The response of hotel performance to international tourism development and crisis events

This study uses panel regression tests to examine the response of hotel performance to international tourism development and crisis events in Taiwan. Hotel performance measures are revenue (revenue per available room and occupancy rate), profitability (return on assets and return on equity) and stock performance. The crises were the earthquake on September 21, 1999 (the 9/21 earthquake), the terrorist attacks of September 11, 2001 in the US (the 9/11 terrorist attacks) and the outbreak of Severe Acute Respiratory Syndrome on April 22, 2003 (the SARS outbreak). This study makes four major contributions. First, test results confirm that international tourism development (ITD), proxied by the growth of total inbound tourist arrivals, has a more direct influence on hotel sales and profitability than it does on hotel stock performance. Second, this study identifies that the absence of a strong tie between ITD and hotel stock returns that was found in previous studies is due to the time-varying discount rate caused by investors’ changing expectations for the prospect of future cash flows from holding hotel stocks. Third, this study finds new evidence that while the poor performance of hotel stocks caused by the 9/21 earthquake and the 9/11 terrorist attacks was attributed to the loss of hotel sales revenue, the adverse effect of the SARS outbreak on hotel stock returns is attributed not only to decreased hotel sales revenue but also to the increased discount rate. Lastly, this study is the first to investigate whether the response of hotel stock returns to ITD depends on the state of economy and concludes that the response of hotel stock performance to ITD in business cycle contraction is statistically different from that in business cycle expansion. Further, although the influence of ITD on hotel stock performance is still irrelevant during expansion periods, ITD can significantly enhance hotel stock returns during contraction periods.     

Does gender diversity matter to hotel financial performance?

This study examines the effects of executive gender diversity (EGD) and board gender diversity (BGD) on hotel financial performance in China based on the framework of the gender role, agency, and resource dependence theories. This research documents a negative effect of EGD and no significant effect of BGD on hotel financial performance. Moreover, the effect of EGD on hotel financial performance captured by return on equity (ROE) exhibits a U-shaped curve, with the profitability measure bottoming out at 21%. Our analysis also shows that a critical mass of 40% of EGD serves as a positive moderator for the EGD-ROE relationship. Beyond this point, gender-balanced executive groups evade negatives rooted in the gender role theory, enjoy positives drawn in the agency and resource dependence theories, and generate superior financial performance compared to all-male executive groups. This research offers important implications for human resource management and policy and regulation formulation.     

Pricing determinants in the hotel industry: Quantile regression analysis

Due to the skewed distribution of hotel prices, quantile regression provides a more flexible and complete characterization of the determinants of the hotel prices at the higher and lower tail of the distribution. This study applies quantile regression approach to investigate the major determinants of hotel room pricing strategies. The ordinary least square regression is also used for comparative purposes. The data are drawn from 58 international tourist hotels in Taiwan and average room rate (ARR) is used as the proxy of hotel room price. The results of OLS and quantile regression share common characteristics but also have differences in some aspects. The OLS results reveal that number of rooms, hotel age, market conditions and number of housekeeping staff per room are the main attributes of hotel room rate. The quantile regression results further demonstrate that room number and the number of housekeeping staff per guest room do not significantly influence hotel price at the low price quantile. Hotel age and market conditions are only significant determinants in high-price category. Additionally, for the high-priced quantile hotels, the proportion of foreign individual travellers positively and significantly influences room price. The empirical results can help hoteliers in shaping investment and pricing strategies.     

Understanding the impact of changes in consumer confidence on hotel stock performance in Taiwan

This study contributes to the hospitality literature by providing a comprehensive investigation of the effects of changes in consumer confidence (ΔCCI) in Taiwan on hotel stock performance, including hotel sales growth (ΔSALES), hotel stock returns (HSR) and the perceived riskiness of stock cash flows from holding hotel stocks (proxied by the risk of hotel stock returns (RISK)). Empirical test results reveal that ΔCCI can significantly benefit HSR by stimulating hotel sales growth and by lowering the perceived riskiness of hotel stock cash flows. Quantile regression tests demonstrate that among six economic variables, only ΔCCI can consistently and significantly affect HSR, ΔSALES and RISK at all different quantiles. Changes in consumer confidence are also found to be significant in helping the prediction of HSR, ΔSALES and RISK. Specifically, an increase in ΔCCI can cause an increase in HSR and ΔSALES and a decrease in RISK.     

