The status of research in the lodging industry Pauline J. Sheldon, Juanita C. Liu and Chuck Y. Gee School of Travel Industry Management, University of Hawaii, 2404 Maile Way, Honolulu, HI 96822, U.S.A. This paper examines the scope, activities and need for research in the lodging industry. It reviews over seventy articles on hotel research and classifies them into the four categories of market research, operations management, personnel management and development. The literature review is followed by the results of a survey of 44 hotel chains in the U.S. to assess their research activities. The survey confirmed a generally held view that few hotel chains actually operate their o wn research departments; and where in-house research activities are performed, they deal mostly tvithoperations and personnel problems on a short-run basis. Outside consultants, however, are frequently hired by hotel chains to do feasibility or marketstudies for expanding operations. Both the literature review andsurvey results indicate an increasing need for applied and basic research with both short- and long-term perspectives to assist decision-makers faced with complex and multiple marketing and operations problems in the hotel industry. Suggested areas for further research are included to stimulate interest among academic and industry researchers to conduct the needed studies. Key words: research, status of lodging industry introduction As planning, marketing, and product development become increasingly complex in any industry, re- search becomes a critical function in providing needed information for decision-making. Research can help managers understand both short-term changes in the market, and long-term trends, thus assisting business in improving and developing pro- duct lines, enhancing the effectiveness of opera- tions, and increasing satisfaction for employees and customers. In addition to improvements in business operations, research plays a crucial role in deter- mining the optimal development of the industry. Research may alternatively include basic re- search to further explain the theoretical or funda- mental nature of the industry, applied research to test theories and new ideas, and empirical research to ascertain facts. All of these aspects of research are important since they offer a logical basis for the development and strengthening of the industry. The purpose of this article has been to examine the scope, activities or current practices and need for research in the lodging industry. A review of the literature written on the current state of lodging industry research will be augmented by the authors’ survey on current in-house research activities of 44 hotel chains in the United States in 1982. ht. J. Hospitality Management Vol. 6 No. 2 pp. 89-96, 1987 Printed in Great Britain Survey of the literature Due to the proprietary nature of research con- ducted by private corporations, and given our limited access to research results and findings, it is difficult to gauge the full extent of research on the lodging industry. Published research represents only a fraction of total research activities. These are found in three sources. First, academic journals dedicated to the hospitality management field such as Tourism Management, International Journal of Hospitality Management and Cornell Hotel and Restaurant Quarterly publish articles useful to researchers and practitioners. Second, such trade journals as Hotel & Motel Management, Lodging. and Lodging Hospitality may occasionally publish research findings. Third, accounting and consulting firms such as Panell, Kerr & Forster, Laventhol & Horwarth and Booz, Allen & Hamilton publish regular statistical reports on the lodging industry. Over 70 articles on the lodging industry are reviewed in this paper. They are classified into four categories: market research, operations manage- ment, personnel management, and development. Most of the articles were found in academic jour- nals; the majority were descriptive and concerned applied research problems. Few empirical studies were found, and as anticipated even fewer involved theory-oriented, basic research. 0278-4319/87 53.00 + 0.00 0 1987 Pergamon Journals Ltd 89
Transcript
The status of research in the lodging industry Pauline J. Sheldon, Juanita C. Liu and Chuck Y. Gee School of Travel Industry Management, University of Hawaii, 2404 Maile Way, Honolulu, HI 96822, U.S.A.
This paper examines the scope, activities and need for research in the lodging industry. It reviews over seventy articles on hotel research and classifies them into the four categories of market research, operations management, personnel management and development. The literature review is followed by the results of a survey of 44 hotel chains in the U.S. to assess their research activities. The survey confirmed a generally held view that few hotel chains actually operate their o wn research departments; and where in-house research activities are performed, they deal mostly tvith operations and personnel problems on a short-run basis. Outside consultants, however, are frequently hired by hotel chains to do feasibility or marketstudies for expanding operations. Both the literature review andsurvey results indicate an increasing need for applied and basic research with both short- and long-term perspectives to assist decision-makers faced with complex and multiple marketing and operations problems in the hotel industry. Suggested areas for further research are included to stimulate interest among academic and industry researchers to conduct the needed studies.
Key words: research, status of lodging industry
introduction
As planning, marketing, and product development become increasingly complex in any industry, re- search becomes a critical function in providing needed information for decision-making. Research can help managers understand both short-term changes in the market, and long-term trends, thus assisting business in improving and developing pro- duct lines, enhancing the effectiveness of opera- tions, and increasing satisfaction for employees and customers. In addition to improvements in business operations, research plays a crucial role in deter- mining the optimal development of the industry.
Research may alternatively include basic re- search to further explain the theoretical or funda- mental nature of the industry, applied research to test theories and new ideas, and empirical research to ascertain facts. All of these aspects of research are important since they offer a logical basis for the development and strengthening of the industry.
