Cornell Study: Charging for Restaurant Reservations May Gain Acceptance

Apr 14, 2016

Contact: Carol Zhe, 607.254.4504, caz9@cornell.edu

FOR IMMEDIATE RELEASE:
Cornell Study: Charging for Restaurant Reservations May Gain Acceptance

Ithaca, NY, April 14, 2016 - The idea that restaurants would charge money for table reservations seems unlikely, but this practice already occurs in some situations. Additionally, a recent study published by Cornell University finds that some guests would accept this practice, although most study respondents still consider paying separately to be unfair. A report on this study, "Revenue Management in Restaurants: Unbundling Pricing for Reservations from the Core Service," by Sheryl Kimes and Jochen Wirtz, is available at no charge from the Cornell Center for Hospitality Research. Kimes is a professor of operations management at the Cornell School of Hotel Administration, and Wirtz is professor of marketing at the National University of Singapore.

Kimes and Wirtz point out that table reservations have a value, but restaurants traditionally include that value as part of the overall cost of a meal. The reservation itself becomes particularly valuable at popular restaurants where tables are hard to get. Recognizing this value, a group of third-party reservation firms have made a business of selling hard-to-get reservations in popular restaurants. Based on that type of scenario, the study, which surveyed 297 U.S. residents, found that a substantial minority of restaurant guests would be willing to pay separately for a restaurant reservation.

"We see some acceptance of the idea of paying separately for a restaurant reservation through third-party firms, especially among respondents who said they were familiar with the practice. So far, though, we are not aware of any restaurant that is charging for reservations," said Kimes. "That said, we anticipate that we may see restaurants adopt this practice as restaurant guests become more familiar with it. This is a logical extension of the revenue management principle of pricing a service to match demand."

"Singapore's taxi system provides an analogy to paying for tables," added Wirtz. "Like restaurants, taxis usually include the value of the reservation as part of the fare that a customer pays. But customers in Singapore are willing to pay an extra reservation fee to ensure that the taxi arrives when they need it. We could see this rationale extending to similar businesses, including restaurants."

About the Center for Hospitality Research
The purpose of the Center for Hospitality Research is to enable and conduct research of significance to the global hospitality and related service industries. CHR also works to improve the connections between academe and industry, continuing the School of Hotel Administration's long-standing tradition of service to the hospitality industry. Founded in 1992, CHR remains the industry's foremost creator and distributor of timely research, all of which is posted at no charge for all to use. In addition to its industry advisory board, CHR convenes several industry roundtables each year for the purpose of identifying new issues affecting the hospitality industry.

Center Members: Accenture, Access Point Financial, Inc., Barclaycard US, Cvent, Davis & Gilbert LLP, Deloitte & Touche USA LLP, DerbySoft, Duetto, Four Seasons Hotels and Resorts, Fox Rothschild LLP, Hilton Worldwide, Host Hotels & Resorts, Hyatt Hotels Corporation, IDeaS Revenue Solutions, Infosys Limited, InterContinental Hotels Group, Jumeirah Group, Marriott International, NTT DATA, Preferred Hotels & Resorts, priceline.com, PwC, The Rainmaker Group, RateGain, ReviewPro, Sabre Hospitality Solutions, STR, Taj Hotels Resorts and Palaces, Tata Consultancy Services, Wipro EcoEnergy, and Wyndham Hotel Group