Cornell CHR Reports

Social Media Use in the Restaurant Industry: A Work in Progress

Wed, 15 May 2013 12:52:04 EST

A survey of 166 restaurant managers reveals a mixed picture in their use of social media and its impact on operations. Although many restaurants are using social media, the study found that many restaurateurs lack well-defined social media goals, both in terms of the purpose of the restaurants’ social media activities and the target of their social media messages. Although the restaurant operators in this convenience sample were generally supportive of the use of social media, well over half were not certain that social media met one or more of three specific goals, namely, increasing customer loyalty, bringing in new customers, and boosting revenues. The respondents generally rely more heavily on non-financial metrics than on actual financial numbers to measure the return on their social media investment, due to the large degree of uncertainty surrounding how to measure the financial returns of social media on operations. On balance, independent restaurants made more use of social media than did chains. The study’s findings suggest that restaurateurs should reevaluate their social media approaches to ensure that they are strategically designed and executed.

Common Global and Local Drivers of RevPAR in Asian Cities

Mon, 13 May 2013 12:16:04 EST

This study examines the common global and local factors that drive changes in revenue per available room (RevPAR) in eight major Asian cities. We find that RevPARs for these cities tended to move together until about 2009, after which the RevPARs began diverging significantly. The study tests economic variables that capture both local and global factors and which explain most of the changes in RevPAR in each city. One factor, the number of tourist arrivals, is always positively associated with RevPAR changes in the eight cities. Other factors that drive RevPAR in most of the eight cities are inflation, Chinese consumer confidence, U.S. consumer confidence, and Chinese real-estate development (as a proxy for China’s GDP). Most of these gateway cities are more heavily influenced by global factors than local factors. At one extreme, global factors explain over 90 percent of the changes in RevPAR in Seoul. At the other extreme, local factors explain 66 percent of the changes in RevPAR in Bangkok. These similarities and differences give hoteliers and investors a window into the factors that drive their properties’ revenues and allow a more accurate risk assessment.

Network Exploitation Capability: Model Validation

Mon, 01 Apr 2013 13:04:44 EST

This report provides the validation of a model for Network Exploitation Capability (NEC), which is a newly proposed measure of a lodging firm’s level of sophistication in its application of networked information technology (IT). The report also includes a questionnaire and benchmarks that allow management to gauge its own hotel’s NEC and compare that to a pilot set of validation data. Network Exploitation Capability is the ability of hospitality organizations to successfully respond to new technology in three key areas: demand generation, multi-channel digital distribution, and profit optimization—all of which are being constantly reinvented by IT innovations. As IT changes, so must hospitality ventures be able to acquire or develop new capabilities for using the new applications. The NEC Maturity Model describes how the sophistication of hospitality ventures might progress over time in their use of IT. This discussion of the NEC model validation includes empirical results, along with detailed suggestions for how properties, management companies, owners, and chains can assess their own current level of IT sophistication.

Preferences and Attitudes of Chinese Outbound Travelers: The Hotel Industry Welcomes a Growing Market Segment

Mon, 18 Mar 2013 09:29:21 EST

Numbering more than 70 million, the market of outbound Chinese travelers is already large and continues to grow. A survey of Chinese travel operators paints a picture of their clients as a focused group of travelers who seek to experience diverse aspects of the world’s cultures on trips while also making the best possible use of the time available. To that end, China’s travelers prefer such hotel room amenities as a pot to make hot water for tea, and a double sink with a separate vanity. A buffet breakfast is also high on the list, as another time saver. Most travel organizers book their clients in full-service urban hotels, because the travelers want to be close to shopping, attractions, and activities, while resorts are less popular. Although China’s outbound tourists have primarily been visiting nearby Pacific-region destinations, their target destinations are expanding to Europe and the United States, among other locations. While tour package price is always a consideration in deciding where to go, a particular problem for the Chinese travelers is the difficulty of obtaining U.S. visas. While China’s travelers would prefer planning their own independent trips, the reality is that package tours are the most practical for the foreseeable future. The world’s hotel chains have taken notice of this important market, and have developed concepts and amenities specifically intended to improve the guest experience for Chinese travelers.