Board diversity and firm performance in the U.S. tourism sector: The effect of institutional ownership

This study examines the relationship between board diversity and firm performance in the U.S. tourism sector by using institutional ownership as a contingency that moderates this relationship. The study's sample includes publicly-traded companies from the U.S. restaurant, hotel and airline industries. The hypotheses are tested via two-way fixed-effects regression, and the findings of the study indicate that board diversity is positively associated with financial performance (Tobin's Q), and the effect of board diversity on performance is contingent on the degree of institutional ownership. More precisely, the study finds that board diversity has a larger effect on financial performance when institutional ownership is low on a tourism firm's ownership structure. Overall, the findings suggest that boards' internal control and monitoring on management is important to derive higher financial performance, and even yet it is more important when external monitoring by institutional owners, proxied by percentage of institutional ownership, is weak.     

The impact of insider managerial ownership on corporate performance of Taiwanese tourist hotels

This study examines the impact of insider managerial ownership on financial performance of publicly traded tourist hotels in Taiwan. Insider managerial shareholding (IMS) includes two different classes of owners: managers and directors (i.e., managers’ shareholding [MAS] plus directors’ shareholding [DIRS]). The indicators of financial performance under consideration are return on assets (ROA), return on equity (ROE), stock return (SR), and Tobin's Q. In addition to analyzing total insider managerial ownership (IMS), the study splits IMS into two components (MAS and DIRS) and examines each of them, separately. Subsequently, panel regression tests examine the effects of IMS, MAS, and DIRS on financial performance of Taiwanese tourist hotels. Test results suggest that IMS explains ROA, ROE and Tobin's Q, but not SR. Further, compared to MAS, DIRS has a more significant impact on hotel performance. Specifically, an inverted U-shape represents the effects of IMS and DIRS on hotel performance (ROA, ROE and Tobin's Q), indicating that both IMS and DIRS have a significantly positive impact on hotel performance up to an optimal point (supporting the convergence-of-interests hypothesis). Further, when IMS and DIRS are greater than their corresponding optimal points, these two factors can significantly deteriorate hotel performance (supporting the entrenchment hypothesis).     

Market diversification and financial performance and stability: A study of hotel companies

The primary objective of this study was to investigate the effect of a diversification strategy by hotel companies on corporate financial performance and stability. Using 36 publicly traded hotel companies, this study analyzed the differences in financial performance and stability between market-diversified and undiversified hotel companies. Accounting measures, market measure, and risk-adjusted performance measure were employed to gauge financial performance. The results of this study indicated that diversification strategy does not provide profit growth, but diversification partly improves the stability of performance. This study supported the nature of the trade-off between financial performance and stability in the company diversification, and also implied that the market diversification strategy by hotel companies does not function as a means to improve financial performance.     

Effects of psychological contract breach on attitudes and performance: The moderating role of competitive climate

The performance of hotel employees is an important driver of customer satisfaction, which in turn affects hotels’ financial outcomes. Hotel managers should encourage their staff to deliver quality service and should inspire them to perform their best. This study advances a multilevel model that draws connections among competitive climate, organizational identification (OID), job performance, affective commitment (AC), and psychological contract (PC) breach from a sample of hotel staff. The results indicate that (1) PC breach is negatively related to OID and AC, (2) OID and AC have a significant positive relationship with job performance, and (3) competitive climate at the organizational level moderates the effects of OID and AC on hotel workers’ in-role performance. These results offer valuable implications for managers to produce more efficient hotel human resource management techniques.     

Enhancing customer-based brand equity through CSR in the hospitality sector

ABSTRACT

Corporate social responsibility is considered an important element in the development of brand equity. Extant research in this context is mainly focused on the relationship between this corporate philosophy and financial performance, overlooking its potential to develop competitive advantages through brand equity dimensions. The aim of this research is to explore the impact of socially responsible aspects on hotel brand equity. To test the proposed model personal surveys of hotel customers were conducted. A structural equation model was developed to test the research hypotheses. The findings show that corporate social responsibility has positive effects on brand image, perceived quality, brand awareness, and brand loyalty.     

