Cornell Studies Examine Hotel Operating Results in Spain and the U.K.

Dec 15, 2011

Contact:  Jane Henion, 607.255.9780, jmh222@cornell.edu

FOR IMMEDIATE RELEASE:
Cornell Studies Examine Hotel Operating Results in Spain and the U.K.

Ithaca, NY, December 15, 2011 -  Two reports from the Center for Hospitality Research (CHR) at the Cornell School of Hotel Administration, provide new perspectives on hotel operating results. One report analyzes the first two years of operating results for hotels in the United Kingdom. The other examines the effects of ISO 14001 certification for hotels in Spain. Although the reports are unrelated and deal with two different studies in two countries, both seek to help hotel operators determine the most effective way to improve their revenue picture.

Hotel Opening Performance: Independents in U.K. Sometimes Have Stronger Revenues than Franchises

One of the many decisions that hotel developers make is whether to purchase an established franchise system or to operate independently. A study by Cornell professors Cathy Enz and Linda Canina has found that independent hotels in some segments can outperform those that operate using franchise systems. Their study compared the operating results of 104 independent and franchised hotels in the United Kingdom during the first two years of operation.

The study, "A Comparison of the Performance of Franchise and Independent Hotels: The First Two Years of Operation," is available at no charge from the Cornell Center for Hospitality Research. Enz and Canina note that franchising is the dominant approach to opening hotels in all segments. For limited-service hotels that opened during the study period, revenue per available room (RevPAR) for independents was stronger than that of franchise properties for the period from six months after opening through the end of the study period, at two years from opening. For full-service properties, franchise hotels had an early RevPAR advantage, but that faded over the following 18 months.

One factor highlighted by the study was that independent operators tended to have higher average daily rates from the beginning. Enz and Canina suggest that these findings invite further study, especially since the data come from only one country.

Spanish Hotels with ISO Environmental Certification Perform Better than Uncertified Properties

A study of over 2,000 independent hotels in Spain compared the economic performance of hotels that have earned the international environmental standard, ISO14001, with those that have not been certified. On balance the certified hotels recorded stronger sales and earnings before taxes and depreciation than those that were not certified.

The study, "Environmental Management Certification and Performance in the Hospitality Industry: A Comparative Analysis of ISO14001 Hotels in Spain," by María-del-Val Segarra-Oña, Ángel Peiró-Signes, and Rohit Verma, is available at no charge from the Cornell Center for Hospitality Research (CHR). Segarra and Peiró are CHR visiting researchers from Polytechnic University of Valencia. Verma is a professor at the Cornell School of Hotel Administration and CHR executive director.

The report notes that hotel operators are increasingly interested in sustainable operation, but few international standards are universally recognized. ISO14001 is one such standard, although it is less common in the United States than in Europe. Certified hotels in Spain tended to be larger than uncertified properties, and certified hotels in city and beach locations enjoyed considerably stronger performance than those without the certification. The report challenges the often-heard contention that adopting sustainability programs will diminish hotels' performance. Instead, these data show the reverse to be the case.

About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 78 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit www.chr.cornell.edu.

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