The moderating role of brand diversification on the relationship between geographic diversification and firm performance in the US lodging industry

In spite of the prevalence and strategic importance of diversification for US lodging firms, research on the effects of diversification has been insufficient in the hospitality literature. Especially, an examination of the moderating effect of brand diversification on the relationship between geographic diversification and performance of US lodging firms has been lacking in the literature in various disciplines, including hospitality field thus far. This study aims to first investigate the individual effect from each of brand and geographic diversification strategy on firm performance in the US lodging industry. Further, to investigate effects of diversification comprehensively, this study examines the moderating effect of brand diversification on the relationship between geographic diversification and performance of US lodging firms. The study's results indicate a positive and significant effect of geographic diversification on firm performance, an insignificant effect of brand diversification, and a positive and significant moderating effect of brand diversification in the US lodging industry.     

The influence of board interlocks on firm performance: In the context of geographic diversification in the restaurant industry

Given the strategic importance of resources and service that interlocking directors bring to a firm, this study aims to examine the influence of board interlocks on financial performance in the restaurant industry based on the resource dependence theory. Further, as the primary purpose, this study incorporates geographic diversification as a pivotal contingent factor, playing a moderating role on the board interlocks-firm performance relationship. This study found not only a positive main effect of board interlocks on financial performance, but also a positive moderating effect of geographic diversification on the relationship between board interlocks and firm performance. These findings contribute to the corporate governance literature by providing a unique dimension that geographic diversification is a salient factor adjusting the effect of board interlocks on firm performance in the restaurant industry. The results further offer implications for managers and shareholders of restaurant firms when electing directors as representatives of shareholders.     

Effect of diversification on firm performance: Application of the entropy measure

This study investigated the effects of diversification on firm performance in the restaurant industry. In prior studies, the theoretical rationales and empirical results appeared to contradict each other. These contradictory results may be due to factors such as industry-specific characteristics or a linear understanding of the relationship between diversification strategies and firm performance. Thus, this study suggested a non-linear hypothesis based on the costs and benefits of diversification strategies with businesses categorized based on their level of diversification. The results of this study showed that restaurant firms do not benefit from a low level of related diversification. This study also found that when restaurant firms are involved in both related and unrelated businesses, the optimal mixed ratio of diversification is approximately half and half. More detailed results, as well as academic and practical implications, are discussed in this paper.     

Inter-relationship between firm growth and profitability

There is a widespread presumption that there is a close link between firm growth and profitability. However, most of the past studies on firm growth and profitability have been conducted without mutual associations. Only a few studies, thus far, have scrutinized the inter-relationship between firm growth and profitability and the results have been inconsistent. The main reason for this inconsistency is due to the lag structure of the models in each study. To address the issue, this study conducted panel unit-root tests on firm growth and profitability separately and then made appropriate models using dynamic panel system GMM estimators. Through analyzing these models, this study found that in restaurant firms the prior year's profitability had a positive impact on the growth rate of the current year. However, the current and prior year's growth rates had a negative impact on the current year's profitability. This outcome implies that in the restaurant industry profit creates growth but growth impedes profitability. Further implications are also discussed in this paper.     

Impacts of geographic diversification on restaurant firms’ risk: Domestic vs. international diversification

In the hospitality context, the diversification literature has evolved to mostly focus on the impact of diversification on firm performance. However, without accounting for risk, the effect of diversification on firm value likely provides an incomplete picture. Therefore, this study investigates the influence of domestic and international geographic diversification on restaurant firms’ risk. This study uses the Berry-Herfindahl Index to measure the degree of domestic and international geographic diversification. Findings show a non-linear relationship between geographic diversification and restaurant firms’ risk. However, different shapes of the non-linear relationship are revealed between domestic and international geographic diversification and between operational and market-based risk. The results of this study indicate that the risk-reduction effects argued from the modern portfolio theory may be partially applicable to the geographic diversification for restaurant firms, suggesting a different view toward financial diversification and corporate diversification.     

