Monday, March 26, 2012

Shirking at Hotels

A new paper by Matthew Freedman and Renáta Kosová titled, "Agency and Compensation: Evidence from the Hotel Industry" examines franchising as a way to motivate hotel managers to limit shirking by their employees. The money quote is actually from the travel magazine Budget Travel in which a housekeeper relates:
I cut corners everywhere I could. Instead of vacuuming, I found that just picking up the larger crumbs from the carpet would do. Rather than scrub the tub with hot water, sometimes it was just a spray-and-wipe kind of day… After several weeks on the job, I discovered that the staff leader who inspected the rooms couldn't tell the difference between a clean sink and one that was simply dry, so I would often just run a rag over the wet spots… I apologize to you now if you ever stayed in one of my rooms. You deserved better. But if housekeepers were paid more than minimum wage — and the tips were a bit better — I might have cleaned your toilet rather than just flushed it.

Since it is pretty difficult to monitor this behavior, you might want to use an incentive contract with employees. To get hotel managers to have a motive to implement such contracts, you might want to franchise the hotels. In a pretty carefully done study, Freedman and Kosová find that, relative to company owned hotels, franchise operations rely more on hiring practices characterized by low initial pay with more bonuses and more merit based pay.

6 comments:

  1. Room service food delivery from the kitchen is a standard hotel amenity, but not all hotels offer it 24 hours a day. Laundry service in which hotel staff take guests' garments to be cleaned is common in higher end hotels. A nightly turn down service in which the top part of the bedding is prepared for sleeping and a mint is placed on the pillow is a luxury amenity usually appreciated by guests. In accommodations that allows dogs, dog walking services are often available. Dog sitting and babysitting are other types of service-oriented hotel amenities.

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  2. You get what you pay for, and many times a customer wants the lowest price of room for location or reward loyalty, not necessarily the expectations of luxury housekeeping.

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  3. I totally agree. At New Harmony, I had black mold on shower curtains, walls, and floors. The housekeeper had reported it earlier, but management had not got around to fixing it. It took three different contacts to staff before they finally stated that they would have to replace the curtain and strip and re-caulk the shower walls and the floors. I told them to do it. I came back to the room and the shower was spotless. There was no incentive until I voiced the concern.

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  4. I'm sorry for your experience Reggie! Increased rivalry can force hotels to deliver a better and/or cheaper product. At New Harmony, a single hotel is pretty much the only show in town, so they probably didn't feel as much need to deliver superior service to differentiate themselves in that market. That, and the moral hazard of them already being paid for our stay, probably didn't help your cause.

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