The Target Market Misapprehension: Lessons from Restaurant Duplication of Purchase Data

Mon, 11 Feb 2013 13:33:12 EST

This study tests the supposition that different types of restaurants appeal to or attract substantially divergent market segments. Instead of targeting specific markets, the analysis suggests that restaurant brand managers should take a mass marketing approach. The study examines the "Consumer Picks" survey data collected by WD Partners and the National Restaurant Association to determine the extent to which a particular restaurant brand shares its customers with other restaurant brands. The analysis finds that the extent of sharing is almost completely explained by the restaurants’ market share, rather than by market targeting. Five sets of restaurants were tested: (1) hamburger quick-service restaurants (QSRs); (2) chicken, Mexican, and pizza QSRs; (3) fast casual concepts; (4) full-service casual restaurants; and (5) table-service restaurants. Each restaurant brand shared its customers with the other brands in proportion to the other brands’ shares of customers and in inverse proportion to its own share of customers. While some restaurant brands shared customers substantially more or less than expected given the sizes of their customer bases, these cases did not occur more frequently than one would expect from chance. This pattern of data suggests that the different restaurant brands do not attract substantially different types of consumers, which in turn suggests that restaurant brands should aim most of their marketing efforts at increasing their appeal to all restaurant customers. That is, most of restaurant marketers’ time, energy and money should be devoted to mass marketing and not targeting subsets of consumers.

Compendium 2013

Thu, 17 Jan 2013 13:50:33 EST

The newly issued 2013 Compendium of the Center for Hospitality Research (CHR) gives summaries of the 30-plus new research publications issued during 2012, as well as 11 articles with Cornell authors published in the Cornell Hospitality Quarterly (CQ), which is produced by arrangement with Sage Publishers.

CHR research publications issued in 2012 comprised 15 reports, 4 tools, 3 industry perspectives, 7 proceedings, and 2 research briefs—all of which are available for download at no charge. The Compendium includes executive summaries and links for all publications, including articles in the CQ, which are available through Sage.

The Compendium listings are arranged by topic: communication, finance, human resources, information systems and technology, marketing and tourism, operations management, restaurant management, and strategy. In addition to summaries of 2012 reports, the Compendium includes a listing of publications posted in previous years. As with CHR’s other research reports, the 2013 Compendium is available for download at no charge.

CHR 2012 Annual Report

Thu, 17 Jan 2013 13:41:28 EST

2012 was a year of change and growth for the Cornell Center for Hospitality Research (CHR), as detailed in its 2012 annual report, which is now available. During 2012, the CHR produced the second Cornell Hospitality Summit (CHRS), conducted its first roundtable outside the U.S., issued over 30 new research publications, and observed its 20th anniversary. The year also saw a transition to a new director, as Associate Professor Robert Kwortnik was named to replace Professor Rohit Verma, whose term as director ended in 2012. The CHR’s activities are made possible by an active group of nearly 80 industry partners and friends.

As recorded in the Annual Report, the CHRS drew some 230 industry executives and researchers to the Cornell campus for two intensive days featuring more than 80 research presentations and discussions. Participants came from 21 nations in addition to the U.S. The first internally located roundtable was held in India, in conjunction with the Dean’s Leadership Series, and sponsored by Taj Hotels, Resorts, and Palaces, a CHR senior partner. The CHR also continued its Industry Roundtable series in Ithaca with sessions on Brand Management, Ethics, International Issues, Labor and Employment Law, and Sustainability.

Research publications include reports, tools, industry perspectives, proceedings, and research briefs—all of which are available for download at no charge. In partnership with SAS, CHR produced three new webcasts focusing on current industry issues, including revenue management and social media analytics.

To conclude the CHR’s 20th anniversary observation, the Annual Report includes a summary of “CHR at 20 by the Numbers”: 148,913 international registrants from 118 nations; 51 CHR Roundtables to date; 234 publications posted since 2004; 625,535 downloads of CHR research publications; and 8 Senior Partners, 31 Partners, and 40 Friends.