Duration of advertising effect: Considering franchising in the restaurant industry

How long do the effects of advertising actually last? This issue has received increased attention in the fields of marketing, accounting, and finance. However, despite the importance of advertising for firm management, research on the effective duration of advertising costs still remains in the exploratory stage. To address this research need, this study investigated how long advertising costs function to increase sales and intangible value in association with franchising in the restaurant industry. The results of this study showed that advertising expenditures had a positive short-term effect on sales growth, whereas advertising did not significantly impact sales growth in the long run. However, when advertising expenditures were considered together with franchising, the long-term interaction effect was positively significant. The results suggest that advertising has long-term positive effects on sales growth only in restaurant firms using a franchising system. This implies that advertising costs should be recognized as investment-like assets only in franchising restaurant firms. On the other hand, advertising ratio had both positive short-term and long-term effects on intangible value. In addition, once the advertising ratio was associated with franchising, the long-term interaction effect was negatively significant. More detailed explanations and implications are included in the conclusion.     

The effects of product diversification on firm performance and complementarities between products: A study of US casinos

In spite of the growing importance of product diversification strategy and the existence of varying degrees of product diversity in the US casino industry, research of the effect of product diversification on firm performance has been sparse. By examining the impact of the degree of product diversification on both financial market- and accounting-based firm performance of sampled US casinos and complementarities between products, this study attempts to fill the gap in the hospitality literature. Results of this study show an inverse U-shaped relationship between the degree of product diversification and firm performance and complementarities between gaming business and food and beverage (F&B) business. These findings suggest that US casinos take into account both costs and benefits associated with product diversification, and consider F&B operations more preferentially as a supplementary business when implementing product diversification strategy.     

Effects of restaurant franchising: Does an optimal franchise proportion exist?

Franchising has significantly affected the US economy, contributing to a rapid growth of its retail sales. To identify whether franchising influences a restaurant firm's financial performance, this study investigated (1) the profitability and intangible values of both franchise and non-franchise restaurant firms and (2) the effect of the combination of franchised and company-owned outlets of restaurant firms (i.e., franchise proportion). The results of this study showed that (1) franchise firms had significantly higher profitability than non-franchise firms and (2) the relationships between franchise proportion and firm profitability and intangible value were curvilinear (inverted U-shape), verifying the existence of an optimal franchise proportion. The results propose a possibility that restaurant franchisors could maximize their profitability and intangible value with an optimal franchise proportion when other variables held constant, implying that it is important to pay attention to the franchise proportion together with other management strategies.     

Tour operators and performance of SME hotels: Differences between hotels in coastal and inland areas

This paper studies the differences in the impact of global tour operators on the management and performance of hotels in coastal and inland areas. The empirical analysis is based on a survey conducted in 2016 on 375 Spanish SMEs operating in the hotel industry. A multi-group comparison analysis was carried out using Partial Least Squares (PLS) structural modelling. This analysis reveals that dependence on global tour operators has a direct effect on the conditions under which hotel services are provided (room rates and quotas) both in coastal and inland areas. Nevertheless, the pressure from tour operators is significantly stronger on hotel SMEs located in coastal areas, where it has a negative effect on profitability, in spite of having a positive influence on firm growth (sales and employment).     

The effect of tourism investment on tourism development and CO2 emissions: empirical evidence from the EU nations

Abstract

The objective of this study is to investigate the effect of tourism investment on tourism development and CO₂ emissions in a panel of 28 EU countries using annual data from 1990 to 2013. The empirical results from a panel cointegration test confirm the presence of long-run equilibrium relationship among the variables. The long-run elasticities indicate that tourism investment has a significant positive and negative impact on tourism development and CO₂ emissions, respectively. Finally, the short-run heterogeneous panel non-causality test results show the evidence of bidirectional causality between tourism investment and tourism revenue. These results therefore suggest that tourism investments not only increase tourism revenue but also reduce CO₂ emissions. Given these findings, we suggest the policy makers of the EU nations to initiate more effective policies to increase the tourism investments. The increasing tourism investments will allow the industry to grow further by ensuring sustainable tourism development across the EU member countries.     

