Cornell Studies Examine Global Hotel Industry Strategy and Restaurant Social Media

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. May 21, 2013

Ithaca, NY - May 22, 2013 - Hotel revenues in Asia's gateway cities are subject to global forces, according to one of the newest reports issued by the Cornell Center for Hospitality Research (CHR) at the School of Hotel Administration. A second recently issued report finds that the restaurant industry is embracing social media, but not all restaurants have a clear strategy for using social media sites. Also newly available is a summary of industry strategy presentations from the Cornell Hospitality Research Summit proceedings. The reports and proceedings are available at no charge from the CHR.

Global Factors Are Strong Drivers of Asia Hotels Revenues

A study of global and local factors that drive changes in hotels' revenue per available room (RevPAR) in eight major Asian cities found that the revenues for the hotels in these cities are strongly subject to global forces. The study, "Common Global and Local Drivers of RevPAR in Asian Cities," (http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-17183.html) by Crocker H. Liu, Pamela C. Moulton, and Daniel C. Quan, is available at no charge from the Cornell Center for Hospitality Research. Liu, Moulton, and Quan are all faculty members at the Cornell School of Hotel Administration.

"When we initially interviewed the hotel managers, they listed many local events and factors as potential drivers of their revenue, and they were not focused on international forces. But we determined that local or regional events must be extremely large and even disrupting to offset the effects of global forces on hotels' revenue," said Moulton. "For example, the 2008 Chinese Olympics and the 2010 Shanghai Expo moved the needle. Sadly, so did the 2011 Japanese tsunami and Thailand floods. Overall, however, global forces, such as Chinese and U.S consumer confidence had noticeable effects for these eight gateway cities."

One factor, the number of tourist arrivals, is always positively associated with RevPAR changes in the eight cities. Other factors have various levels of influence on revenues. In addition to consumer confidence, two other factors that drive RevPAR in most of the eight cities are inflation and Chinese real estate development (as a proxy for China's GDP). 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. Moulton and her coauthors suggest that these findings give hoteliers a window into the factors that drive their properties' revenues and allow investors a mechanism to make a more accurate risk assessment.

Cornell Study Finds U.S. Restaurants Diving into Social Media

Restaurant operators have moved strongly into social media, but a survey of 166 restaurant managers finds a mixed picture in the way restaurants use social media. The study, "Social Media Use in the Restaurant Industry: A Work in Progress," (http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-17223.html) by Abigail M. Needles and Gary M. Thompson, found that many restaurants are moving ahead without having well-defined social media goals. Needles, a Ph.D. student at Texas A&M University, is a graduate of the Cornell School of Hotel Administration, where Thompson is a professor. The study is available at no charge from the Cornell Center for Hospitality Research.

"Our respondents believe social media are important, but they have a difficult time in terms of measuring whether social media activities increase customer loyalty, bring in new customers, or boost revenues," said Needles. "We found that these restaurant operators generally rely on non-financial measurements to determine their return on investment. In fact, we found a lot of uncertainty surrounding how to measure the financial returns of social media."

Added Thompson: "Restaurant operators have the right idea about social media, but they need to focus on a particular goal and a specific market segment. Then they can select the appropriate social media channel. Most of the restaurants in our study are on Facebook, but perhaps Foursquare or blogs would be a better choice, once they refine their goals."

Industry Strategy: A Key Focus of the Cornell Hospitality Research Summit

The importance of strategic thinking resonated in numerous presentations at the 2012 Cornell Hospitality Research Summit (CHRS), as explained in a newly released proceedings, "Hotel and Restaurant Strategy: Key Elements for Success," (http://www.hotelschool.cornell.edu/research/chr/pubs/roundtableproceedings/roundtable-17203.html) by Glenn Withiam. The new proceedings publication, which provides summaries of more than a dozen CHRS strategy presentations, is available at no charge from the Cornell Center for Hospitality Research.

Since the goal of most strategies is to build customers' patronage and loyalty, CHRS presenters aimed many of their analyses at the foundations of customer brand loyalty, including employees' attitudes and actions, a well designed physical environment, and an appropriate set of service offerings. For a strategy to succeed, organizations must align their activities with their stakeholders' attitudes. A critical element in brand management is to measure whether brand marketing efforts are hitting their intended target.

Like other hospitality industry segments, restaurants are moving rapidly to integrate technology in their operations, notably with social media. Although loyalty programs are an inevitable part of the competitive scene, true loyalty comes through excellence in service that involves attention to detail, hospitality, and appropriate service. For many chains, franchisees are integral to ensuring the brand's success and thus it's important to consider the dynamics of a franchise system. Consumer research is also critical to a restaurant's success.

Contact:
Jane Henion
607.254.8987
[email protected]

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 72 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.

Center Senior Partners:
Accenture, ASAE Foundation, Carlson Rezidor Hotel Group, Hilton Worldwide, National Restaurant Association, SAS, STR, and Taj Hotels Resorts and Palaces

Center Partners:
Davis & Gilbert LLP, Deloitte & Touche USA LLP, Denihan Hospitality Group, eCornell & Executive Education, Expedia, Inc., Forbes Travel Guide, Four Seasons Hotels and Resorts, Fox Rothschild LLP, Hyatt Hotels Corporation, InterContinental Hotels Group, Jumeirah Group, LRP Publications, Maritz, Marriott International, Inc., Marsh's Hospitality Practice, McDonald's USA, priceline.com, PricewaterhouseCoopers, Proskauer, ReviewPro, Revinate, Sabre Hospitality Solutions, Sathguru Management Consultants (P) Ltd., Schneider Electric, Travelport, TripAdvisor, and Wyndham Hotel Group

Center Friends:
4Hoteliers.com • Berkshire Healthcare • Center for Advanced Retail Technology • Cleverdis • Complete Seating • Cruise Industry News • DK Shifflet & Associates • ehotelier.com • EyeforTravel • The Federation of Hotel & Restaurant Associations of India (FHRAI) • Gerencia de Hoteles & Restaurantes • Global Hospitality Resources • Hospitality Financial and Technology Professionals (HFTP) • hospitalityInside.com • hospitalitynet.org • Hospitality Technology Magazine • HotelExecutive.com • International CHRIE • International Society of Hospitality Consultants (ISHC) • iPerceptions • JDA Software Group, Inc. • J.D. Power and Associates • The Leading Hotels of the World, Ltd. • Lodging Hospitality • Lodging Magazine • LRA Worldwide, Inc. • Milestone Internet Marketing • MindFolio • Mindshare Technologies • PhoCusWright Inc. • PKF Hospitality Research • Questex Hospitality Group • The Resort Trades • RestaurantEdge.com • Shibata Publishing Co. • Sustainable Travel International • UniFocus • WIWIH.COM