Restaurant Daily Deals: The Operator Experience

Wed, 12 Dec 2012 09:44:34 EST

A survey of 273 restaurateurs who have offered daily deals presents a mixed picture regarding the deals’ success and the operators’ attitudes on past and future deals. About half of the restaurateurs, a substantial majority of which were independents, had offered at least one deal, most of them through Groupon or LivingSocial. These operators reported that about 40 percent of the deal purchasers were new customers, meaning that there was substantial cannibalization of existing customers. However, 35 percent of the first-time deal customers returned to the restaurant without a further incentive. Although many restaurant operators said revenues increased, the number that said they made money on the deal was about the same as those who reported losing money. Additionally, a comparison of deal buyers’ attitudes with the restaurateurs’ view of the deal buyers found that the operators misjudged their guests in some regards but were correct on others. The operators underestimated deal buyers’ likelihood of returning to the restaurant without a subsequent deal, and missed a key characteristic of the deal buyers, which is that they want to be opinion leaders, or “market mavens.” This aspect of deal buyers can be important for future sales. Given the consumers’ attitudes, the best strategy to bring back deal buyers is to offer them a first-class experience so that they can see a restaurant’s full value proposition.

The Impact of Social Media on Lodging Performance

Thu, 15 Nov 2012 16:08:19 EST

Social media has been touted as having an increasingly important role in many aspects of the hospitality industry, including guest satisfaction and process improvement. However, one of the more intriguing aspects of social media is their potential to move markets by driving consumers’ purchasing patterns and influencing lodging performance. In the absence of a comprehensive attempt to quantify the impact of social media upon lodging performance as measured by bookings, occupancy, and revenue, this report uses the unique position of Cornell’s Center for Hospitality Research to combine data from three CHR research partners (ReviewPro, STR, and Travelocity), and two other data providers (comScore and TripAdvisor) in a first attempt at determining ROI for social-media efforts. The analysis finds the following. First, the percentage of consumers consulting reviews at TripAdvisor prior to booking a hotel room has steadily increased over time, as has the number of reviews they are reading prior to making their hotel choice. Second, transactional data from Travelocity illustrate that if a hotel increases its review scores by 1 point on a 5-point scale (e.g., from 3.3 to 4.3), the hotel can increase its price by 11.2 percent and still maintain the same occupancy or market share. Third, to measure the impact of user reviews on hotel pricing power, consumer demand, and revenue performance the study uses matched-sample data from ReviewPRO and STR. By matching ReviewPRO’s Global Review IndexTM with STR’s hotel sales and revenue data, a regression analysis finds that a 1-percent increase in a hotel’s online reputation score leads up to a 0.89-percent increase in price as measured by the hotel’s average daily rate (ADR). Similarly this 1-percent increase in reputation also leads to an occupancy increase of up to 0.54 percent. Finally, this 1-percent reputation improvement leads up to a 1.42-percent increase in revenue per available room (RevPAR).

HR Branding: How Human Resources Can Learn from Product and Service Branding to Improve Attraction, Selection, and Retention

Mon, 22 Oct 2012 09:30:42 EST

Brand equity and human capital are two critical assets that support a firm’s short-term stability and long-term success. While businesses have recognized the power of brand management for attracting and retaining external customers, companies are only beginning to realize the potential benefits of HR brand management for attracting, selecting, and retaining internal customers (i.e., employees). The purpose of this report is to introduce CHR readers to the concept of HR branding. Our purpose is to review the research and implications of the branding literature, and then to describe how human resource management can draw on these lessons to influence human capital. Specifically, we will (1) define HR branding, (2) detail its potential for attracting, selecting, and retaining employees, and (3) describe how firms can manage their HR brand to achieve this potential. Many examples of firms engaging in HR branding practices are provided throughout the paper. We argue that human resources can learn from marketing, thereby managing three components of a company’s HR brand—its reputation, culture, and total value proposition. Ultimately, HR branding can be used as a strategic tool to manage different aspects of the employment experience.

Service Scripting and Authenticity: Insights for the Hospitality Industry

Wed, 17 Oct 2012 14:44:12 EST

Customers in hotels and restaurants can quickly discern when an employee is following a service script. The customer’s reaction to that script depends in part on the nature of the service transaction, but also on how authentically the employee behaves within the script. A study of 2,407 U.S. hospitality customers found that many customers (almost half of the sample) focus on the treatment aspect of scripts—that is, how they are treated by the employee—and have a generally negative view of scripted services. However, about one-third of the sample considered the task-completion aspect of scripts. These respondents agreed that scripts are valuable for ensuring that all aspects of a task are completed correctly. Certain encounters are well suited to strict scripting (such as reservations and check-in), because their task-related aspects are critical to quality. Other encounters, such as concierge service and fine-dining interactions, might benefit from more flexible scripts, since customers are more focused on how they are treated during such service interactions. The respondents were uniformly negative when they detect what is known as “surface acting,” which occurs when employees are clearly just going through the motions of a script. In contrast, positive results occurred with “deep acting,” in which employees are (or seem to be) sincere in their service interaction. However, only a substantial minority of respondents reported perceiving sincere script delivery by employees. Given the importance of scripts in ensuring that service tasks are completed correctly, the study’s implications for hospitality managers include strategies of assessing the balance between task and treatment, determining which tasks are appropriate for flexible scripts, training employees in “deep acting,” and gaining employees’ buy-in by having them assist with script design.

