Faculty & Research
Executive Summary of the Report
The Best Practices in the U.S. Lodging Industry study was conducted by Cornell University in collaboration with The American Hotel Foundation and American Express. The objective of the study was to identify best practice champions across the U.S. lodging industry. Specifically, the study identified companies, hotels, or individuals that have developed highly effective and profitable practices which represent the best in the industry. We examined best practices by functional areas, and then selected overall champions in each product segment and key competency areas. We also investigated customers' perspectives on best practices in the lodging industry and compared these perspectives with managers' perceptions of best-practice activities.
More than 3,500 companies and individuals were nominated as champions from the phase I survey of a representative sampling of industry managers. Nominations were analyzed and reduced to a final set of the "best of the best" champions. The champions were prescreened and interviewed in-depth in phase II of the study. A total of 145 case studies of the best practice champions were prepared including 115 functional champions and 29 overall champions. Phase III involved interviewing 773 customers of the overall champions, specifically 536 end-users, 194 travel agents, and 123 meeting planners. Respondents described their purchase decision and experience with the overall champions. The customers' perspectives on best practices were incorporated into several of the overall best practice champion cases, and the drivers of customer purchase behavior and consumption experience were examined separately. All surveys and interviews were conducted between May 1998 and January 1999. The major findings of the study are summarized below:
- Of the 115 functional best practices, the largest number of champions were in the area of human-resources management, followed by operations, corporate management, and sales and marketing.
- The functional champions were evenly split between corporate and property locations, while owner/operators and chains were the operating structures with the largest number of functional champions.
- Employees were extremely important to best practice champions in every product segment from budget to deluxe. Employee involvement was frequently cited as a key to successful implementation of the functional and overall practices, and as a key to improving levels of customer satisfaction.
- The functional champions repeatedly observed that they should have started the practice sooner, moved slower in implementation, and established an approach to monitoring results along the way. Additionally, functional champions stressed the importance of senior-level commitment to the practice as a major component in assuring successful implementation.
- The 29 overall best practice champions did many things well and worked from a strategic business model that stressed the importance of understanding customer needs and creating value, and focused on profitability. In particular they were skilled at creating value for the owners, employees, and customers that was in line with the key strategies of their business model.
- Execution and attention to detail were keys to success for the overall best practice champions. At the property level the involvement of the general manager in the daily life of the hotel was viewed as critical to the overall champions.
- According to the customers sampled, the five most powerful motives behind their purchase behavior were location, brand name, reputation, public spaces (e.g., exteriors, lobby, and landscape), guestroom design and amenities, value for money, and functional aspects of the service. These customer-value drivers were found to correspond to the practices reported by the overall champions.
- Customers stated that the public spaces, the guestroom, and the interpersonal and functional aspects of service, as well as the hotel food and beverage services were the primary creators of value during the hotel experience.