An Investigation of the Relationship Between Selected Hotel Characteristics and Performance in the Extended Stay Hotel Segment

As extended stay hotels gain in popularity across the US, it is important to understand how certain hotel factors influence their performance. The purpose of this paper is to analyze the relationship between selected hotel characteristics (location, scale, size, and operation arrangement) and its performance (revenue per available room (RevPAR)) in the US extended stay market. A multiple regression model is performed on a national dataset, which is available from Smith Travel Research (STR). The findings show that hotels located in urban areas perform the best among all location categories. Upper-tier hotels are able to achieve better results than their lower-tier counterparts. In addition, larger hotels are associated with better performance. Lastly, hotels are advised to adopt the franchise approach as the operation arrangement to achieve higher performance. 

American Hotel & Lodging Association. (2012). The lodging industry’s chief trade association. Retrieved from
http://www.ahla.com/

Arnold, D. (1994). Profits and prices: A lodging analysis. Cornell Hotel and Restaurant Administration Quarterly, 35(1), 30-33.

Barros, C. P., & Mascarenhas, M. J. (2005). Technical and allocative efficiency in a chain of small hotels. International Journal of
Hospitality Management, 24(3), 415-436.
Breen, W., & Lerner, E. (1973). Employee selection methods. Management. Retrieved from
http://best-management-articles.blogspot.com/2013/05/employee-selection-methods.html
Brown, J. R., & Dev, C. S. (1999). Looking beyond RevPAR: Productivity consequences of hotel strategies. Cornell Hotel and
Restaurant Administration Quarterly, 40(2), 23-33.
Claver‐Cortés, E., Molina‐Azorín, J. F., & Pereira‐Moliner, J. (2007). The impact of strategic behaviours on hotel performance.
International Journal of Contemporary Hospitality Management, 19(1), 6-20.
Cullen, P. (1997). Economics for hospitality management. Oxford: International Thomson Business Press.
Economies of Scale. (2014). In Business Dictionary Online. Retrieved from
http://www.businessdictionary.com/definition/economies-of-scale.html
Elder, C. (2013). An overview of hotel asset classes. U.S. Hotel Appraisals. Retrieved from
http://www.ushotelappraisals.com/services/hotel-asset-classes-limited-service-hotels/
Ellis, J., & Harris, B. (2013). What is an independent business? Retrieved from
http://www.wisegeek.com/what-is-an-independent-business.htm
Enz, C. A., Canina, L., & Walsh, K. (2001). Hotel-industry averages: An inaccurate tool for measuring performance. Cornell
Hotel and Restaurant Administration Quarterly, 42(6), 22-32.
Fishman, L. (2010, October 14). Extended stay Inc. emerges from bankruptcy after $3.93 billion sale. Phoenix Bankruptcy News.
Retrieved from
http://phoenixbankruptcynews.com/2010/10/extended-stay-inc-emerges-from-bankruptcy-after-393-billion-sale.html
Fontinelle, A. (2010). Starting a small business. Retrieved from http://www.investopedia.com/
Friebe, K., & Bowler, I. (2012). Hotel franchising in Europe. Retrieved from http://www.dlapiper.com/en/global/
Gallagher, M., & Mansour, A. (2000). An analysis of hotel real estate market dynamics. Journal of Real Estate Research, 19(2),
133-165.
Geieregger, E. (2008). A home for the modern nomad: Extended stay hotels. Journal of Retail and Leisure Property, 7(3),
216-233.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2009). Multivariate data analysis (7th ed.). Upper Saddle River, N.J.:
Prentice Hall.
Hayes, N. (2007). Hotel operations management (2nd ed.). Upper Saddle River, N.J.: Prentice Hall.
Helmers, C. G. (2010). The importance of ownership form and spatial location in the lodging industry: An empirical analysis of
the hotel sector in Texas. Ann Arbor, M.I.: ProQuest, UMI Dissertation Publishing.
Holmes, D. E. (2012). The advantages and disadvantages of franchising. Retrieved from
