Carola Raab

The Influence of Reward Program Membership and Commitment on Hotel Loyalty

This research evaluated the role of reward membership and commitment on switching costs, defined as the price at which consumers would switch to a nonpreferred hotel brand. Online survey respondents were classified by reward tier and two types of commitment: value (reward program benefits) and affective (emotional attachment to brand). The results showed that all reward program members exhibit value commitment but upper tier members are more likely to develop an emotional bond. Participants rated likelihood to switch in response to 20 pricing scenarios that varied base price for the preferred brand and discount for a nonpreferred brand. Value commitment was associated with greater price sensitivity, whereas affective commitment produced less differentiation between prices and discounts. Findings indicate that value commitment and lower tier membership are associated with a utilitarian perspective, whereas high-tier members or those with high affective commitment value intangible benefits and are less susceptible to discounting by competitors.

Evaluating Loyalty Constructs Among Hotel Reward Program Members Using eWOM

Electronic word-of-mouth has become a driving force for hospitality businesses. Achieving customer loyalty is a primary goal of hospitality businesses, and reward programs are one mechanism for doing so. Customer-based communication channels have the potential to undermine or support these efforts. This study investigated attitudes toward hotel loyalty programs among members of flyertalk.com, a forum for frequent travelers. A content analysis of 1,519 comments from members of five major hotel programs was conducted. The core categories that emerged were program experience, value, process, obtaining status, company-created communication, customer-created communication, and defection motivators and inhibitors. A paradigm model indicated that communication is the most important loyalty antecedent, and that all antecedents influence loyalty via the program experience. The emergent relationships suggest that managers should actively monitor online channels and take action to correct issues that cause member frustration and dissatisfaction. Otherwise, these problems can escalate through the rapid spread of electronic word-of-mouth.

Menu engineering and activity‐based costing – can they work together in a restaurant?

Purpose – This research paper aims to examine whether using menu engineering (ME) together with activity‐based costing (ABC) for menu analysis gives new insights about true menu profitability. The traditional ME approach only uses food cost to determine the contribution margin of individual menu items. This combined approach uses both food and traceable operating costs to estimate contribution margins more accurately.Design/methodology/approach – An improved menu engineering model was developed and tested in a buffet restaurant in Hong Kong. Direct observation of restaurant activities allowed most costs to be traced (not simply allocated) to individual menu items.Findings – The results found that only three of 20 dinner menu entrees were profitable. This unique insight would not have been possible using traditional ME methods alone. The results also showed that ABC methods are applicable to a buffet‐style restaurant.Research limitations/implications – Only a single restaurant and only the dinner menu were...

The application of activity‐based costing to a support kitchen in a Las Vegas casino

Purpose – The paper aims to examine the activity‐based costing (ABC) method as a feasible and appropriate tool for the casino and hotel industry to apply to support kitchens in order to eliminate the monthly allocation of overhead based on variable costs.Design/methodology/approach – Data were collected at a support kitchen in a Las Vegas casino. These data were analyzed by using ABC methods and establishing ABC costs. ABC methods were compared to traditional allocation methods to determine, first, if allocations could be eliminated entirely; and, secondly, to establish if some outlets would be significantly impacted by the accounting change.Findings – An ABC approach can be applied to support kitchens and total cost (ABC) can be estimated. This approach allowed the casino to eliminate traditional allocation methods based solely on food cost.Research limitations/implications – ABC was shown to be a powerful technique that can be applied effectively in a support kitchen of a casino. Since this paper involv...

Exploring the use of activity based costing in the restaurant industry.

Abstract Traditional cost accounting systems have been replaced in recent years in the manufacturing sector by Activity Based Costing (ABC) systems. In spite of this trend in manufacturing, ABC systems have made few inroads in the services and hospitality sector, particularly in the restaurant industry. In this study, restaurant controllers in the United States were surveyed to identify their knowledge about, and use of, ABC systems. The results show that the use of ABC in the restaurant industry is almost non-existent for a variety of reasons. However, restaurants may be an ideal setting for the application of ABC tools due to the inherent characteristics of the industry.

