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Arbitration: A Positive Employment Tool and Potential Antidote to Class Actions
Get PDFThe use of arbitration for employment and other workplace disputes has been the topic of much controversy. In examining various aspects of arbitration, this paper proposes arbitration as a fair and appropriate process for responding to employees’ workplace issues. The value of arbitration is notable, particularly considering the potential costs of litigation. Even considering Wal-Mart v. Dukes, the 2011 Supreme Court decision which tightened the requirements for certifying a class in a class action, employers are concerned that the expense or judgments resulting from litigation will put an entire company at risk. From the employees’ stance, a major argument against arbitration is the perception that the process favors employers. Indeed some statistics show that employers do win most arbitration cases. However, employers generally settle legitimate grievances when possible, leaving the questionable cases to emerge into arbitration or litigation. Another source of unfairness for employees is the difficulty of finding counsel for arbitration, but this occurs largely because less money flows through the arbitration process. In sum, the analysis presented here presents arbitration as the fairest, most economical, and speediest procedure to properly address employees’ complaints if a settlement cannot be reached
Communication Richness: Why Some Guest Complaints Go Right to the Top - and Others Do Not
No full textDespite everyone’s best efforts, restaurant service falls short at times. In those situations, guests perceive a service failure, and many complain. This study of 513 guests in three U.S. markets examines the guest characteristics that seem to drive the channel used for those complaints. Using a framework of media richness theory, the study found that guests who are more educated, more likely to complain, more frustrated, and in need of greater information about the service failure will typically take their complaint directly to management, either face-to-face or via written communication. On the other hand, those who are less educated or less frustrated will instead complain to line staff or use corporate guest-comment cards. Some of these findings appear not to support media richness theory, as face-to-face complaints are the richest channel (whether to line staff or management). However, it appears that for this sample of restaurant guests, the idea of taking it to the top (both in person or in writing) is important, particularly for frustrated, educated guests
Root Causes of Hotel Opening Delays in Greater China
Get PDFChina’s massive program of hotel construction has opened hundreds of properties with thousands of rooms—an unprecedented accomplishment that is projected to continue for the next two decades. The available development pipeline data indicate that at least three 150-plus-room hotels will be opened in China every day for the next 25 years. Because such a rate of hotel growth has never been seen before, the methods used to open these hotels must be focused and methodical. Given that many of these planned hotel openings have encountered delays, this report analyzes the nature and causes of these delays. Interviews of 81 professionals working at 15 hotel chains were assessed using Causal Chain Analysis. This process revealed a large set of proximate causes for those delays, including last-minute design changes, delays in appointing a contractor, and failure to acquire necessary permits. Deeper analysis of these causes revealed that a lack of understanding and adaptation of project management concepts and techniques were the root causes of these issues. As a consequence, this report recommends that major hotel management companies need to strengthen their project management capabilities if they hope to meet their ambitious China growth targets
Using Eye Tracking to Obtain a Deeper Understanding of What Drives Online Hotel Choice
No full textBooking a hotel online involves two major stages, namely, browsing and deliberation (followed by booking a hotel). A study that tracked 32 individuals’ eye movements as they worked on selecting a hotel to book found that during browsing, consumers quickly glance at many hotels (sometimes scrolling but often just taking the first screen) as they check the names and prices of available hotels. During this process, consumers apply personal heuristics to identify hotels that warrant further scrutiny. During the deliberation phase, consumers review more detailed information for the consideration set—usually no more than about seven properties—from which a purchase decision is made. During the browsing stage, consumers fixate primarily on firm-supplied information, including hotel name, images, price, and location, in addition to user ratings. Within the consideration set, consumers fixate most on images, closely followed by firm-provided descriptions. They also fixate on price and room offers, as well as user-generated ratings and reviews
Customer-Facing Payment Technology in the U.S. Restaurant Industry
No full textThe U.S. restaurant industry has so far been cautious in adopting electronic payment technology for customer use, but a survey of 385 U.S. restaurant operators suggests that this is about to change. Nearly all of the respondents were aware of customer-facing payment technology (CFPT), such as mobile wallets, tabletop boxes, and remote payment mechanisms, and nearly half of them expected to install such equipment in the next year or two. At the time of this survey, however, only one-eighth of the respondents had installed such technology. Potential benefits from allowing customers to pay electronically include faster settlement, less wait-staff time needed, greater security, improved customer satisfaction, reduced labor costs, increased revenue, and access to better customer data. Ironically, security is also considered to be a potential barrier. Other barriers include infrastructure issues, the cost of CFPT devices, the cost of integrating CFPT with existing POS and payment systems, the impact of reduced customer contact, and the fact that the CFPT industry is still highly fragmented. Survey respondents believed they were saving money with the new technology, but they also cautioned that any payment mechanism must synchronize with the POS system