Failure of play on asset disposals and share buybacks: Application of game theory in the international hotel market

The principal purpose of this study has been to investigate the impact of an asset disposal strategy, often coupled with share repurchase programs, by international hotel companies on financial performance, earnings stability and share values. Utilising ratio analysis, stock returns and risk-adjusted measures, the study analyses the differences in performance, stability and market valuations between asset light and more capital intensive hotel companies. The findings of the study indicate negligible differences in most accounting measures of earnings growth and stability between asset light hotel companies and traditional hotel companies with significant holdings of owned or leased property. Drawing on game theory, we conclude that international hotel companies dispose of their assets in an effort to manipulate financial markets and make their stocks more attractive to investors and traders. Notwithstanding the absence of significant differentiation in accounting measures of performance fundamentals, market based measures show that hotel groups failed in the aim of manipulating financial markets. This study recommends avoiding playing this game as dual asset light/share repurchase strategy generated superior risk-weighted returns to that of more capital intensive traditional hotel companies across the period of the study.     

Does Triple Bottom Line reporting improve hotel performance?

Triple Bottom Line (TBL) reporting is a comprehensive approach to achieve sustainability as it integrates reporting on environmental, social and financial issues. While society is pushing hotels to increase their commitment to TBL reporting, opinions are divided as to whether TBL reporting affects hotel performance. The present study uses the Data Envelopment Analysis (DEA) method to address this important question. Our results, based on a sample of Slovenian hotels, support the hypotheses that more extensive reporting on environmental, social and financial issues lead to better hotel performance. We show that reporting on environmental issues has a slightly higher impact on performance than reporting on social and financial issues. We discuss the implications of the study and provide directions for future research.     

Modelling growth and revenue for Swedish hotel establishments

This paper provides first estimates of the determinants of output growth of Swedish hotels based on establishment data. Growth of overnight stays is modelled as a function of initial size, age, type of accommodation, location and hotel prices measured as average revenues per guest nights. The empirical model accounts for potential endogeneity of hotel prices through the two-stage least absolute deviation model (2SLAD) and the instrumental variable quantile regression method. 2SLAD estimates show a positive and significant relationship between hotel prices and subsequent growth. The relationship is nonlinear with a decreasing impact as the price level increases. Growth of establishments is significantly higher for smaller and younger hotels. An important result is that city hotels, in comparison to tourist and other hotels – which are mainly located outside urban areas (in the mountains and at the sea) – exhibit significantly higher growth rates with a gap between 2.2 and 3.4 percentage points. Furthermore, the positive impact of hotel prices on growth is larger for high-growth establishments. Accommodation prices significantly decrease with the number of local competitors with a non-linear form and increase with size. City hotels and accommodation in the capital city have the highest revenues per guest night.     

Key drivers of innovation capability in hotels: implications on performance

Innovation capability is critical for the modernization and competitiveness of the hotel industry. This work analyzes the role of hotels' innovative culture, market orientation, and internal marketing as forerunners of innovation capability in hotels, as well as the effect of innovation capability on hotels' performance. The proposed conceptual model is evaluated through structural equation modeling using a sample of 256 Spanish hotels. The results reveal that innovative culture by itself is not a key driver of the hotels' innovation capability. However, internal marketing and market orientation mediate the innovative culture-innovation capability relationship. Innovation capability proves to enhance hotels' market results directly and indirectly through customer equity. Our findings offer hotel managers useful guidance to understand how innovation capability is built within the firm by combining the right organizational culture and practices. Additionally, our study reinforces the financial and non-financial benefits of innovation capability in hotels.     

Hospitality Cobranding: An Experimental Investigation of Enhancement and Erosion in Consumer-Based Brand Equity

ABSTRACT

Cobranding is suggested as a competitive strategy for the hospitality industry due to its potential benefits. Although implied, the potential impact of cobranding on consumer-based brand equity of partner brands and the composite brand has not been empirically investigated in the hospitality industry context. Therefore, a quasi-experimental study design with a structured survey was applied to general tourist population in Hong Kong to identify the potential influence of cobranding on the brand equity of individual brands as well as the hotel–restaurant composite brand versus the hotel–retail composite brand. Surprisingly, results revealed brand equity erosion rather than brand equity enhancement for even the presumably fit hotel, restaurant, and retail brands. Theoretical and managerial implications and suggestions for future research are discussed.     