Can tourism be a key sector in reducing income inequality? An empirical investigation for Turkey

The aim of the study is to investigate the nexus between tourism and income inequality by employing the Autoregressive Distributed Lag (ARDL) test cover the period 1974–2015 in Turkey. Findings indicated that the variables are cointegrated and an increase in tourism has a positive effect on income inequality, while economic growth and trade openness have a negative effect both in the long-run and short-run. Results also denote that tourism will decrease income inequality with the expansion of tourism activities and the spread of tourism throughout society. In other words, the tourism-related Kuznets Curve hypothesis is valid for Turkey.     

An empirical study of inbound tourism demand in China: a copula-GARCH approach

This paper proposes new models for analyzing the volatility and dependence of monthly tourist arrivals to China applying a copula-GARCH approach. A desegregation of the top six origins of China inbound tourists from the period January 1994 to December 2013 is used in this study. The empirical results show that there is a strong seasonal effect in all cases and ?????? some habit persistence on monthly tourist arrival growth rate for South Korea, Russia, the United States (US), and Malaysia. Second, the volatilities of arrival growth rates to China are impacted significantly by their own short- and long-run effects, except for Russia and South Korea. Only short-run shock affects Russian arrivals while only long-run shocks are affecting South Korea arrivals. Third, the conditional dependence among different source countries is found to be positive and significant, but the conditional dependence for all considered pairs is low. Moreover, there is extreme co-movement (tail dependence) between the six major tourism source countries, suggesting the pairwise of international tourist arrivals shows a related increasing or decreasing pattern during extreme events. Implications are discussed and recommendations provided.     

Have restaurant firms been using right recession turnaround strategies?: Evaluating with propensity score measure

Among the diverse strategies that restaurants use in recessions, some studies have shown that strategies that increase advertising, profit margins, or asset turnover have yielded promising results in terms of firm performance. However, the success of these turnaround strategies might be due to the health or size of a firm rather than the implementation of these strategies. Therefore, this study empirically tested this question utilizing the propensity score measure (PSM) due to concerns with selection bias across restaurant segments. The results showed significant improvements in revenue for limited-service and franchise restaurants when aggressive advertising was used but no improvements in profitability. The profit margin strategy had no impact on revenue but affected profitability and stock returns positively for all segments. Finally, the asset turnover strategy had adverse effects on revenue the year after a recession for all segments. These mixed results suggest that managers need to be cautious when implementing recession turnaround strategies.     

Product diversification and property performance in the urban lodging market: The relationship and its moderators

In this study, we investigate the relationship between product diversification and hotel property performance as well as the moderators of this relationship in the urban lodging market. Using stochastic frontier analysis with panel data, we calibrate the efficiency scores of 377 urban hotels in Beijing from 1994 to 2005. We then investigate the impact of product diversification on performance as measured by efficiency score. Results from panel data models indicate that the degree of product diversification exhibits a positive relationship with hotel performance. Hotel location, diversification expansion rate, and foreign ownership/operation are found to be significant moderating factors determining the effect of product diversification. Specifically, hotels that (a) are located farther from the city center, (b) expand diversification more slowly, and (c) are domestically owned are more likely to leverage the benefits stemming from product diversification. We provide a series of practical evaluation modules to help hoteliers improve performance.     

Corporate social responsibility and systematic risk of restaurant firms: The moderating role of geographical diversification

Despite growing attention to corporate social responsibility (CSR) in the tourism literature, the relationship between CSR activities and systematic risk, one of the critical components in evaluating shareholder value, has been a topic of scarce examination. Further, the moderating role of geographical diversification on the link between CSR and systematic risk in the restaurant context has not been studied. Therefore, the current study explores these issues in the restaurant context based on the organizational theory and stakeholder theory. In addition, this study dichotomizes CSR activities into two dimensions, socially responsible activities (i.e., positive CSR) and socially irresponsible activities (i.e., negative CSR), to examine the separate effects of the two dimensions. A two-way fixed-effects model that effectively accounts for unobserved effects in a panel data set has been employed to test the proposed hypotheses.     