The purpose of this article has been to examine the scope, activities or current practices and need for research in the lodging industry. A review of the literature written on the current state of lodging industry research will be augmented by the authors’ survey on current in-house research activities of 44 hotel chains in the United States in 1982.
ht. J. Hospitality Management Vol. 6 No. 2 pp. 89-96, 1987 Printed in Great Britain
Survey of the literature
Due to the proprietary nature of research con- ducted by private corporations, and given our limited access to research results and findings, it is difficult to gauge the full extent of research on the lodging industry. Published research represents only a fraction of total research activities. These are found in three sources. First, academic journals dedicated to the hospitality management field such as Tourism Management, International Journal of Hospitality Management and Cornell Hotel and Restaurant Quarterly publish articles useful to researchers and practitioners. Second, such trade journals as Hotel & Motel Management, Lodging. and Lodging Hospitality may occasionally publish research findings. Third, accounting and consulting firms such as Panell, Kerr & Forster, Laventhol & Horwarth and Booz, Allen & Hamilton publish regular statistical reports on the lodging industry.
Over 70 articles on the lodging industry are reviewed in this paper. They are classified into four categories: market research, operations manage- ment, personnel management, and development. Most of the articles were found in academic jour- nals; the majority were descriptive and concerned applied research problems. Few empirical studies were found, and as anticipated even fewer involved theory-oriented, basic research.
90 Pauline J. Sheldon, Juanita C. Liu and Chuck Y. Gee
Market research
Most hotel research has been done in the area of nrarketi,zg research. This is not surprising since the success of the lodging industry is based on the consumption of services, making consumer re- search an area of paramount importance. Many articles, for instance, have described the use of research to identify potential market segments (Penner, 1975; Yesawich. 1980; Lewis. 1953a). or to help in the development of promotional cam- paigns (Peters, 1978; Meidan and Lee, 1952; Lewis, 1982; Kaven, 1971), or to assist in location decisions (Smith, 1977; Arbel and Pizam, 1977; Waddell, 1977) or to evaluate and measure guest satisfaction (Yesawich, 1977; Cornell. 1975; Lewis, 19S3b; hlccleary and Weaver, 1982). Although these areas of marketing research tend to be applied in nature. there is apparent room for basic and empir- ical research regarding marketing effectiveness, including more sophisticated methods of segmenta- tion. test marketing, and the needs of future growth markets, product development and the rote of strategic marketing in hotel planning.
Operations management
The efficient management and operation of lodging facilities was a popular research topic found in the literature (Shaner, 1978; Downey, 197s; Ley, 1978; Orkin. 1979; Sepic. 1979; Kotas, 19S2; Fujii and Mak, 1951). Related research covered issues deal- ing with management contracts (Eyster, 1977a.b), new forms of lodging such as timesharing (Hart, 19SO; Hart, 1982), efficient pricing structure for hotels to maximize occupancy (Morphis, 1979; Cournoyer, 1972; Abbey, 1983), and impact of room tax on business (Mak and Nishimura, 1979; Weston, 1983). Since hotels are affected by such problems as seasonality, no-shows and overbook- ing, researchers also investigated and discussed the development and application of methodologies in forecasting and stochastic models, i.e. queuing theory in hotel reservations (Toh, 19%; Lieberman and Yechiali, 1978; Ladany, 1976; Williams. 1977).
The use of computers and technology in the lodging industry has generated a number of descrip- tive articles on their application to operations (Sheldon, 1983; Chervenak. 1983; Kasavana, 1952; Gillette, 1983; Palmer, 1983; Teicher, 1982; Huson and Knuff, 1982; Arneberg, 1979). However, there is a paucity of research on the impact of new technology on the qualitative aspects of hotel ser- vice, productivity, and employment.
Personnel management
The area of personnel management and industrial
relations is an important one because the industry is labor-intensive. and therefore wage-intensive. Concerns about various problems of hotel employ- ment. namely that it is seasonal, comparatively low-paying, lacking in job stability. subject to dis- criminatory practices and has a high turnover and low productivity have been the topics of considera- ble research (BC Research, 1975; Morgan, 1982: Wasmuth and Davis, 1983; Cottington, 1969: Smith. 1972; Samy, 1975; Brown and Chrisianson. 1983). Most of the findings of such research are biased against the industry, while the positive employment aspects, i.e. job creation and demand. good opportunities for advancement or entre- preneurship, increasing skill requirements, job satisfaction, and prospects for future jobs (Canvin. 1979). are overlooked or ignored.
