period of operation of the hotel. The principle of limited liability of the client. According to it, the repayment of the debt occurs from the income from the implementation of the project, and the responsibility of the project initiator is determined by its own contribution. The principle of investment guarantee. A guarantee in project financing means an unconditional obligation to transfer the specified funds to the capital provider (usually a bank) in the event of a guarantee event. The purpose of this type of guarantee is to insure the debt obligations of the hotel project throughout its life cycle. The principle of debt repayment. This principle means that project financing will require unconditional repayment of funds according to the schedule. The principle of high financial leverage. This principle of project financing is based on maintaining a high ratio between own and borrowed funds. Such a scheme allows obtaining a number of advantages in the form of tax benefits, ensures the most effective use of credit instruments at each stage and contributes to the increase in the value of shares of project participants as a result of the completion of each sub-project and the commissioning of new hotels.

Locational attributes of the lodging industry: An empirical study on urban hotels in Ankara, Turkey

Providing temporary accommodation for visitors, hotels usually make permanent location choices as a strategic managerial decision. This study is shaped around the research question of how urban hotels appreciate their locational attributes considering their operationality. By this way, it is aimed at establishing the location decisions of urban hotels, and the interaction between their spatial distribution and urban space. A structured questionnaire was conveyed to a sample of 75 hotels operating in Ankara city to inquire about their locational attributes. Results show that hotels commonly accompany with the business functions and their operability are affected from the urban spatial structure. The analysis provides a basis to discuss the attributes of urban location on the business operations of lodging industry by presenting an empirical assessment, and an insight to both potential entrepreneurs and decision-makers in developing a policy framework for hotel investors’ needs, demands, and site-specific problems.

Upper echelon characteristics and environmental sustainability practices: Evidence from upper echelons in the hotel industry

The global tourism industry's boom has put pressure on achieving hotel sustainability. Managing water, energy and waste is a big challenge for the hotel industry. Upper Echelon Theory can be considered an approach to addressing hotel sustainability challenges. Using data from 23 in-depth interviews of senior hotel executives in Sri Lanka, we examine how upper echelon characteristics affect the environmental sustainability practices of senior executives in the hotel industry in Sri Lanka. The findings reveal that participants with strong attitudes, sound educational background, extensive prior experience, foreign exposure and early exposure to the environment perform better in managing hotel sustainability. These study findings while extending our understanding of upper echelons will benefit hotel investors and tourist regulatory bodies in particular.

How Acquired Technical Skills Surpass Cognitive Personality Traits of PR Employees: A Case Study of Economy Hotels in Egypt

The hotel industry is one of the world’s oldest commercial industries (Bovin 2019). The industry is rapidly expanding, necessitating the assignment of tasks to skilled staff that will ensure client satisfaction. Hotel investment activities in African countries have lately increased (Ernst & Young 2013), and new hotel developments have become the fastest rising economic activity not just in Sub-Saharan Africa but also globally (Ernst & Young 2013). Human resource allocation in hotels refers to the assignment of hotel workers to service tasks, where staff can only be engaged for a certain amount of time due to labor laws. Human resource allocation requirements differ depending on the application area (Kayoko et al. 2011). The system’s success is frequently ascribed to how well it manages human resources. It is a critical issue in order to improve performance. When a task requires certain abilities, such as accounting skills, a human resource that handles the activity should have those skills in order to complete the assignment efficiently (Ernst et al. 2014). On the other hand, the impact of personality traits on employee job performance is undeniable, and many businesses take use of this effect. One of the most important psychological aspects influencing human behavior is personality. It is said to be crucial in the workplace. Personality qualities have an essential influence in improving an employee's job performance’s efficiency and are probably much weighted than technical ones. Personality traits are favorably connected with job success, and conscientiousness has attributes that directly correspond to job performance of employees with the highest weights, according to previous researches. It is the main objective of this paper to find out whether personalities traits from one side outweighs employees’ skills from the other side taking PR employees of economy hotels in Cairo as a sample for application and how could this contribute to the performance of the hotel. Keywords: attitudes, skills, cognitive personality traits, PR department, economy hotels, reputation and performance

Do Brand-Affiliated Hotels Have Lower Cash-Flow Risk?

