Cornell Hospitality Reports Win Industry Relevance 2008 Awards

Reports on Discounting and Turnover

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. October 14, 2008

ITHACA, NY, May 12, 2008. Research on the dangers of hotel-rate discounting and on the costs of turnover have been named the 2008 Industry Relevance Award winners from Cornell's Center for Hospitality Research. The studies published during 2006, are available at no charge from www.hotelschool.cornell.edu/research/chr/pubs/reports/.

The winning reports are "Why Discounting Still Doesn't Work: A Hotel Pricing Update,' by Linda Canina and Cathy Enz, and "The Costs of Employee Turnover: When the Devil Is in the Details," by Bruce Tracey and Timothy Hinkin.

In the report, "Why Discounting Still Doesn't Work: A Hotel Pricing Update,' researchers Linda Canina and Cathy Enz update and extend their findings regarding hotels' costly practice of discounting relative to the competitive set. Using data from strong economic times, they confirmed the industry's conventional wisdom that discounting increases occupancy. However, contrary to what managers may believe, hotels make more money relative to their competitors when they resist the temptation to discount to fill rooms. In short, hotels charging higher prices relative to their competitive set had lower occupancy, but they enjoyed higher revenue per available room (RevPAR). This was true regardless of location or market price segment. Linda Canina is an associate professor of finance at the Cornell University School of Hotel Administration, where Cathy Enz is Lewis G. Schaeneman, Jr. Professor of Innovative Management.

In "The Costs of Employee Turnover: When the Devil Is in the Details," authors Bruce Tracey and Timothy Hinkin employed an innovative, internet-based research method in which hotel managers contributed data regarding employee turnover. They found that the number-one cost of turnover is the damage to productivity caused by the inexperience of new employees. Based on data contributed by 33 U.S. hotels, the costs of turnover are the highest in the following categories:

(1) higher complexity jobs,

(2) independent properties,

(3) properties with relatively high room rates,

(4) large properties,

(5) high occupancy properties,

(6) properties in markets with a high cost-of-living index, and

(7) properties in markets with a high unemployment rate. Bruce Tracey is an associate professor of human resources management at the Cornell School of Hotel Administration, where Timothy Hinkin is a professor of management and organizational behavior.

Three other Cornell Hospitality Reports were named finalists in the judging for industry relevance. They are:

---|-"Revenue Management in U.S. Hotels: 2001-2005," by Linda Canina and Cathy Enz,

---|-"An Examination of Guest Complaints and Complaint Communication Channels: The Medium Does Matter!," by Alex Susskind*, and

---|-'Eight Rules for Competing in Hotel Real Estate Markets,' by Jack Corgel.

The award winners and finalists were selected using the following three criteria: the number of downloads from the center's website (www.chr.cornell.edu), the results of a survey of those who frequently download center materials, and input from the center's Advisory Board.

*Susskind is an associate professor of food and beverage management, and Corgel is the Robert C. Baker Professor of Real Estate at the School of Hotel Administration.