Increasing the effectiveness of hotels' investments: How to avoid throwing good money after bad

Abstract

This article suggests ways to enhance the effectiveness of hotels' investments in special projects and new initiatives. Specifically, the article (1) reviews research findings that show managers across many industries often continue, or even increase, resource allocation to unprofitable courses of action; (2) reports the results of a case study with managers suggesting that this tendency may also be extensive in the hotel industry; (3) itemizes by relative importance 15 causal factors of escalation (e.g., managers' personal gain, inadequate accountability), and (4) suggests several ways for hotel managers to control the occurrence of suboptimal actions (e.g., using teams or consultants to evaluate projects).