Hotels are generally perceived as the riskiest type of commercial real estate (CRE) investment because hotel “leases” have relatively high turnover. Existing literature regarding CRE investment risk and return lacks investigation of hotels at the unit level—which is the level of analysis undertaken by existing and prospective hotel investors. Two major types of hotels are branded and independent ones. The purpose of this study is to investigate the variability (risk) of key performance indicators (KPIs) such as occupancy rate, and revenues and profit of branded versus independent hotels. Using a large sample of performance data regarding over 4,000 U.S. hotel properties from 2000 to 2019, we examine the extent to which branding affects the volatility of KPIs. We find that brand-affiliated hotels have lower cash flow risk measured as lower volatilities of KPIs compared with independent ones. Furthermore, the level of volatility reduction of branded hotels is greater for profit than for revenue, and profit may be the most important KPI for hotel investors. The magnitude of volatility reduction also increases as the measurement window length (number of years) increases. We also study the long-term returns of branded versus independent hotels. This study contributes to the understanding regarding the relationships between investment risk of branded versus independent hotels, extends the literature regarding hotel investment, and provides hotel investors and analysts information regarding risk to aid decisions such as developing, purchasing, holding, or disposing of hotel assets.

Hotels as Noncongregate Emergency Shelters: An Analysis of Investments in Hotels as Emergency Shelter in King County, Washington During the COVID-19 Pandemic

This study analyzes the COVID-19 homelessness response in King County, Washington, in which people were moved out of high-density emergency shelters into hotel rooms. This intervention was part of a regional effort to de-intensify the shelter system and limit the transmission of the virus to protect vulnerable individuals experiencing homelessness. This study used quantitative and qualitative methods to describe the experiences of and outcomes on individuals who were moved from shelters to noncongregate hotel settings. The study highlights a new approach to shelter delivery that not only responded to the public health imperatives of COVID-19, but also indicated positive health and social outcomes compared to traditional congregate settings. The findings establish an evidence base to help inform future strategic responses to homelessness as well as to contribute to the broader policy conversations on our nation’s response to homelessness.

Examining the Determinants of Location Attributes and their Effect on Hotel Pricing in the Period of the Covid-19 Pandemic in an Emerging Market

The emergence of COVID-19 and the consequent travel restrictions have led to a decrease in the patronage of hotel services in nearly all economies in the world. In this circumstance, location attributes have become even more important in hotel pricing and investment decision-making. It is even more interesting to see how this plays out in emerging economies such as Ghana. The study assesses the effect of location attributes on hotel pricing during the COVID-19 pandemic period in Tamale. A sequential mixed research design including Mixed Spatial Hedonic Price Approach, Exploratory Factor Analysis and key informant interviews was employed. A sample of 815 tourists and 163 hotels was used. Hotel class, road accessibility, age of building, and hotel rate are the key determinants of hotel pricing. Among these, the hotel class showed more significance in influencing pricing decisions in the COVID-19 period. The models show that the hotel class with positive coefficients are located outside the city centre of Tamale. This has resulted in increased Yield To Maturity because the hotels located outside the city centre received more clients, with grade one hotels showing a huge net income and good post-COVID-19 investment drive. The results show that potential hotel investors should consider hotel class as a major entry decision factor during and after periods of the pandemic.

Keeping the competition close: The impact of competitor distance in the lodging industry

AbstractThis study applies a distance‐based measurement outlining market boundaries for competition in the lodging industry and investigates the effects of competition across a range of distances. Predetermined administrative boundaries have been the conventional metric used when estimating competition effects in a given geographical area in the lodging industry. For this study, distances are calculated using the location information of 45,623 hotels in the United States extracted from the Smith Travel Research Hotel Census. Our findings suggest a U‐shaped relationship: hotel room prices fall as relative distance increases, due to increasing negative price pressure, until a threshold distance is reached (a radius of 20 km), after which price pressure falls and prices begin to increase. These research findings have implications for hotel managers with respect to competitor management and for hotel investors interested in locating and developing future accommodation establishments.

