Brands' Hotel Ownership Doesn't Always Limit Management Opportunism, Says Cornell Study

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. September 17, 2014

Ithaca, NY - September 17, 2014 - As one way to limit opportunistic behavior by hotel managers, many hotel brands have adopted a policy of owning a particular hotel. But a study published by the Cornell Center for Hospitality Research finds that, contrary to the conventional wisdom, the level of managers' opportunism goes down when a third-party owner is involved, rather than when the brand owns the property. This is based on an analysis of management opportunism with regard to the brand at 49 brand-owned hotels compared with 247 hotels owned by a third party. The study, "Strategies for Successfully Managing Brand-Hotel Relationships," by Professor Chekitan S. Dev, is available at no charge from the CHR.

"We see many different actions as involving opportunism on the part of hotel managers," said Professor Dev, a marketing and branding expert at the Cornell School of Hotel Administration. "But they all involve some kind of deliberate, guileful misrepresentation of facts about their operations, with the goal of protecting or promoting their own interests or the interests of their hotels. This could include stealing as the most severe example, but lying, misleading, and misrepresenting the facts also could occur."

Professor Dev added: "The study found that opportunism is limited when it is easy for someone to monitor a hotel's performance, and, ironically, when the brand itself is able to use opportunism as a form of retaliation. Then there's the remarkable finding that managers are less able to be opportunistic when a third party owns the hotel. That is entirely contrary to the conventional wisdom that advocates a strategy of owning and operating brand-affiliated hotels, especially at the higher end, to be successful."

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 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. To learn more about the center and its projects, visit www.chr.cornell.edu.