Does hotel class moderate the impact of crime on operating performance?

Abstract

Hotel guests are more likely to be targeted by criminals than local residents, and the hotel business is particularly vulnerable to various crimes. This study investigates whether guests prefer to stay at luxury hotels when in insecure neighborhoods to reduce the risk of victimization. Using monthly property-level data from 352 hotels between 2010 and 2014 in Houston, Texas, we estimate a series of econometric models to investigate the impact of crime. Results suggest that hotel class moderates the effect of crime on lodging performance, and high-end hotels are less influenced by crime incidents. For luxury hotels, this effect is further moderated by the lodging market structure of vicinity such that the effect is smaller for luxury hotels in a more concentrated market. Lastly, this study carefully addresses theoretical implications that confirm the routine activities theory framework as well as practical implications that suggest measures and strategies handling various impacts related to crime and hotel class studied herein.