Critical success factors of green hotel investment in Taiwan

PurposeThis study aims to address research gaps by constructing critical success factors (CSFs) in the context of green hotel investment in Taiwan. It contributes to the domain knowledge to cultivate Taiwan’s green hotel development in the future.Design/methodology/approachThe authors secured 20 prominent green hotel management/owners/architects as crucial informants. The first stage used the Delphi method to collect expert opinions (i.e. CSFs) and the second stage applied the analytic hierarchy process to analyze the importance of CSFs.FindingsThe results show that the “financial investment benefits” is considered the most crucial success factor for the green hotel investment. However, to balance long-term economic development with environmental impact, green hotel investors should consider other aspects of the research to sustain future financial performance returns.Research limitations/implicationsFurther studies should consider regional characteristics to accommodate geographic/social differences and hotel types to explore possible CSFs for the green hotel investment. The authors suggest including panel experts from government officials and prominent scholars to represent a broader but different view on subject matters. They also offer implications for investors’ governmental policies, hotelier cognition and customer-related aspects in green hotel investment.Originality/valueThis study built a hierarchical framework based on the CSF concept by evaluating priority differences between hotel management and hotel owners/architects. Such findings help investors’ effective decision-making through considering factors’ relative importance for green hotel investments.

Small Hotel Location Selection Problem: The Case of Cappadocia

Identifying an appropriate location is one of the most significant factors in determining the success of a facility. This paper focuses on the selection of the most appropriate small hotel location in inner Cappadocia, based on seven destination-specific criteria. The Pivot Pairwise Relative Criteria Importance Assessment (PIPRECIA) and Additive Ratio Assessment (ARAS) methodology is utilized to obtain the relative criteria weights and the final ranking of six alternative small hotel locations. The results indicate that the most important factors in small hotel location selection in Cappadocia are revenue per available room (REVPAR) potential, investment amount and view of hot air balloon flights. Goreme and Uchisar are identified as the most appropriate locations for small hotel investment in the region.

State Manoeuvres in Hotel Acquisitions in Cameroon: An Analysis of the Ringway Hotel Saga, 1962- 1992

Since the independence and reunification of Cameroon in 1960/61, state engagements in hotel provisioning has been one of the essential socio-economic devotions. Decision making in this sector has most often largely depended on administrative preferences than well-versed managerial pointers. Consequently, some state ventures in this direction have been characterised by, inappropriate forecasting and mismanagement. These setbacks in the long run culminate in the collapse of public hotel investments. Based on primary and secondary sources and informed by qualitative analysis, this article profiles a crucial case of a public hotel investment, the Ringway Hotel in the chief town of Bamenda (Cameroon) as it quivered and writhed for survival. It argues that the purchase and management of the hotel was trapped in controversies involving but not limited to the strategic interest of the state and different stakeholders. The state purchase and operational principles of the hotel did not fluidly align with the desire for which its purchase was envisioned. This had as long run consequence, the collapse of the Ringway hotel. Key Words : Acquisitions, Manoeuvres, State, Ringway, Hotel, Board of Directors, Cameroon Hotel Limited. DOI: 10.7176/JAAS/76-07 Publication date: November 30th 2021

Factors Affecting Hotel investment in Ethiopia: Evidence from South Gondar Administrative Zone, Ethiopia

The main objective of this study was to examine the factors affecting hotel investment in the case of South Gondar Administration Zone. Descriptive and Explanatory research design and mixed research approach were applied. The data was collected through structured questionnaire and semi- structured interviews. 220 sample respondents were selected for survey questionnaire and 9 informants were selected for interviews. The key informants were selected via purposive and multi-stage stratified sampling. The study was employed both descriptive statistics inferential statistics using SPSS Version 26. On the other hand, the five independent variables namely government policy, infrastructure, socio-cultural, location, and economic factors affect hotel investment. Based on the findings of the study, the researcher recommended that investment and land administration office could be make standard and feasible policy for hotel investor to minimize the complexity of policy. Keywords: Investment, Hotel, South Gondar Zone, Ethiopia, factors, DOI: 10.7176/JTHS/58-01 Publication date: August 31 st 2021