Enhancing business performance of hotels: The role of innovation and customer orientation

Innovation management and customer orientation have been widely recognized as key factors in enhancing the business performance of hotels. Our research investigates the interplay between customer orientation, innovation, and business performance in the Alpine hospitality industry. The study contributes to current innovation research by jointly investigating hotel innovativeness and innovation behavior as two distinct dimensions of the innovation concept. Analyzing data from 203 hotel managers, this study shows that the effect of hotels’ customer orientation exceeds the effects of innovativeness and innovation behavior on financial and non financial business performance. Mediation analysis shows that innovation behavior partially mediates the effect of customer orientation on business performance. The results of the study provide hotel management with relevant insights into the customer orientation innovation performance chain.     

The impact of corporate charitable giving on hospitality firm performance: Doing well by doing good?

While corporate charitable giving (CCG) may have a positive or negative effect on corporate performance (based on value enhancement theory and agency cost theory, respectively), CCG could also have no impact at all. This article tests the extent to which CCG can influence corporate performance of Taiwan's publicly traded hospitality companies. The variable of CCG is defined as the ratio of the total value of corporate giving to total sales revenue. The measures of corporate performance are profitability (return on assets and return on equity), stock performance and Tobin's Q. Panel regression test results reveal that CCG can affect all measures of corporate performance except for stock return. In particular, the impact of CCG on return on assets, return on equity and Tobin's Q is an inverted U-shape, implying that an increased CCG can enhance corporate performance, but as the level of CCG reaches its optimal point, an increase in CCG could have a negative influence on corporate performance. Empirical test results can offer valuable managerial insights for the hospitality industry.     

酒店市场营销:花得越多越好?

本文使用史密斯旅游研究(Smith Travel Research,STR)提供的酒店数据来探寻市场营销开支对酒店将来财务效益的影响.根据荻取的结论,我们有3大发现:1)市场营销支出对酒店一年后财务影响的边际效应呈递减分布;2)在个体酒店这个层次,总经营利润(gross operating profit)、纯经营利润(net operating income)以及总销售(revenue)有很强的自我预测性;3)对总经营利润、纯经营利润以及总销售的构成作进一步分析可以获得更好的预测效果.     

Becoming an ambidextrous hotel: The role of customer orientation

Because competitive pressure in the hotel industry continues to increase, hotels have to develop service innovation (i.e., exploration) and service improvement (i.e., exploitation) capacities to become ambidextrous for continually creating customer value. In this study, a theory of the effect of customer orientation on service innovation and service improvement, which facilitates service quality and results in better market performance, was developed and investigated. By analyzing the data provided by senior executives and department managers from 126 hotels in Taiwan, both service innovation and service improvement were revealed to partially mediate the relationship between customer orientation and market performance. The results imply that customer orientation affects the market performance of a hotel through the development of service capabilities, and that customer orientation can transform a hotel into an ambidextrous hotel by concurrently developing service innovation and service improvement capacities.     

Hotel Guest Satisfaction and Brand Performance

ABSTRACT

The value and significance of guest satisfaction, brand management, and franchising in the hotel industry have been well documented and researched as independent topics. While previous research has suggested that franchising has an overall negative effect on hotel quality, it has rarely investigated the important links between hotel brand performance and guest satisfaction, and the role of brand franchising strategy in the relationship between hotel brand performance and guest satisfaction. This study examines the relationships among guest satisfaction, revenue performance and growth, and franchising strategy at the hotel brand level. Results indicate that guest satisfaction is a key to brand growth, while the positive effect of guest satisfaction on brand revenue performance is moderated by the extent of franchising within each brand.     

Direct and indirect contribution of HRM practice to hotel company performance

The research problem is the measurement of direct and indirect HRM contributions to hotel company financial performance. The theoretical multi-level model developed in this paper is based on Resource Based View theory, the Motivation–Ability–Opportunity framework and a universalistic, contingency and configurational approach to measurement relationships. It investigates whether HRM results measured at an individual level (employee engagement, skills, attitudes and behaviour) and at an organisational level (consequences of employee loyalty) mediate in the link between HRM practice (quantitative and perceived data) and hotel company financial performance and whether hotel company ownership and size are moderating the link. Data was obtained from HR managers and employees in hotel companies in all regions of Croatia. The results suggest the key HRM activities which make the largest contribution to employee engagement, skills, attitudes and behaviour, loyalty and hotel company financial performance. Management implications of the results are discussed and avenues for further research are proposed.