The role of hotel owners: the influence of corporate strategies on hotel performance

Abstract

Purpose-The purpose of this paper is to examine corporate strategic effects on hotel unit performance. Taking a hotel owner's perspective, the relationship between four types of the owner's corporate level strategies and the hotel property financial performance are examined. Design/methodology/approach-This study is built on a secondary data set provided by Smith Travel Research. A total of 2,012 hotels across the USA were analyzed for the period between 2003-2005. Findings-The findings support the existence of corporate effects in the US lodging industry. It is revealed that a hotel owner's corporate strategies do influence hotel property level financial performance. Specifically, a hotel owner's expertise in implementing superior strategies regarding segment, brand, operator, and location (i.e. state) are critical to hotel unit financial performance. Research limitations/implications-The main limitations of this study include the limited number of years with available data, lack of knowledge on the names of hotel owners, brands and operators, and the performance measures focusing only operating but not value/return measures. Practical implications-This research shows that a hotel owner can have significant influence on the operating performance of its hotel properties by implementing strategies regarding its properties' locations, segments, brand affiliations and operators. Specifically, brand affiliation has shown a consistently larger impact on both revenue and profit than other corporate strategies, and consequently should receive particular attention from the owner to carefully assess the brand's potential contribution before engaging in a franchise agreement. Originality/value-This research expands the strategy research in the hospitality field by linking two key strategy constructs-corporate effects and corporate strategy-together and by revealing their collective influence on hotel performance.

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