Three New Hospitality Research Briefs
Source: Cornell University School of Hotel Administration, Center for Hospitality Research

+ Consumer Racial Discrimination in Tipping (PDF; 213 KB)

Research Question: Does a server’s race affect the size of tips that consumers leave?

Findings: Both black and white restaurant customers tipped white servers more than they did black servers, even when the quality of the service from the white and black servers was the same. When customers rated the service a perfect 5 out of 5 points, they tipped white servers 23.4 percent of the bill and tipped black servers 16.6 percent of the bill.

Relevance: Restaurants could be held liable for customers’ racial discrimination in tipping. The Supreme Court has ruled that any unnecessary business practice that adversely affects employees of one race but not another is unlawful under the Civil Rights Act of 1964, even if the adverse impact is unintentional. Restaurants do not have to compensate servers through tips, since they could impose service charges or build higher wages into their menu prices. So those that do rely on tipping could be held liable if their black servers are tipped less than their white servers. This interpretation of the law has not been tested in the courts yet, but legal experts I’ve consulted agree that it is one the courts might accept. Thus, restaurants who compensate through tipping run the risk of a potentially costly class action lawsuit from their black servers.

+ Brand-Specific Investments, Intra-Brand Relationships and Performance of Hotel Firms (PDF; 239 KB)

Research Question: We investigate brand-specific investments (BSIs) by hotels belonging to two major North American hotel brands and the role these investments play in safeguarding the relationship and creating value for both partners.

Results: Our results show the conditions under which brand-specific investments safeguard the relationship by protecting against opportunism, and enhance a hotel’s performance. They also indicate that these results depend upon the type of brand-specific investment–physical assets versus knowledge- based or human assets. Finally, our findings demonstrate that more extensive hotel-brand relationship norms can diminish the performance-enhancing role of physical brand-specific investments–more evidence of the “dark side” of close hotel-brand relationships.

Relevance: Hotel owners frequently invest in assets that are devoted specifically to a particular brand. For example, as specified by the franchisor, a Holiday Inn franchisee invests in outdoor signs to advertise its location and affiliation with the franchise system, or training programs in Holiday Inn specific systems and procedures. These brand-specific investments (BSIs) support a particular exchange relationship and have little or no value outside of that relationship. We find that when hotels have a strong relationship with their brand partners, their investment in human BSIs pay off in terms of better operational per- formance. This finding is consistent with other researchers who argue that firms must align their specific investments with an appropriate gov- ernance mechanism (e.g., relational norms) to capture the value created by these investments.

+ Setting Prices on Priceline (PDF; 290 KB)

Research Question: How can a hotel best use an opaque online travel agent (OTA), such as Priceline.com, to best advantage?

Findings: Using mathematical models it is possible to improve both sales volume and rate.

Relevance: Virtually all hotels have excess inventory that could be sold on an opaque OTA. It is possible to improve rate using the information provided by Priceline.

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This entry was posted on Wednesday, February 10th, 2010 at 10:32 am and is filed under Business and economics, Consumer issues, Labor, Sports, recreation and leisure, Transportation and travel. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.