Training is a universal concern in the lodging industry. and a number of studies have attempted to identify the industry’s training needs (Pizam and Lewis. 1979; Dunn, 1970; Malina, 1978; Lukowski. 1972; Nebel. 197S), and the role that formal educa- tion plays in preparing a person for a career in the lodging Industry (Schmidt. 1961; Mai-Dalton et 01.. 1978; Pearce, 1979; Choy and Gee. 1979: Ferencc. 1982). On the other hand, there is a Iack of useful published ~nformati~~n and research data on career paths and promotions in the industry, employee motivation, and the measurement of productivity of hotel services.
Development
The accommodation industry is a key component in the development of tourism since it determines the distribution of touristic activities and income for an area. In the hotel industry, development can mean any of the following:
1. Specific product development 2. Hotel investment in a community or region 3. The role of the hotel industry in community or
regional tourism development.
Technical aspects of product development, e.g. equipment, food and beverages, etc.. can be found in technical journals such as Engineering nrld Food Science (Hunt. 1982; Cidry, 1982; Palmer, 1983). Product development with respect to service has at its center the application of computer technology. Telecommunications technology ivhich is now being employed in some hotel properties allows expansion of the product line by offering telecon- ferencing capability, continuous m-room television entertainment, and access to distant data bases with the use of personal computer terminals in guest rooms as well as in back offices. Research. however, is needed to investigate what consumers perceive to be the value of these additional services,
The status of research in the lodging industry 91
and nhether there is any impact on brand selection and brand loyalty. Product development has another side to it, i.e. whether the hotel product that is being promoted, packaged and consumed is also consistent with community interests in tourism promotion.
Hotel investment is almost always preceded by feasibility studies vvhich study the problems, costs and benefits of the proposed project (Troy and Beals. 1982). Environmental impact statements (EIS) which are required either by state or federal statutes assess the ecological, social, and economic impacts. The quality of these statements varies widely and depends largely on the methodologies used to determine quantitative and qualitative impacts. Further research in this area w,ould benefit both private and public interests.
A number of studies have examined hotels in the context of regional development in terms of lodging ratios (Liu and Var. 1980), economic impact (Liu and Var, 1982), spatial distribution (Van Doren and Gustake, 1982) and performance and planning (Liu. 1983). Martel (1974) has performed an analysis of the market structure of the hotel and motel industry. Vine (1981) has examined the issue of standard hotel classification, while Dunning and McQueen (1982) studied hotel multinational cor- porations. Visitor accommodations are central to the geographical development of the travel industry (Lundgren, 1979), which in aggregate composition becomes the largest retail industry in the U.S. and
the second largest industry in the world. Despite its size, the service sector as a whole-including such tourism components as the hotel, motel, resort, and vacation condominium sector- has been given virtually no assistance in terms of research support. As service industries now dominate the U.S. econ- omy (estimated at 70% of employment) and tourism-related industries in particular provide a promising prospect for future economic growth, better understanding and planning for this import- ant sector will require reliable information pro- vided by funded research at all levels.
Table 1 summarizes the present status of research in the hotel industry. Although the published articles are varied, they provide asomewhat limited information base for fundamental research. The articles which were reviewed tended to be descrip- tive in nature, examining particular problems in the lodging industry. The discussion based on a survey of major U.S. hotel chains in the following section also indicates the specific problem orientation of in-house research activities of hotels. While such research is important to the lodging industry, there is also a need to develop stronger theoretical and methodological approaches which take into ac- count long-term perspectives. Research of this nature would result in a more systematic body of knowledge based on concepts, theories, measures, and analyses which would have wider applicability to all research in the field. Table 2 suggests areas for future research which may be helpful in establishing that framework for the lodging industry.
Table 1. Current research activities in the lodging industry
Market research
l Marketsegmentation 0 Location l Guest research 0 Positioning
Management + operations
l Management contracts l Timesharing l Pricing l Food and beverage 0 Computers&communications
technology
HOTEL
Personnel management
l Studies on turnover rates, pay inequities, low pay
l Training and career paths l Productivity 0 Compensation l Management styles
Development
l Development of hotel operations l Hotel development l Development of hotel industry l Regional economic development
92 Pauline J. Sheldon, Juanita C. Liu and Chuck Y. Gee
Table 2. Needed research activities in the hotel industry
Market research
l Market segmentation l Women travellers l Test marketing l Productivedevelopment
Management and operations
l Managementcontracts l Load factor pricing l Value l Technologyimpacts
HOTEL
I
Personnel management
l impact of training l Career pathsand promotion l Productivity 8 Motivation
Development
* Developmentof hotel operations l Hotel development l Development of hotel industry o Regional economic development
Survey of major US. hotel chains
Snrtzple nrzd srcrvey
The questionnaire on research activities and needs was designed to solicit the following information from the hotels:
1. The number of properties, rooms and em- plovees disaggregated into domestic and foreign operations, and different types of properties (e.g. hotel, motel, condominiums).
