Asking, ‘What’s in a name?’ William Shakespeare would add that what we call a rose would smell as sweet by any other name. But the hospitality industry may hold a different view. Hotels whose names are linked to a specific and distinctive brand will perform better on the tourist market, notes a recent paper in www.ssrn.com, titled Analysis of hotel names in Croatia as a tool of marketing strategy by Mario Plenkovic, Vlado Galicic and Vlasta Kuciš.

Through their names, these hotels create real preconditions for enhanced performance and increased sales of services, unlike other hotels appearing in the marketplace as independent hotels, with a stereotype name that is not distinctive, the authors reason. “Hotels, whose names represent a basis for creating a comprehensive tourism, cultural and gastronomic framework, are more successful in satisfying tourism demand.”

The paper finds that recognising a hotel’s name leads to a decision to buy its services, as it is easier for most guests to select a hotel whose name they have already heard somewhere before, than a hotel they have never heard of. “Recollecting the name of a specific hotel is also very important. Whether a guest remembers a certain hotel or not will significantly influence his/her decision to buy a travel package linked to the hotel.”

Important insights.

Intangible assets

Compared to most other industries, the hotel industry employs a greater proportion of intangibles, underlines Intangibles as future value creators: The case of the hotel industry, a recent paper by Mateja Jerman, Slavka Kavcic, and Bogdan Kavcic (www.ssrn.com). For starters, ‘intangible assets’ are identifiable non-monetary assets without physical substance; they are capabilities and ‘potential’ for future growth and income, as cited in the paper. Stating that the concept of intellectual capital is a broader aspect of intangibles — including human, structural and customer-relationship capital — the authors fret that there is still no generally accepted dividing line between the elements of intellectual capital and intangible assets.

One other hurdle that the authors face is that today’s accounting approach allows the recognition just of a smaller part of intangibles. Current accounting practice will have to accept a more dynamic accounting approach that will provide more information about the state of intellectual capital as a whole and not only the value of intangible factors that meet the criteria for their recognition, argue Jerman et al.

In the hotel industry, the human resources and customer satisfaction are of vital importance, but there is no information on this concern in traditional financial accounts, the authors rue, for instance. A further step forward they recommend is the disclosing of non-monetary measures that could provide more reliable information about the future growth potential of hotel companies. “This will undoubtedly be a challenge for the future accounting practice for hotel enterprises.”

Suggested study.

(This article was published on August 18, 2012)
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