infonet-economy

Hotel are increasingly owned by one entity and operated under management agreement by another. The split between owners and operators poses potential agency problems as the two entities are often interested in conflicting objectives and the operator may not always take decisions in the owner’s best interest. The hotel general manager, meanwhile, is tasked with satisfying both parties’ objectives. This study investigated how owner-operator goal alignment, and the ensuing impact on GM autonomy, influences hotel performance. We surveyed matched pairs of owners (or their asset manages) and operators (their GMs). We found that while autonomy and alignment are both highly correlated to hotel performance, autonomy does not moderate or mediate the impact that alignment has on performance. Hotel owners and operators who have found a way to align their goals have thus demonstrated that such alignment can result in better hotel performance.