News for the Hospitality Executive
Cornell Center for Hospitality Research Presents New Reports
on Distribution Strategies
Ithaca, NY, January 16, 2012 - Two new reports from the Cornell Center for Hospitality Research (CHR) at the Cornell School of Hotel Administration are aimed at helping hospitality managers improve their sales and revenue. One report focuses on restaurant distribution strategies, and the other compares the financial outcomes for hotels that have various corporate cultures and strategic approaches. Both reports are available at no charge from the CHR. CHR also invites hotel practitioners to participate in a new interactive blog on the CHR site, with a goal of sharing ideas and improving success in addressing issues created by social media.
Study Seeks to Develop a Strategy for Maximum Benefit from Restaurant Reservation Sites
The use of online restaurant reservation sites has grown astronomically in a relatively short time, leaving many restaurateurs to wonder whether the benefits of such sites are worth the cost—especially since the telephone continues to be by far the most common way to make a restaurant reservation. A study by Sheryl Kimes and Katherine Kies,"The Role of Multi-Restaurant Reservation Sites in Restaurant Distribution Management," is aimed at helping restaurateurs understand who is using online reservation sites and how they use them. Kimes is the Singapore Tourism Board Distinguished Professor of Asian Studies at the Cornell School of Hotel Administration. Kies, a graduate of the School of Hotel Administration, works with New York-based consulting firm Avero. They found that the use of multi-restaurant reservation sites (such as OpenTable) is growing rapidly, particularly among younger consumers.
"We know that reservations made through the multi-restaurant sites cost more money than other channels," said Kimes. "But we have learned that the people who use those sites the most make up an important demographic. These people are generally younger than other customers, and they dine out more frequently. Perhaps most interesting, they use the reservation sites to find a restaurant to visit."
Kimes and Kies found that once they find an interesting restaurant, guests don't always continue with the multi-restaurant site to make their reservation. Some switch to the restaurant's website and many still pick up the phone. What is not clear is what effect the growth of restaurant reservation apps will have on these patterns. Also not clear is the level of cannibalization: that is, the number of reservations that come through the multi-restaurant sites that would have been made anyway. Kimes and Kies conclude that the cost of multi-restaurant sites could be as much a marketing expense as a cost of distribution. Their study is available at no charge at http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-15979.html.
CHR Analysis Shows How an Effective Corporate Culture Can Improve Hotels' Financial Results
Thirty years of business research says that an effective corporate culture, coupled with an appropriate strategic orientation, can help make a company successful. A new CHR study focuses on the types of cultures that drive hotels' financial results, and combines that study with an analysis of the most lucrative strategic approaches. The study, "The Effect of Corporate Culture and Strategic Orientation on Financial Performance: An Analysis of South Korean Upscale and Luxury Hotels," by HyunJeong "Spring" Han and Rohit Verma, identified two culture types that improved results for 99 large Korean hotels. Han is a visiting scholar at the Center for Hospitality Research, and Verma is the CHR's executive director and a professor at the School of Hotel Administration. The report is available from CHR at no charge: http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-15982.html.
Their study found that the family-like "Clan" culture and the innovation-oriented "Adhocracy" culture drove positive financial results for these hotels. On the other hand, a tradition-bound Hierarchical culture and the transaction-oriented Market culture failed to boost financial performance.
"For these hotels, we found that culture directly drives financial results, but we also see an effect from the hotels' strategic orientation," said Han. "Certain strategies improved on the financial results. For example, the "leading" strategic orientation, which focuses on innovative ideas, helped improve financial results for the Clan and Adhocracy cultures, but it did not help the Market or Hierarchy cultures."
The study found other interactions of culture and strategy that improved financial results, but some combinations ended up costing the hotels money. For example, the shoot-from-the-hip "adventurous" strategy appeared to diminish financial results, and the discount-oriented "aggressive" strategy offered no benefits to any of the hotel cultures.
Interactive Blog Looks at Social Media and Ways to Manage a Hotel's Reputation
A new interactive blog focuses on the effects of social media for the hospitality industry. Developed by Judi Brownell, Bill Carroll, and Amy Newman, all members of the Cornell faculty, the blog "Managing a Hotel's Reputation," provides a way for managers and staff to discuss concerns and share ideas for managing a hospitality company's reputation.
"A key issue for hospitality managers is that a guest complaint can go viral and quickly damage a hotel's reputation," said Newman. "We want to give practitioners a chance to interact and discuss strategies for managing social media issues." The tool poses a series of questions to get the conversation started.
The blog presents a situation in which a front desk attendant has "walked" a guest who then posts several complaints, writes a negative review on TripAdvisor, tweets to followers, and sends an email to the general manager. Visitors to the website can view all of these communications plus a YouTube video of the hypothetical interaction. On separate blogs, employees and managers share approaches, strategies, and tactics for dealing with social media commentary. Researchers will analyze blog responses to produce a future report from the Center For Hospitality Research.
About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 77 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit www.chr.cornell.edu.