The short- and long-term impact of the Asian financial crisis on Las Vegas strip baccarat revenues.

Abstract This study investigates the short- and long-term impact of the Asian crisis on Las Vegas gaming revenues. Without timely information on Asian visitor volumes and expenditures, we use aggregate Las Vegas baccarat wins and economic information for Japan, Korea, Taiwan and Hong Kong, areas from which most Asian high-rollers to Las Vegas come from, and estimate an ARCH/GARCH model. Fluctuations in exchange rates are utilized as economic determinants. We find that baccarat wins have experienced a temporary decline since the Asian Crisis began. Fluctuations in exchange rates, do not, however, fully explain this decline. Furthermore, the models findings suggest the devaluation of the currencies of Japan, Korea, Taiwan and Hong Kong has no significant long-term impact on baccarat revenues in Las Vegas. However, we found a permanent increase in volatility of baccarat wins, which represents an increased risk that may need to be addressed by casino managers and owners. Future research should include the search for other factors that may influence the magnitude of baccarat wins, in general, and the portion derived from Asian customers, in particular.

Construction and Validation of the Customer Participation Scale

Although the importance of a mandatory customer participation construct in service delivery has been much discussed in the literature, little research has been devoted to conceptualizing and measuring one. To fill this void, this study followed a seven-step process for creating and analyzing scales in order to develop a customer participation scale and evaluate its generalizability, reliability, and validity. In theoretical terms, this scale extends the service quality literature, which has heavily emphasized the service provider’s responsibility for service quality, and will facilitate further studies in customer participation. In practical terms, the scale provides practitioners with useful mechanisms that could enhance their interactions with customers through facilitating the latter’s mandatory role in service delivery.

A Model of Hotel Defection at the Purchasing Stage

Hotel operators spend millions of dollars each year to create customer loyalty. Less attention is paid to factors that cause customers to defect. In the current study, factors that influence hotel purchasing and established loyalty-related constructs were integrated into two models of hotel defection, one for full-service brand guests and one for limited-service brand guests. For full-service hotels, the decision to defect or not is driven by affective, or emotional, commitment, as well as switching costs, which are defined as the amount of discount that an otherwise loyal customer would require to switch to a competing brand. Hotel selection factors influence defection primarily through their impact on affective commitment. For limited-service guests, value considerations play a central role. Reward program membership and hotel selection factors influence defection through commitment, based on reward program benefits. The findings emphasize the importance of tailoring hotel features and reward program benefits to the needs of target customer segments.

Sustainable Hotel Practices and Guest Satisfaction Levels

The purpose of this study is to identify which sustainable hotel practices guests would be most satisfied with, and what motivates guests to participate in these practices. In addition, the study tested for differences that may exist due to the sociocultural backgrounds of respondents, and whether they are willing to pay a premium for an environmentally friendly hotel. Data was collected in a popular tourist destination in Mexico. An analysis on satisfaction ratings revealed only minimal differences between demographic groups, which suggests that sustainable hotel practices are attractive beyond a niche market. Furthermore, Mexican and American respondents reported different views of environmentally friendly hotels, with Americans exhibiting more concern with functional aspects of sustainability, while Mexican guests were more familiar with emotional aspects of conservation. The study concluded that management should consider the sociocultural backgrounds, of their guests and may have to engage in efforts to educate guests about the benefits of balancing social responsibility with guest service expectations.

Hospitality Programs at Four-Year Universities in South Korea

The primary purpose of this research is to report on the current profile and development of hospitality programs of four-year universities in South Korea. Approximately 28 percent of four-year universities in South Korea have a hospitality program (i.e., hotel, restaurant, and/or tourism management). Information provided in this paper includes names and characteristics of institutions, website addresses of institutions, and faculty profiles. From this report, hospitality educators and practitioners will gain an understanding of South Koreas hospitality education and find access to detailed program information. International educators and Korean educators can utilize this information to help determine the adequacy of programs for potential collaboration, exchange partners, or recruiting. Industry practitioners may also use the information to recruit students as potential interns or employees as hospitality businesses expand globally and their customers become more multicultural.