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Cornell Center for Hospitality Research Studies Focus on Hospitality Employee Turnover and Hotel Room Pricing

(Ithaca/New York, USA – August 16, 2012) A new study from Cornell’s Center for Hospitality Research (CHR) at the School of Hotel Administration pins down the corrosive effects of negative employee attitudes on hospitality employee turnover. The CHR also makes available a tool that allows hotel operators to take advantage of a new approach to pricing hotel room reservations.

Cornell Report Highlights the Effects of Employee Attitudes on Turnover
Hospitality managers have long suspected that there’s a connection between the industry’s high turnover and employee attitudes. A new report from the Cornell Center for Hospitality Research focuses on how that connection works. The report has found that co-workers’ attitudes over time play a large role in whether a person leaves or not. The study, “The Contagion Effect: Understanding the Impact of Changes in Individual and Work Unit Satisfaction on Hospitality Industry Turnover,” by Timothy Hinkin, Brooks Holtom, and Dong Liu, explains the results of a two-year longitudinal study examining the effects on employee turnover resulting from the change in individual and unit levels of satisfaction. The report is available at no charge from the CHR at

Hinkin is the Georges and Marian St. Laurent Professor of Applied Management at the Cornell School of Hotel Administration, Holtom is an associate professor at the McDonough School of Business at Georgetown University, and Liu is an assistant professor at the Ernest Scheller Jr. College of Business at Georgia Institute of Technology.

“We collected data from 5,270 employees in 175 locations of a diversified hospitality company,” said Hinkin. “One key finding was that when employees’ attitudes in a particular unit converge, it’s hard for a single individual to withstand that attitude. This can be termed a ‘contagion effect.’ So, as the work environment becomes more positive and overall satisfaction in the unit increases over time, fewer individuals leave their jobs. Even unhappy employees are lifted by a coherently positive environment.”

In contrast, when workers’ attitudes vary substantially, a general increase in satisfaction has little effect on an individual’s satisfaction or turnover plans. Hinkin and his co-authors advise managers to track changes in employee satisfaction over time and be aware of the variance or dispersion of attitudes. A group of employees whose level of satisfaction is simultaneously converging and declining is a sign of impending increases in turnover. In this situation, you’ll find that the best employees can always leave.

Cornell Room Pricing Tool Offers New Mechanism to Optimize Hotel Room Rates
A new report and tool from the Cornell Center for Hospitality Research presents a novel and valuable approach to pricing hotel room reservations. The report, “Optimizing Hotel Pricing: A New Approach to Hotel Reservations,” by Peng (Peter) Liu, discusses the dual nature of a hotel room reservation. The report explains the derivation for the new tool, “The Hotel Reservation Optimizer,” and also gives step-by-step instructions for its use. Both the report and tool are available at no charge from the Cornell Center for Hospitality Research.

“Even with many decades of experience with booking and reservations, managers in the hotel industry still face substantial challenges predicting future room demand,” explained Liu, who is an assistant professor at the Cornell School of Hotel Administration. “So gaining knowledge of the likelihood that the room will be occupied in connection with a given room reservation is valuable to the hotel. Thus, I have developed a tool that sets separate prices on the room and the option to use the room, based on the traveler’s estimate of the likelihood that the trip will occur.”

As explained in the report and as demonstrated in the tool, the value of the reservation increases as the traveler’s certainty of travel increases. At the same time, the room rate decreases according to likelihood that the traveler will actually occupy that room. This tool therefore provides a mechanism by which hotel managers can obtain more accurate information regarding future room demand and potential guests can gain a more favorable rate in exchange for revealing the critical information regarding their trip.

Based on Excel, “The Hotel Reservation Optimizer” allows hotel managers to analyze guests’ likelihood of stay. With this information, the hotel can focus its revenue management system more sharply and does not have to rely solely on historic ratios to predict room occupancy.