Faculty & Research
Best Practices in US Lodging Industry Methodology
The American Hotel Foundation and American Express jointly sponsored this research by soliciting competitive grants in February of 1998. Upon selection of Cornell University as the investigators of this study, the research team assembled an expert panel of industry executives to provide advice and suggestions for executing the study. This expert panel was extremely important in helping the team define the most critical functional areas in the industry, and the most meaningful definitions of product segments and operating structures. These classifications were essential in assuring adequate and representative reach to all segments and areas of the lodging industry.
Overview of Research Design
The goal of this research was to surface and summarize practices of use and value to the entire lodging industry. As a means to this end, we organized the study into three distinct phases. In the first phase, based on our literature review in the area of best practices, prior research, and the guidance of our expert panel, we selected three approaches to gathering data. Nominations for best practice champions were obtained via mailed, faxed, and Internet surveys to the industry. The second phase involved in-depth interviews with carefully selected and pre-screened best practice champions derived from the nominations of phase I. The final phase involved interviews with customers of the overall best practice champions identified and interviewed in phase II. In this section of the report we will summarize the research methodology employed in each phase.
Phase I ’ Nomination of Champions
The first phase of this study was designed to surface the names and practices of possible champions from managers across the United States. Multiple versions of an open-ended survey were distributed to a national sample of 13,400 managers at both corporate and property levels, stratified by product segments (e.g. Budget, Midscale with F&B, etc.) and functional areas (e.g., Human Resources, Food & Beverage, etc). These lodging industry managers were instructed to write in their nominations of individuals, hotels, chains, or companies they considered best practice champions; that is, those individuals and companies they know who have superior practices and processes and the results to prove it. The definition we provided our Phase I survey respondents to guide them in nominating a best practice champion is highlighted in the box below.
DEFINITION: A BEST PRACTICE CHAMPION
has developed a highly effective and profitable practice that represents the best in the industry.
The Survey Design
The survey was designed and pilot tested for feedback and input by the American Hotel Foundation (AHF) advisory board and a group of industry managers. Revisions and additional pre-testing was conducted to assure a user-friendly, reliable, clear and meaningful phase I questionnaire. The survey consisted of two series of questions to nominate best practice champions. One set of items focused on overall practices in each of the eight product segments, and five key competency areas. The second set of items focused on identifying nominees in the key activities of ten specific corporate functional areas and six property-level functions. All respondents completed the first series of questions for nominations on overall practices, whereas only those respondents with responsibility for a particular function in their company or hotel nominated the champions in that functional area. The final survey contained unique versions for corporate and property level managers, and for each of the functional area managers.
In open-ended questions, respondents were presented with the definition of best practice champions, and asked to nominate champions. By creating special surveys for corporate and property levels and functional areas a total of sixteen different versions of the phase I survey were prepared and distributed by mail and fax. A web site was also established for on-line nominations. The on-line survey provided some of the most comprehensive responses to our survey because it permitted the respondent to elaborate on their reasons for selecting the best practice. The approach is visually presented in figure 2.
Figure 2: The Creation of Sixteen Versions of The Phase I Survey.
The sixteen versions of the survey reflected our desire to capture the differences and unique best practices that exist in corporate versus property settings and within various functional areas of expertise. In addition, we felt that functional experts would be more familiar with what others in their own area of expertise were doing in the industry. For example, it was reasoned that the information technology experts in one company would be familiar with what others in their field of expertise were doing that was exemplary. In short, the purpose of this design was to obtain the expert opinion of functional managers in their own area, and to account for the unique operating features of the lodging industry. The use of multiple versions of the survey in the nominating process, while complex to administer, helped to assure that the search would have the depth necessary to solicit and reach those managers who are in the best position to bring forth functional nominations of champions at both corporate and property levels.
Sampling Strategy
Surveys were mailed to 2,059 corporate managers and 11,400 property level managers using a stratified random sample of names and addresses.
Corporate executives in the following managerial functions were invited to participate: (1) owner, chief executive officer (CEO), chief operating officer (COO), brand manager, or executive vice-president (EVP); (2) design/architecture; (3) business development; (4) information technology/system; (5) marketing; (6) sales; (7) human resources; (8) room divisions/operations; (9) food and beverage; and (10) chief financial officer (CFO)/corporate controller. Thus, the corporate-level sample size was 2,059 managers in ten functional categories.