2. The amount of resources (staff and funds) allocated to research activities by the firm.
3. The amount, frequency and type of in-house research activities performed.
J. The frequency and type of outside consuItants that were hired.
5. The most important problems facing the indi- vidual company and the lodging industry as perceived by the manager.
The sample for the survey consisted of the head offices of all hotel and motel chains in the United States with ten or more properties. (But all proper- ties were not necessarily Iocated in the United
States.) The firm size of ten or more properties was chosen on the supposition that larger chains are more likely to engage in research activities than do smaller ones with fewer resources.
The questionnaire was mailed to a total of 147 companies in February 1982. One month later in IMarch 1982 a second round of questionnaires was sent to those companies that failed to respond. This produced a total of 46 responses representing a response rate of 3 1% . Of the 46 responses, 44 were usable. Table 3 gives a profile of &he responses.
The questionnaire requested respondents to cat- egorize their properties into hotels, motels, con- domini~lms and other. Forty-seven per cent of the properties were hotels. 50% were motefs, 1.6% were condominiums and 0.2% were categorized as other.
These 44 responses constituted a sample which represented approximately 21% of the total number of rooms in the United States, and 8% of the total number of lodging establishments in 1981.
Among the 44 hotel chains, 25% had their own research departments (with a mean of 2.8 full-time employees): and 14% ‘allocated funds for applied research. Table 4 shows the types and frequency of research activities performed by respondents. Research dealing with operations and personnel problems are performed routinely, whereas prob-
The status of research in the lodging industry 93
Table 4. Types and frequency of research activities performed (%)
None
Marketing Analysis of competition {n = 4314 Determining consumer reaction (n = 42) Measuring advertising effectiveness (n = 42) Measurement of sales trends and potential (n = 42) Analysis of economic trends (n = 43)
Operations Food quality analysis and quality control (n = 38) Value analysis in procurement (n = 41) Product pricing/comparative cost analysis (n = 43) Analysis of profitability (n = 42) Equipmenttesting (n = 39)
Development New product development (n = 41) Equipment development (n = 39) Software development for computers (n = 41) Energy audit (n = 42) Telecommunications development (n = 42) Financial planning in= 43)
Row sums equal 100%. n indicates number of actual responses for each item. *Short term is up to 6 months into future. t Long term is more than 6 months into future.
lems on development are performed on a long-term basis. Notably, all firms conducted research on analysis of competition.
Hotels occasionallv hire consultants to perform research related acti;ities. Tables 5 and 6 show the frequency and reasons for engaging outside exper- tise. Accounting firms are most frequently engaged as consultants; over 75% of the respondents employed them at least once. Outside of accounting firms, 57% of the companies did not hire any other type of consultant. The most common reason given for using consultants was to prepare feasibility studies.
In the world of business, research must usually serve a practica1 end. The ability to integrate
research results into the decision process of respon- dents is summarized in Table 7. ApproximateI~ 75% of the respondents are able to apply their research findings. at least to some degree. Hoiv- ever, research findings of marketing and operations functional areas are more easily incorporated into decisions than are personnel and development functional areas.
The finat part of the questionnaire sought to identify the major problems affecting individuai companies and the lodging industry as a whole, now and in the future. An open-ended question was used for this section to avoid suggested responses, and respondents were free to state as many problems as they wished. The degree of agreement by respondents on perceived major
Tab/e 5. Types and frequency of outside consultants hired (%I (n = 43)
aag ‘A y3n43 pue n!i ‘3 el!ueny ‘uoplaqs ‘r au!lned P6
The status of research in the lodging industry
incorporating research results, particularly into marketing and operations decisions.
Our survey information appears to support find- ings from the literature review which shows that researchers have generally del.oted more attention to problems of an applied nature with a short-term focus. However, if the current and future problems of the hotel industry as perceived by managers are to be solved, namely the economy, labor. and energy, then more emphasis needs to be given to basic issues with Ions-term perspective. The development of new methodologies. increased empirical testing, and the formulation of new theories for their measurement and analysis ivill be required.
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About the Authors
Pauline J. Sheldon IS Assistant Professor of Tourism at the School of Travel fndustrl; hfanqement {University of Hax~ii. Honolulu. HI 96SX. U.S.A.). She has published articles on tourism forecastinp. resident attitudes to tourism, and applications of technology to the trdvcl industry.
Juanita Liu is an Associate Professor at the School of Travel Industry hianagement, University of Haivaii (Honolulu, HI 96822, lJ.S.A.). She has xkrirtsn extensively on economic and social impacts of tourism.
Chuck Gee is Dean of the same school. He has authored or coauthored many publications including two hooks on Resorr D~~rlopmenratld.\lanngemenr and The Trur~elindmrr~. He serveson the Tourism andTravel Advisory Board for the United States Secretary of Commerce.