Using Economic Value Added (EVA) as a Barometer of Hotel Investment Performance
No full textIn this report, we show how the popular and well known economic value added (EVA) technique can be used as a barometer of investment performance for hotels and other property types. Economic value added represents the return on a project in excess of its financing cost. The EVA metric complements traditional measures which analyze the spread between the cap rate and either the ten-year U.S. Treasury bond rate (riskless debt) or the BAA bond yield (risky debt). Although both RevPAR and EVA account for revenues, the primary advantage of applying EVA analysis (versus cap rate spread) is that EVA also considers the cost of equity financing (in addition to risky debt financing), which cap rate spread and RevPAR do not capture. Unlike cap rates, EVA incorporates investors’ risk premium. To demonstrate this metric, we show that the EVA spread on hotels reached its peak in the first quarter of 2004, at the start of the boom for hotels, while it hovered near zero during 2007, when hotel values reached their apex. The EVA spread then turned negative in the second quarter of 2008 as hotel values had already started to decline, and it continues to remain negative in general, coinciding with continued economic and property sector weakness. A negative EVA spread suggests that investors are buying properties with the expectation of upside potential arising from higher cash flow growth rates typically achieved through repositioning or renovating the hotel. We find evidence to suggest that once the EVA spread is below 1 percent, which is equivalent to a year-over-year change in RevPAR of approximately 1 percent, real estate practitioners should start to check whether the canary in the coal mine is still chirping, or whether their deal has expired
Third Quarter 2014: Hotel Prices Decline on a Year over Year Basis: Expect this Trend to Continue
Get PDFThe borrowing cost of debt financing continues to remain stable while equity financing has become relatively cheaper. We expect prices for hotel properties to fall slightly in the next quarter. This is not necessarily bad news since it will give operating performance as measured by EVA a chance to continue to increase vis-à-vis an increase in the cap rate, assuming that total borrowing cost remains stable or it becomes cheaper to borrow debt or equity money. This is report number 12 of the index series
Relative Risk Premium: A New “Canary” for Hotel Mortgage-Market Distress
Get PDFLenders’ evaluation of the hotel industry’s prospects can be assessed using a metric called the relative risk premium, which we introduce in this report. Similar to the canary in a coal mine, changes in the relative rates that lenders charge for hotel loans, as compared to those for office buildings, give an early warning of relative hotel loan delinquencies. This metric is based on the practice of lenders charging higher interest rates for hotel loans than on office buildings. The relative risk premium measure is defined as the interest rate on hotels minus interest rate on office buildings. Changes in this measure predict relative hotel loan delinquencies (delinquencies on hotel loans minus delinquencies on office building loans). Office loans are an appropriate benchmark to measure the relative health of hotel loans because office building occupancy has a relationship with the economy and with room-night demand. Spreads on hotel loans widen when lenders anticipate higher hotel delinquencies relative to offices and narrow during periods when relative delinquencies for hotels are expected to drop. We also find three other bellwethers for hotel delinquencies: an increase in the volatility of hotel REIT returns (risk), a negative shock to expected earnings forecasts (which signals lower expected future profitability), or an increase in unemployment. Interestingly, the converse situation doesn’t hold, and an increase in relative delinquencies is not useful in predicting a rise in the relative risk premium
Calculating Damage Awards in Hotel Management Agreement Terminations
Get PDFWhen a hotel management agreement is terminated without the consent of the manager, the law clearly allows the manager to recover damages (from the owner) as a result of the termination. In most cases, the owners and managers resolve their issues without litigation. For the substantial number that cannot agree and thus must be adjudicated, the courts have supported solid estimates of forgone fees for determining damage awards, based on careful, defensible calculations of the hotel’s performance during the prospective contractual period. The methodology outlined in this paper provides a way to establish with reasonable certainty the damages that occur from the involuntary termination of a hotel management agreement. While many hotel management agreements contain a liquidated damages clause that establishes the termination fee when the parties agree to terminate the contract, these liquidated damages clauses are not applicable in a situation where the hotel management agreement is terminated even though the manager has not breached the contract. This report provides a numerical example demonstrating that the actual damage amount is at least twice and potentially five times the amount of a typical termination fee. An analysis of recent court cases shows that the courts accept the methodology proposed here, although they may debate the assumptions that underlie the calculations (such as the anticipated inflation rate). What courts will not accept are unsupported estimates and certain expense claims not expressly found in the contract language