At the property-level, the sampling was stratified by product categories, operating structure, and property size (< 250 rooms; 250-650 rooms; > 650 rooms), with representation of each stratum in the sample being proportional to that of the population. The sample of respondents was culled from the Meinrad database. At the property level, samples of respondents were randomly selected within the stratification by product categories, operating structure, property size, and function. The following percentages of the overall sample were drawn from six managerial functions: (1) general manager (39.6% of the sample); (2) marketing/sales (11.8% of the sample); (3) human resources (8.7% of the sample); (4) rooms division/operations (including front office, reservations, and housekeeping) (22.4% of the sample); (5) food and beverage/catering (5.6% of the sample); and (6) controller (11.9% of the sample). By randomly selecting managers we avoided the systematic bias due to all functional managers in a given hotel participating in the study. The sample size for general managers was 4,515 and the sample size for the five other managerial functions was 6,885. General managers were intentionally over-sampled because of their important position at the core of decision-making in hotels, and the likelihood that they would perform many of the functions in the limited service segments that the full service segment would rely on department heads to perform.
Following the stratified sampling plan, a total of 13,459 hotel managers at the corporate and property level were mailed questionnaires. A personalized cover letter from the Dean of the School of Hotel Administration accompanied the survey to all managers. The functional managers received the questionnaire and a general cover letter, mailed to the general manager with instructions to distribute to specified department heads since the contact names of department personnel were not available from the database. Additionally, a drawing to receive a free week of executive education on the Cornell campus during the summer Professional Development Program was offered as an incentive to facilitate quick and high levels of survey response. A total of five free weeks of executive education were given away in this phase of the study. Figure 3 provides a breakdown of the survey sampling plan for the Phase I survey.
Respondent Profiles
A total of six hundred and ten managers responded to the phase I nomination survey of which five hundred and fifty eight provided demographic information. The profile characteristics of the average manager who responded to our survey was a 40 year-old male who has been in the lodging industry for fifteen years. A summary of the respondent profile information is presented in Table 1, and reveals that a large percentage of our respondents were general managers. The balance of corporate and property level management responses is representative of our original sampling strategy.
To enhance the modest response to the phase I survey we conducted the following follow-up activities. First we telephoned 100 non-responding property level general managers to discover why they had not completed the survey. This phone poll revealed that the general manager to whom the questionnaire had been addressed had left the property in 59% of the hotels called. Other explanations for non-response included: I didn’t get around to it (10%), I was out of town / on vacation (2.5%), It’s in the mail back to you (2.5%) or the phone rang at the hotel with no pick up for an extended time (7.3%). Finally, twenty percent (20%) of those called indicated they had not received the survey. The quality of address information in existing databases is an important consideration in any industry wide survey. In this study a total of one hundred and seventy-five surveys were returned with bad addresses After the phone poll we faxed shorter follow up surveys to randomly selected hotel properties using the Realtime Hotel Reports Inc. database.
At the conclusion of phase I a total of 3,448 nominations of best practice champions were received. As with all studies of people’s opinions, the nominations in phase I are subject to potential error. People do not always know or have contact with the best practice providers. To assure that some of the best of the best were not missed via the survey a review of the trade and industry literature was also conducted. The extensive literature review produced an additional 80 nominations. Hence, at the close of phase I a total of 3,528 best practice champions had been nominated for their efforts at developing highly effective and profitable practices that represent the best in the industry.
Phase II - In-depth Interview of Champion
In Phase II, the 3,528 nominations surfaced in Phase I were evaluated and reduced to 549 potential champions, using the criteria discussed below. A telephone interview prescreening procedure reduced the nominees further to a group of champions. The selected best practice champions were notified by mail of their selection and interviews were scheduled. A total of 115 functional champions and 29 overall champions were interviewed in phase II.
An Overview of Phase II
The primary objective of this phase of the study was to learn from the interviews with each best practice champion, in as much detail as possible, what was done, why it was done, how it was done, and how it will be improved or evolve in the future. It is this richness that will provide the concrete understanding and generate the enthusiasm among others in the industry to experiment, adapt and adopt these practices.
