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.     

Two-dimensional mapping of Asia Pacific destinations combining tourism and economic indicators

The present study aims to cluster five Asia Pacific destinations (Cambodia, Hong Kong, Indonesia, the Philippines, and Singapore) with respect to other countries according to the evolution of the main tourism and economic indicators over the period between 2000 and 2014. By assigning a numerical value to each country corresponding to its position, we summarize all the information into two components (“tourism expenditure and profitability of tourism activity” and “tourism development and economic growth”) using different multivariate techniques for dimensionality reduction. By means of perceptual maps, we find that the five Asia Pacific destinations can be clustered into three different groups: Hong Kong and Singapore, which are the most mature markets; Indonesia and the Philippines, with moderate growth rates in most variables; and Cambodia, with top positions in all variables, showing a huge potential in terms of growth and tourism development and the challenges derived therefrom.     

The Otus theory of hotel demand and supply

The structural balance of an economy and the economic policies that influence its development are shown to be determinants of the volume and structure of hotel supply. Similarly, these features of an economy are also shown to be determinants of the volumes of domestic hotel business and leisure demand.     

The effect of hotel chain affiliation on economic performance: The moderating role of tourist districts

This paper offers a pioneering analysis of the impact that integration in different types of hotel chains has on firm performance, and the moderating effect of the tourist destination in this relationship. Studies in the literature examine both size and location independently, without reconciling the apparently contradictory trends of globalization and conservation of the local base. The aim of the research is to analyze the comparative effects on tourism firms’ performance of belonging to different types of hotel chains while maintaining the advantages of location in a tourist destination. Based on a study of 292 Spanish hotels, the authors test the proposed hypotheses using hierarchical regression analysis. The results show the advantages of non-equity chains over independent establishments. The study also finds a positive moderating effect of location in a district on the results yielded by belonging to a chain, whatever organizational form it takes.     

Gender and economic performance: Evidence from the Spanish hotel industry

Recent research suggests that the stereotype of underperformance attributed to female management may not be the result so much of poorer management skills as to using unsuitable comparative performance measures, as well as not taking into account structural characteristics that may be detrimental to the financial performance of companies managed by women. Gender differences with regards to conditions and business goals can result in female underperformance when performance measures relate to firm size, such as total sales, assets, or profits. When appropriate measures of relative performance are used, women and men are likely to prove equally effective business managers. Using longitudinal panel data on a large sample of Spanish hotel firms, there are few differences found when growth and profitability are compared by gender within a bivariate framework. What's more, when a regression model designed to control other performance determining factors is estimated, the results show better management by women than by men. As such, the research provides evidence that stereotypes of women as poor performers must be abolished, and the glass ceiling preventing entry of women into management positions shattered.     

A quantile regression analysis of tourism market growth effect on the hotel industry

This study used the quantile regression method to investigate how inbound tourism market growth proxied by the growth rate of total foreign tourist arrivals (GTA) affects the growth rate of sales (GS) and financial performance of hotel firms in Taiwan. The ordinary least squares estimation results of panel regression test revealed that GTA significantly affects GS, but has no significant effect on financial performance (proxied by hotel equity return). However, quantile regression tests revealed new and interesting results. GTA has a significant effect on GS at the different quantiles of GS. In comparison, although hotel equity return was not significantly related to GTA at the median and high quantiles, the effect of GTA on hotel equity return was statistically significant at the low quantiles. These results suggest that the effect of GTA on hotel equity return is asymmetric and state-dependent, conditional on the distributions of hotel equity return. The study further identified that GTA has a significant influence only on equity returns of hotels with a small size.     

What is the optimal number of hotel rooms: Spain as a case study

The main contribution of the paper is that it proposes a well-defined model and an empirical estimation technique for determining an optimal targeted number of incoming tourists and for getting as close as possible to this target by controlling variables that are affected by tourism authorities policies. We assume that the planner wishes to minimize the gap between the actual and the optimal number of tourists in order to get as close as possible to the optimally desired number. The actual number of tourists from each country is affected by the cost of travel as well as by exogenous variables. We constructed a system of two simultaneous equations, where the number of tourists and the cost of travel are the endogenous variables. We estimated the system for incoming tourism to Spain from various countries and forecasted the actual number of incoming tourists. Using the forecasted equation we were able to extract the optimal number of rooms needed in order to get as close as we could to the desired number of tourists.After defining several targeted levels for the number of incoming tourists to Spain from Canada, Japan, Belgium, The Netherland, US, Italy, France, Germany and UK, we extracted the optimal number of needed hotel rooms in order to get as close as possible to the targets.This paper is important since it provide a tool for the decision makers to effect the number of incoming tourists by changing the level of variables that are under the control of the decision maker.     

