When a group of researchers looked into the relationship between managers of branded hotels and their brand representatives, they found mixed news regarding undesirable opportunistic behavior. On balance, the news was good, because the frequency of bad behavior was relatively low overall. However, when the researchers compared the amount of opportunistic behavior at 49 brand-owned hotels with that of 247 hotels owned by a third party, there was actually more bad behavior at the brand-owned hotels.
That was a surprise, because the researchers’ expectation, based on other studies, was that direct brand-ownership would reduce managers’ inappropriate behavior. The opportunistic behavior that they examined involved seeking to achieve a personal goal of some kind by bluffing, lying, misleading, misrepresenting, distorting, cheating, misappropriating, stealing, or shirking contractual obligations. These actions damage a partnership, and studies have shown a clear link between opportunistic behavior and poor performance. The study, by James R. Brown, Anjala S. Krishen, and Chekitan S. Dev, is described in a new report from the Cornell Center for Hospitality Research (CHR).
Contrary to conventional wisdom, this study found that a brand’s hotel ownership alone doesn’t necessarily reduce opportunistic behavior or opportunism on the part of its management. Instead, the researchers found two situations that tend to limit opportunism in a brand-owned hotel. First, opportunism is reduced when the brand has created structures that make it relatively easy to monitor a hotel’s performance. Ironically, the other situation that limits hotel opportunism occurs when the brand is able to use its own opportunistic behavior against the hotel.
In another unexpected outcome, the researchers found that a third-party owner tends to stifle opportunism in the individual property. It appears that having another set of eyes on a situation tends to keep everyone on the straight and narrow. Consequently, one implication is that selling off owned hotels, as many brands are currently doing, is one way to lower opportunism and improve performance.
Finally, if all parties agree on a set of relationship norms or behavioral principles, opportunism is reduced on both sides of the partnership. By establishing strong norms of behavior, irrespective of the ownership, it becomes clear that opportunism toward brand headquarters will not be tolerated, and also allows everyone to see more clearly where their goals coincide.
In conclusion, even though opportunistic behavior seems to be a relatively small problem in the industry, it’s important to control even what little bad behavior exists, given all the interconnections between brands and their numerous affiliated hotels. Positive and mutually respectful behavior is essential for improving performance for all parties. The report describing this study, which is available at no charge from Cornell’s CHR, identifies strategies that can help create a mutually beneficial hotel-brand partnership. As a closing note, I want to express my appreciation to Cornell Professor Chekitan Dev for his assistance in preparing this essay.