Criteria for Selection of Nominees
The principal investigators categorized and analyzed the entire set of 3,528 nominations. Using the frequency counts on the number of respondents who nominated each potential champion and reading each best practice independently, the four researchers scored and then assembled a sub-sample of potential champions. The nominees whose practices most closely adhered to our definition of a best practice, and the most frequently mentioned nominees were considered for inclusion in Phase II. The highest frequency of mention was calculated across all respondents for all brands, hotels or individuals mentioned to determine the overall best practice champion in each industry category (e.g., the best luxury hotel, etc). However, due to important differences in practices in different categories of the industry, separate counts were made for each of the industry categories (e.g., deluxe, economy, extended stay upper-tier).
This phase of the project provided a broad, segmented, and practice-focused list of overall and functional best practice champions. The 549 most frequently nominated and/or highest scored nominations were then pre-screened in preparation for Phase II. Fifteen to twenty-five minute pre-screen interviews were conducted with each potential nominee to obtain more detailed information on the nature of the practice. If the initial prescreen discussion confirmed the nominee as a champion, he/she was they invited to participate in an in-depth telephone interview. The nomination as a best practice champion and the request to participate in an in-depth interview was confirmed via a letter that was faxed to each nominee. In-depth Interview Structure and Approach
The core interview questions, numerous probes and a detailed interviewer manual were developed to guide the interviewers through the in-depth interview and to standardize the process of gathering information from the numerous functional best practice champions. The overall best practice champions were interviewed using a different set of interview questions that were broader in focus and less structured. The interviewers initially contacted the best practice champions and arranged an interview time. This step in the process frequently required the interviewer to make multiple telephone calls and transmit numerous faxes given the busy schedules and obligations of the champions. Once a time was established, a comprehensive interview was conducted using the carefully established questions and numerous probes (see the Appendix-Phase II Questionnaire). The probes were designed to assist the interviewers in eliciting sufficient information from each champion to prepare the initial case summaries. Functional Best Practice Champions
A total of 115 functional best practice champions were interviewed in this phase of the project. In each case eight core questions were asked and a case synthesis was prepared following the template provided in figure 5. Each interview was tape recorded for future reference. The researchers reviewed each case, listened to tapes when needed, and called champions a second or third time to obtain more information and clarify information when needed.
An interview summary form was completed after each interview to capture the attitude of the champion toward the interview process and to identify any problems or issues that the interviewer may have experienced during the interview. This interview summary form, the pre-screen interview notes, the in-depth interviewer notes, the case summary using the template format, and the tape recording of the interview along with any additional material that the champion provided was reviewed by the research team in preparation for the final short, content-driven case write-ups. The information obtained in the interviews was assembled to prepare a comprehensive set of case studies, and then each case study was reviewed by the interviewee to ensure accuracy. This set of case studies are provided in the next chapter of this report.
Overall Best Practice Champions
A total of 29 overall best practice champions were also interviewed in this phase of the project. Several of the overall champions had been selected and interviewed as functional champions for specific practices, but were interviewed again because of their distinction in a variety of different domains. Because of the broader scope of practices employed by these champions, a different case format was used to convey the richness of the philosophies, strategies, and behaviors of these champions. In addition, a limited set of customers for the majority of the overall best practice champions were interviewed, and this guest perspective was incorporated into these cases. These "overall" cases follow the chapter of functional cases.
Phase III-The Customers' Perspective
The objective of phase III was to assess customers’ perspectives on best practices in the lodging industry by surveying the customers of the overall champions. The interview was divided in two parts. In the first part, respondents were asked to identify which hotel attributes were perceived as determinants of value in their purchase decision and in the hotel experience provided by the overall champion. The second part aimed at eliciting customers’ perspective on functional best practices. Respondents described the customer value created by what they considered as the top performance in the lodging industry on a series of attributes tied to the various functional areas of a hotel in the customers’ words (e.g., the personnel, the physical property, the check-in/out, etc.). These functional areas paralleled to a large extent the diversity of functional practices covered in phase II. The content of both parts of the interview was analyzed to determine the hotel attributes that drive customer value and influence purchase behaviors and loyalty.
The survey consisted of open-ended, partially structured phone interviews. For each overall champion, we interviewed 12 customers within each segment. We considered three end-user segments, i.e., leisure, business transient, and business meeting/convention, and two intermediary segments, i.e., travel agents and meeting planners. Thus, depending on the market basis of the champion, we interviewed up to 36 end-users and 24 intermediary customers. Overall, 773 interviews were conducted (536 end-user customers, 194 travel agents, 123 meeting planners).