旅游业上市公司多元化经营能够降低公司风险吗？——基于2004—2012年A股上市公司数据的实证研究

我国的旅游业上市公司普遍存在进入房地产业、高新技术产业等行业的多元化经营现象。国内外学者对多元化经营与公司风险之间的关系展开了一系列的研究,但是没有得出一致的结论。截至目前,对旅游类企业多元化经营能否降低公司风险的研究仍较为欠缺。因此,文章以2004—2012年国内23家A股旅游业上市公司1的184个截面数据为样本,利用多元回归分析法检验了旅游业上市公司多元化经营对其公司风险的影响。旅游行业自身的行业特征及其多元化特点使得针对旅游业上市公司多元化经营行为的分行业研究产生了与以往整体层面的研究截然不同的结论：旅游业上市公司多元化经营能够降低公司的财务风险,但无法降低公司的经营风险。进一步对多元化类型进行区分后发现：旅游业上市公司相关多元化水平的提升可以显著地降低公司的财务风险,但无法显著地降低公司的经营风险;而非相关多元化水平的提升无法显著地降低公司的财务风险与经营风险。基于上述研究成果,文章从促进融资体系多元化、完善主业发挥自身优势、谨慎选择多元化行业3个角度对旅游业上市公司的多元化发展提出了建议。     

Impact of customer-to-customer interactions on overall service experience: A social servicescape perspective

Utilizing the appraisal theory, this study proposes a dynamic and sequential customer future interaction intention model that deconstructs customer-to-customer interactions and illustrates how customer-to-customer interaction experience perceptions are formed and how those perceptions may influence customers overall experience evaluation and their future interaction intentions. The model was tested using data from a sample of 460 casual restaurant consumers. Of the three dimensions of interaction, functional interaction only exerts influence on RELATE; hedonic interaction impacts both SENSE and RELATE; expressive interaction influences THINK, SENSE and RELATE. Further, SENSE and RELATE are positively related to FEEL, while THINK has no significant effect on FEEL. FEEL impacts customers’ overall experience evaluation, which has positive influence on approach ACT and negative influence on avoidance ACT.     

The relationship between board diversity and firm performance in the lodging industry: The moderating role of internationalization

Following the emphasis on board diversity and its roles on firm performance, an examination on the relationship between board diversity and firm performance in the lodging industry is conducted. Further, this study employs internationalization, a moderator, to more comprehensively investigate the board diversity-firm performance relationship. This study found that gender diversity shows a positive and significant effect on firm performance while age diversity has an insignificant effect on firm performance. Regarding the moderating effect of internationalization, the degree of internationalization significantly magnifies the effect of gender diversity on firm performance but insignificantly moderates the effect of age diversity on firm performance. This study attempts to contribute to the hospitality and tourism literature by examining the topic that has been rarely dealt with and provide practical guidelines for stakeholders of a lodging firm especially when selecting board members.     

Health care and tourism: Evidence from Singapore

This research note analyses the role of the health care sector in international tourism and the impact of international tourism on the state of health care in Singapore. The results suggest that there is a long-run unidirectional causality from health care to international tourism. The effect of health care on international tourism is positive. However, in the short-run, the results also indicate that there is no causality between these two variables. It is concluded that the current efforts of the Singaporean government to establish Singapore as a leading medical hub will attract more inbound tourists in the long-run.     

Growth-focused or profit-focused firms: Transitions toward profitable growth

Profitable growth is the most desirable state tourism and hospitality firm managers can hope to achieve. In reality, however, it is not easy for a tourism and hospitality firm to consistently grow and accumulate profits. In order to achieve profitable growth, some firms focus on sales growth while victimizing profits, while others concentrate on profits and hold off on growth. To better understand these strategies, this study investigated the growth state, profit state and transitions of restaurant firms. The findings of this study supported that profit-focused firms are more likely to achieve profitable growth than growth-focused firms. In addition, growth-focused firms with low liquidity had a higher likelihood of transitioning to a state of low growth and low profit in the short-term, and this liquidity effect was more serious for small firms in terms of long-term performance. Further, when profit-focused firms had few growth opportunities, large free cash flows increased the likelihood of transitioning to a state of low growth and low profit in the short-term. More detailed results are provided in this paper.