Hospitality Property Ownership: Where You Fit In

High Performance Work Systems for Service Quality: Boundary Conditions and Influence Processes

“…In the hospitality industry, the ownership and operation of a hotel may be held by the same or different organizational entities. Because these two types of ownership structure represented different business conditions and implications (Corgel et al, ), we obtained the property ownership and management control information from the general manager at each hotel. Specifically, we asked general managers (1) whether their hotels were owned by the hotel brand, independently owned, or others (such as owned by investors); (2) whether their hotels were managed by the hotel brand, by an independent company, or others.…”

“…A potential moderator that has been overlooked is the organization's ownership structure. In the hospitality industry, hotels operate with a variety of ownership and management structures (Corgel, Mandelbaum, & Woodworth, ). Real estate is one of the most significant components of hotels, yet owners of a property may or may not be the ones who manage it.…”

“…In the latter case, the owners acquire a property, renovate it, and then contract with a management company to operate the hotel on their behalf based on certain standards. Therefore, there are two broad categories of ownership and management structures—one where the ownership and management are the same, and the other where ownership and management are separate (Corgel et al, ).…”

“…Owners generally have a vested interest in the survival and performance of their organizations. In the hospitality industry, hotel owners’ ultimate interest is the resale value of the real estate, which factors in both the business operating profit and the appreciation of the real estate itself (Corgel et al, ). If a hotel is well managed and consistently generates significant profits, prospective buyers will be willing to invest more to own the property to inherit the reputation and customer base already established by the hotel.…”

“…Whereas owners are interested in the hotel's profitability and real estate value of the property, a management company generates its profits through management fees, which may in part be a function of profits (Banker, Potter, & Srinivasan, ) but may also be affected by revenues and efforts that lead to greater management fees. As such, management companies may orchestrate HPWS in a way that emphasizes more on immediate objectives to maximize their cash flow, which directly contributes to their own economic interest, even though some of these actions may not lead to sustainable competitive advantage and asset appreciation of hotels (Corgel et al, ).…”