Description of the Samples: End-users
Four-hundred sixty-nine out of the 536 end-users respondents were frequent business and frequent leisure travelers, selected on a convenience basis from Plog Research’s proprietary list, the USA Travel Bank. This list is one of the largest and most comprehensive national databases available in the travel industry with over 350,000 respondents. The remaining end-users respondents were selected on a convenience basis from customer lists provided by those overall champions whose market basis was geographically limited (individual properties). For these champions, we requested a sample list of customers who had stayed at the property within the last year. . However, only a limited number of property champions were able to provide a customer list. As a result, the customers’ perspectives on the property-level overall champions are not as comprehensively covered as that of the brand-level champions. Because we could not control the selection bias in the customer lists provided by the champions, we chose to use this data for the customers’ perspectives in the overall cases studies only, with a mention that respondents were sampled according to this procedure. In addition, we excluded this data from the industry-wide analysis of customers’ perspectives presented in the customers’ perspectives chapter.
Respondents were first screened on frequency of usage of hotels for one of three purchase occasions (leisure, transient business, business meetings/convention). Segment-specific frequency criteria were:
Leisure: two trips within the past year primarily for leisure.
Transient business: three business trips within the past year consisting of one or more hotel nights on each trip.
Business Meetings/Convention: attendance within the past year at two business meetings (company meeting or convention that included at least two nights stay and two days of meetings on each trip)
Once respondents were screened for frequency, eligible respondents to the survey were those frequent users who had stayed at least once over the last year at one of the champion brands or properties. In Table 2, we present the demographic profile of the end-user respondents. Across customer segments, the age of the respondents was around 50 years, for an overall average of 51.0 years. In terms of gender, the overall sample of end-users was about evenly divided between men and women. However, the relative proportion of men and women in the sample varied across segments. For instance, the relative participation of men was especially high in the business transient segment, reflecting the gender profile in the population of frequent business travelers. Women presented a largest proportion than men in the leisure segment. In terms of education, most respondents had college education.
Intermediaries' perspectives were assessed for brand-level champions only. Travel agents were selected on a convenience basis from Plog's comprehensive travel agency database, TravelEdge. This list, which is regularly updated, consists of approximately 30,000 full service U.S. travel agencies. Meeting planners were selected on a convenience basis from the Meeting Planners International (MPI) association membership lists. MPI represents 14,500 members and we selected 6000 meeting planners from their membership list that possessed two years or more of experience.
Intermediary respondents were screened on two criteria: (1) minimum of five-years experience as a travel agent or meeting planner, and (2) having been a customer of one of the brand-level overall champions within the past year. A total of 194 travel agents (153 women and 41 men) and 123 meeting planners (104 women and 19 men) were interviewed. The average numbers of years of experience were, respectively, 13.4 and 9.6 for travel agents and meeting planners.
Interview Structure and Approach
The interviews used an open-ended, half-structured; approach utilizing a computer-assisted telephone interviewing (CATI) system. A CATI system is a type of software application that enables the interviewer to probe, clarify, and follow up on responses to open-ended questions. In this procedure, after having been familiarized with the topic of the interview and armed with a repertory of typical consumer responses, trained interviewers can type detailed notes as the phone interview unfolds. The content of these notes is then submitted to analysis. The interview procedure and tools were pre-tested within each respondent segment for a resulting average interview duration of 25 minutes. The various versions of the questionnaires developed for the three segments of end-users (leisure, transient and meeting planners) and two segments of intermediaries (travel agents and meeting planners) are presented the appendix entitled Phase III Interview Questionnaires. The interview was divided into two parts: the first part focused on the respondent's experience with the champion hotel for which he/she had been screened; the second part centered on his/her experience with industry-wide top performers based on a series of attributes related to key functional areas in a hotel. In both parts of the interview, linkages were established between customers' perceptions of hotel attributes that drive customer value, the benefits derived from these hotel attributes, and their impact on purchase and loyalty decisions.
