A. J. Singh

The impact of information technology on future management of lodging operations: a Delphi study to predict key technological events in 2007 and 2027.

This research study is part of a comprehensive Delphi study conducted by the faculty of The School of Hospitality Business at Michigan State University. The purpose of the research was to enable expert panellists to project the likelihood of specific events in the future of the lodging industry. This paper presents a summary of the key prognostications of a select panel of experts relative to the impact of information technology on the management of operations in the lodging sector in years 2007 and 2027. In general, panellists agreed future IT applications are likely to rely on a wireless infrastructure that provides cost savings through improved efficiencies and effectiveness. As online purchasing, cashless payments, handheld devices and remote monitoring algorithms become more commonplace, the industry will be better able to exceed guest expectations through enhanced customer relationship management, comprehensive application software and streamlined property management systems.

Guest satisfaction in the U.S. lodging industry using the ACSI model as a service quality scoreboard

SUMMARY This article extracts data from the American Consumer Satisfaction Index (ACSI) for the lodging industry and for the six hotel brands included in the study. Guest satisfaction scores are analyzed for three important standards: overall satisfaction, expectancy-disconfirmation, and customer experience compared to an ideal product. Findings indicate that [1] the lodging industry scores slightly better than the entire service sector and about the same as the national score, and [2] there is significant variation in satisfaction scores among the six brands tested. Implications for management are included.

Financing the lodging industry in the next millennium

Abstract Lending to the industry has seemed to occur in 5-year cycles where lenders alternate between a period of marked flexibility with generous lending terms and then followed by a period of austere lending terms. During the last decade of the 20th century indications are that there is prudence both in the demand and supply markets and some expect that this environment will persist long enough into the new millennium to prevent the recurrence of the boom and bust cycle of hotel financing. With many new financial instruments and new sources of financing introduced in the last decade of the century this paper presents the results of a Delphi study about lodging financing in the next millennium. It highlights the predictions of selected experts from the lodging and financial services industries.

Online Auctions: Dynamic Pricing and the Lodging Industry

Abstract The traditional channels of distribution for overnight accommodations are rapidly being displaced by website scripting, online intermediaries, and specialty brokers. Businesses that pioneered Internet usage relied on it as a sales and marketing alternative to predecessor product distribution channels. As such, websites replace the traditional trading model to the Internet. Web-enabled companies are popular because the medium renders the process faster, less costly, highly reliable, and secure. Auction-based models impact business models by converting the price setting mechanism from supplier-centric to market-centric and transforming the trading model from “one to many” to “many to many.” Historically, pricing was based on the cost of production plus a margin of profit. Traditionally, as products and services move through the supply chain, from the producer to the consumer, various intermediaries added their share of profit to the price. As Internet based mediums of distribution become more prevalent, traditional pricing models are being supplanted with dynamic pricing. A dynamic pricing model represents a flexible system that changes prices not only from product to product, but also from customer to customer and transaction to transaction. Many industry leaders are skeptical of the long run impact of online auctions on lodging industry profit margins, despite the fact pricing theory suggests that an increase in the flow of information results in efficient market pricing. The future of such endeavors remains promising, but controversial.

Evolution of Hotel Asset Management: The Historical Context and Current Profile of the Profession

As the hotel industry’s structure has become more complicated over the past decades, the asset management profession has likewise been evolving. To understand its genesis and current status, this article documents the evolution of hotel asset management from its early troubleshooting role to its present ongoing role of maximizing hotel values for owners. Based on a survey of hotel asset managers, this study found that these asset managers are highly educated, all had hotel management experience before becoming asset managers, and most had also been hotel developers. Many of the asset managers began their careers as hotel operators, but a substantial number began as consultants. Increasingly, asset managers are involved in analyzing strategic issues and making operating recommendations intended to improve the value of a hotel asset. Responding asset managers reported spending substantial time in monitoring the asset’s financial performance, operational reviews, and capital expenditure analysis. Typical performance measures are value creation, financial performance, operating measures, asset utilization, and growth measures, using such common metrics as gross operating profit (GOP) and revenue per available room (RevPAR).

What is a capital expenditure? How lodging-industry financial executives decide.

Lodging-industry financial executives have yet to achieve consensus on the criteria for identifying capital expenditures. When, in the absence of specific IRS guidelines or other accounting norms, those financial experts are uncertain whether to categorize an expenditure as operating (revenue) expenses or a capital expenditure, they use a variety of criteria to make that determination, most often using cost as the deciding factor. Other criteria were used inconsistently by the study participants. These included identifying an expense as capital when the purchase is part of property and equipment at the time a hotel is purchased or as part of a hotel renovation; when the useful life of purchase is more than one year or when the improvement prolongs the useful life of the property; when instructed to do so by owners or upper management; and when the improvement increases the earning capacity of the property. The study confirmed a strong desire among respondents for guidelines that will help lodging-industry financial executives determine whether an expenditure is capital in nature.

The evolution and development of equity reits: The securitization of equity structures for financing the u.s. lodging industry

ABSTRACT The mid-1990s saw the alignment of real estate and capital markets. The primary driver of this convergence was the increasing securitization of real estate debt and equity investments. This article discusses the evolution of REITs as innovative equity instruments during this period and their resulting impact on financing the U.S. lodging industry.

Does it Matter? Examining the Impact of China’s Vacation Policies on Domestic Tourism Demand

With the domestic tourism market enjoying rapid expansion in the past decade, a number of significant changes in public policy have affected the institutionalization of public holidays and paid vacations in China. This article examines the impact of public policy in shaping domestic tourism development in China and estimates domestic tourism demand by applying a dynamic model using panel data. Three alternative models are applied to a panel data set made up of the ratio of domestic tourist departures in each of the 29 Chinese originating cities between 2001 and 2010. The empirical results exhibit the significant value of the lagged dependent variable on consumer decision and reveal the causal link between domestic tourism demand and consumer, trip-related and policy attributes. The findings clearly indicate that (a) China’s domestic tourism market is maturing, (b) the vacation policy changes adopted in 2007 have had a significant effect in changing domestic tourism demand, and (c) domestic tourism demand has been substituted by an ever-increasing outbound tourism market. Implications are discussed for policy making and destination management.

Use of ratios by financial executives in the u.s. lodging industry

ABSTRACT The purpose of this study is to identify ratios that property-level lodging financial executives consider important and the frequency with which each ratio is referenced. Taken together, these two measures show the usefulness of a ratio for evaluating financial performance. The results clearly emphasize the importance of operating, activity, and profitability ratios as key monitoring ratios, and categorize ratios into ratios referenced frequently and those seldom used.

The Impact of Authorization of the Travel Promotion Act on Hotel Firm Stock Returns

On March 4, 2010, President Obama signed into law the Travel Promotion Act of 2010 (TPA), which established a public–private corporation to promote travel to the United States. Results from a survey of twenty financial analysts who follow the hospitality industry reveal that twelve of them considered TPA when analyzing hotel firms’ value at the time the law was signed. Two others had already revised their value assessment in 2009 when they first heard that the act was being considered. These analysts all believed that TPA would have a positive impact on firms in the hotel industry. Consistent with the analysts’ expectations, abnormal stock market returns indicate that publicly traded hotel firm stock prices increased by approximately 1.93 percent, on average, at the time of the TPA signing. Results of cross-sectional analyses of the abnormal stock returns indicate that hotel firms with a larger proportion of rooms in the upper chain-scale tier benefited more from TPA, and real estate investment trusts (REITs) would experience greater gains from TPA than C corps. Finally, we find that firms with a substantial portion of their rooms outside North America gained no more, nor less, than other hotel firms did from the TPA.