Determining Materiality in Hotel Carbon Footprinting: What Counts and What Does Not

Fri, 14 Sep 2012 12:35:29 EST

As hotel companies seek in good faith to determine and report their carbon footprints, often in response to stakeholder requests, the issue of materiality arises, in which the hotel firm must determine what factors are important to greenhouse emissions and which are negligible in terms of emissions. The guidance from existing sources on this question is complex and can be contradictory. In addition to examining the boundaries of materiality, this report presents a materiality analysis of two sources of hotel greenhouse gases, fugitive coolant emissions and mobile fuels. Based on data from 154 hotels in 25 countries, neither source appears to be material for most hotels, since neither exceeds the commonly used cut-off point of 5 percent of total emissions. While the circumstances of a particular hotel might render one of these sources material, they do not seem to merit the industry’s attention for constant measurement.

Earnings Announcements in the Hospitality Industry: Do You Hear What I Say?

Tue, 11 Sep 2012 12:18:19 EST

This study examines how the stock prices of publicly traded hospitality firms respond to quarterly earnings announcements. We find that after the initial price reaction to unexpectedly good or bad news, stock prices continue to drift in the same direction for up to 20 trading days following an announcement, suggesting that the new information is incorporated into prices gradually. Although this implies that hospitality stock prices are not perfectly efficient, we note that the prices of hospitality stocks generally appear more efficient than stock prices in the broader market, where drifts lasting up to 60 trading days are common. Similarly, we find that stock analysts are somewhat slow in revising their forecasts for future earnings in the hospitality sector, but this result is less pronounced than in the broader market.

Optimizing Hotel Pricing: A New Approach to Hotel Reservations

Tue, 14 Aug 2012 15:11:06 EST

This report discusses the economic basis and provides a description of a new hotel reservation pricing approach. In addition, the second half of this report provides a step-by-step key to the screens and functionality of the companion Cornell Hospitality Tool—“Hotel Reservation Optimizer.” The tool applies a general equilibrium approach to establishing a value for a room reservation. The room reservation is essentially an option to occupy a room at an agreed-on room rate. By establishing a price for the reservation that is based on the traveler’s best estimate of whether she will actually occupy the room, the hotelier gains information about how likely it is that the room will be sold. This tool is a mechanism by which hotel managers can obtain more accurate information regarding future room demand.

To download the corresponding Tool click here.

The Contagion Effect: Understanding the Impact of Changes in Individual and Work-unit Satisfaction on Hospitality Industry Turnover

Wed, 08 Aug 2012 11:07:52 EST

This report describes a two-year longitudinal study examining the effects on employee turnover of the change in individual and unit levels of satisfaction. Analyses of data collected from 5,270 employees in 175 business units of a hospitality company demonstrate that changes in an individual’s level of satisfaction affect that person’s turnover decisions. More important, unit-level job satisfaction change and its dispersion jointly affect the individual’s satisfaction change and the overall turnover rate in a unit, in what can be termed a “contagion effect.” As the work environment becomes more positive (employees are satisfied) and overall satisfaction in the unit increases over time, for example, fewer individuals leave their jobs. Even unhappy employees are lifted by a coherently positive environment. We further find evidence of a multilevel three-way interactive effect of unit-level job satisfaction change and its dispersion, and individual job satisfaction change on individual turnover. When attitudes in a work unit vary substantially, a general increase in satisfaction has little effect on an individual’s satisfaction or turnover plans. Put differently, when an employee is out of step with prevailing trajectory in unit-level attitudes, the discrepancy of attitudes appears to alter the relationship between his or her job satisfaction trajectory and turnover propensity. The findings emphasize the importance of tracking changes in employee satisfaction and the impact of changes in group attitudes on individual attitude and behavior.