Customers' Perspectives on Overall Practice Champions
To assess customers' perspectives on the overall best practice champions, respondents were asked to indicate what attributes of the hotel champion made them first decide to stay at this hotel. They then indicated whether the champion actually delivered on those attributes (yes, no, more or less). They also identified the actual practices related to the champion's ability to deliver on these hotel attributes, as well as the set of benefits they derived from these attributes. This part of the questionnaire provided the information from which we identified the source of customer value at purchase in subsequent analyses.
Customer value created by the overall champions during the hotel experience was studied by asking respondents to indicate whether they had liked anything in particular during their last stay at the champion hotel (yes, no). If respondent said yes, they were then invited to elaborate on those hotel attributes that created value during the hotel experience, the same way they had just done for at purchase. All respondents concluded their discussion of the overall champion by indicating whether they were likely to go back on the next similar occasion (definitely yes, definitely no, may be).
Customers' Perspectives on Functional Practice Champions
Ideally, to assess customers' perspectives on the functional practices, we would have preferred to interview customers of our 115 functional best practice champions, as we did for the overall best practices, This research, unfortunately, was beyond the scope and resources of this project. Instead, as part of the interview, we asked respondents to move away from their experience with the overall-best-practice champion, and to think about all the hotels they ever stayed at for the same purchase occasion. They were then instructed to identify the hotel that they considered the best for two broad functional areas of a hotel, to specify those hotel attributes that created value for them, and to denote the benefits they derived from these attributes. They finally indicated whether the fact that a hotel was the top performer in a given functional area made them more likely to give priority to this hotel over competitors on the next occasion. Thus, the assessment of customers' perspectives on the best functional practices in the lodging industry is not made, as for the overall practices, in reference to the champions that were selected by the managers. Instead, customers' perspectives are presented from the point of view of what they consider themselves as being the top performance in the lodging industry in a given functional area.
Altogether, customers provided their perspective on a set of functional areas that to a large extent paralleled the diversity of practices covered in phase II. Specifically, end-users were asked to talk about the personnel, the physical property (separately for public spaces and guestrooms), the quality standards (separately for check-in/out and in-stay services), the brand name/reputation, the marketing to the end-customers, and the perceived value-for-money. To respect the time constraint, each respondent elaborated upon two functional areas that were randomly chosen from the preceding list. Travel agents and meeting planners were interviewed regarding communication with the intermediaries and the quality of deals and incentives as intermediary-specific functional practices. Travel agents only were interviewed on brand name and reputation, and value for money for the end-user. Pilot testing indicated that the customers' perspectives in these two emerged as important choice motives for travel agents. Meeting planners were interviewed on three additional areas: meetings and conventions facilities design and accommodations, services related to meetings and conventions, and guestroom and various non-meeting related services and accommodations for the guest.
Content Analysis
In data analysis, each interview protocol was divided into three types of information: hotel attributes, hotel practices, and customer benefits. Hotel attributes correspond to what elements of the hotel customers perceived. Hotel practices reflected customer perceptions of how the hotel was able to deliver on these attributes. Customer benefits were functional, emotional, and social consequences that respondents associated with a hotel featuring the various attributes. These various coding schemes for these attributes, practices; and benefits are presented in the appendix entitled Phase 3 Coding Scheme.
The content of respondents' interviews pertaining to the overall champions were summarized from various angles: hotel attributes driving customer value at purchase and during the hotel experience, outlook on the champions' practices, and customer benefits. The customers' perspectives on the overall champions were presented within each individual case study. In the chapter on customer perspectives, we shifted the focus of the analysis toward a more global portrait of customers' perspectives on the best practices in the lodging industry. We first represent the various sources of value created by our portfolio of overall champions in terms of hotel attributes and the benefits these created for the customers. We then provide a similar industry-wide description of customers' perspectives on functional practices by describing customer value created by what respondents had identified as the top performance in the lodging industry in a series of functional areas. Finally, we compare managers' perspectives as presented in the case studies to that of customers', as expressed in the survey, for both overall and functional practices.
Summary:
In summary, the study involved three phases. The first phase relied on survey methodology to surface the Best Practice Champions as nominated by industry managers at both the corporate and property level. Phase II used in-depth interviews to capture the best practices of champions at the functional and overall level, and then the information was distilled into easy to ready case formats. Finally, phase III captured the perspectives of the end-users and intermediary customers of most of the overall champions. Customer perspectives have been incorporated into the overall cases, where applicable