http://www.studymode.com/essays/The-Advantages-And-Disadvantages-Of-Franchising-1331775.html
InterContinental Hotels Group [IHG]. (2013). About us—Our history. Retrieved from http://www.ihgplc.com/
Ismail, J. A., Dalbor, M. C., & Mills, J. E. (2002). Using RevPAR to analyze lodging-segment variability. Cornell Hotel and
Restaurant Administration Quarterly, 43(6), 73-81.
Israeli, A. A. (2002). Start rating and corporate affiliation: Their influence on room price and performance of hotels in Israel.
International Journal of Hospitality Management, 21(4), 405-424.
Johnson, K. (1999). Hotel management contract terms: Still in flux. Cornell Hotel and Restaurant Administration Quarterly, 40(2),
34-39.
Kim, S. Y. (2008). Hotel management contract: Impact on performance in the Korean hotel sector. Service Industries Journal,
28(5), 701-718.
Knight, R. M. (1984). The independence of the franchiser entrepreneur. Journal of Small Business Management, 22(2), 53-61.
Location Theory. (2014). In Wikipedia Online. Retrieved from http://en.wikipedia.org/wiki/Location_theory
Lomanno, M. (2006). Location can change outlook for performance picture. Trends & Stats. Retrieved from
http://www.HotelMotel.com/digital_edition
Malk, M., & Schmidgall, R. (1993). Financial analysis of the rooms department. The Bottom Line, 8(6), 18-22.
Market Research. (2013). The 2013-2014 travel & tourism market research handbook. Retrieved from
http://www.marketresearch.com/Richard-K-Miller-Associates-v723/Travel-Tourism-Research-Handbook-7358307/
Mayock, P. (2011). STR: Niche segment performance overview. Retrieved from http://www.hotelnewsnow.com/Article/6178
Newell, G., & Seabrook, R. (2006). Factors influencing hotel investment decision making. Journal of Property Investment and
Finance, 24(4), 279-294.
O’Neill, J. W. (2011). Hotel occupancy: Is the three-year stabilization assumption justified? Cornell Hospitality Quarterly, 52(2),
176-180.
Riley, G. (2011). 2011 in review—The US economy. Tutor2u Resources & Events Store. Retrieved from
http://www.tutor2u.net/blog/index.php/economics/comments/2011-in-review-the-us-economy
Sainaghi, R. (2011). RevPAR determinants of individual hotels evidences from Milan. International Journal of Contemporary
Hospitality Management, 23(3), 297-311.
Sasaki, Y., & Box, P. (2003). Agent-based verification of von Thünen’s location theory. Journal of Artificial Societies and Social
Simulation, 6(2). Retrieved from http://jasss.soc.surrey.ac.uk/6/2/9.html
Singh, A. J., & Schmidgall, R. S. (2000). Financing lodging properties. Cornell Hotel and Restaurant Administration Quarterly,
41(4), 42-51.
Skinner, M. (2013). Extended-stay hotels draw demand, investment. Retrieved from
http://www.hotelnewsnow.com/Article/10171/Extended-stay-hotels-draw-demand-investment
Smith Travel Research [STR]. (2012). Terminology definitions. Retrieved from
http://www.strglobal.com/Media/Default/Documents/Definitions.pdf
Stadd, J. (2013). TownePlace suites ranked #1 extended-stay brand by J.D. Power. Retrieved from
http://news.marriott.com/2013/07/towneplace-suites-ranked-1-extended-stay-brand-by-jd-power-.html
Tran, X. (2011). Price sensitivity of customers in luxurious hotels in U.S.. e-Review of Tourism Research, 9(4), 122-133.
Vandyke, T. (1985). An exploratory study of key variables affecting profitability in the lodging industry (hotels, motels, restaurant,
regressions). N.P.: ProQuest, UMI Dissertations Publishing.
Welsh, D. H. B., Desplaces, D. E., & Davis, A. E. (2011). A comparison of retail franchises, independent businesses, and
purchased existing independent business startups: Lessons from the Kauffman firm survey. Journal of Marketing Channels,
18(1), 3-18.
Withiam, G. (1997). Extended stay: Hot, hot, hot. Cornell Hotel and Restaurant Administration Quarterly, 38(1), 12-25.
Woodruff, C., & Wang, C. (2013). Widespread economic growth in 2012. Retrieved from
http://www.bea.gov/newsreleases/regional/gdp_state/2013/pdf/gsp0613.pdf