The effects of Airbnb on hotel performance: Evidence from cities beyond the United States

Although Airbnb's impact on hotels has been quantified for major hotel markets in the United States, these effects have not been quantified in international hotel markets. Accordingly, the purpose of this study is to examine the effects of Airbnb listings on key hotel performance metrics in an international context. In particular, we examine the effects of Airbnb listings on hotel revenue per available room (RevPAR), average daily rate (ADR), and occupancy rate (OCC) in major international hotel markets, namely London, Paris, Sydney and Tokyo. The results show that Airbnb listings in these major cities have been increasing more than 100% year over year and that the effect of Airbnb on hotel RevPAR and OCC is negative and statistically significant. In particular, a 1% increase in Airbnb listings decreases hotel RevPAR by between 0.016% and 0.031% in these hotel markets. The implications of these findings for destinations and hoteliers are discussed.     

Determinants of Tunisian hotel profitability: The role of managerial efficiency

Using financial data derived from 27 hotel companies operating in Tunisia, the paper reports an analysis of hotel profitability. Using Data Envelopment Analysis (DEA) and the Return On Assets (ROA) analysis managerial efficiency is shown to be important when holding geographical and operating contracts as constants. Nonetheless these two aspects have important implications for hotel profitability. Hotel size, level of indebtedness, exposure to crisis events and levels of managers' education are also influential. The implications for management tenure and optimal age of a hotel are discussed.     

Investigating the whole picture: Comparing the effects of Airbnb supply and hotel supply on hotel performance across the United States

This study examines and compares the extent to which Airbnb and hotel supply affect key hotel performance measures in the United States. The results show that although both Airbnb and hotel supply adversely affect hotel revenues (i.e., RevPAR), the magnitude of the impact of hotel supply on RevPAR is much larger than that of Airbnb. Airbnb adversely affects hotel room prices (i.e., ADR), however; it does not affect occupancy rates (i.e., OCC). Yet, increasing hotel supply negatively affects OCC but not ADR. The results from the state-level analyses further showed that the negative effects of Airbnb and hotel supply on RevPAR, ADR and OCC persist only in states with high hotel supply. Analyzing the joint effects of Airbnb and hotel supply on hotel performance in a manner that is both geographically-comprehensive and spatially-meaningful, this study provides a more complete and nuanced understanding on the economic dynamics of the accommodation industry.     

The economics and implications of moratoria on tourism accommodation development as a rejuvenation tool in mature tourism destinations

This paper fills a literature gap on the economic rationale and implications of moratoria on accommodation development in mature tourism destinations. Moratoria are government-led capacity controls, which reduce market competition and seek to create economic rents. The paper provides a comprehensive set of economic foundations justifying the enactment of moratoria in situations characterised by over-capacity, low profitability, little innovation, environmental damage, strategic behaviour and sectoral imbalances. It notes that the implementation of these controls could be related to regulatory capture, rent seeking and clientelism. While capacity controls can restrain tourism over-expansion and can help fix some of its undesirable consequences, they may lead to multiple and varied unforeseen effects on the rejuvenation process and on the rest of the economy, issues also addressed in the paper. Moratoria relate to the concept of de-growth, which is a highly contested area of discussion. A moratorium does not ensure renovation of private and public capital or maintain the natural environment. It may give rise to detrimental strategies by firms, opening up room for corruption. To be effective, a moratorium must be accompanied by complementary policies, besides being coherently embodied in a broader tourism and regional rejuvenation strategy.     

The determinants of hotel room rates: Another visit with Singapore's data

In this research note, volatility clustering modeling framework is used to examine the determinants of hotel room rates in Singapore. Using monthly data from January 1985 to June 2009, GARCH-M(1, 1) is identified as the appropriate model used to capture volatility clustering. The results suggest that total inbound tourists and economic performance have positive effects on hotel room rates. The main findings are (a) the occurrences of terrorist activities in the neighboring countries have negative impacts and (b) the volatility of hotel room rates has a positive effect, on hotel room rates.     

The dynamic interactions between hotel room rates and international inbound tourists: Evidence from Singapore

Recognizing the possible existence of mutual interactions between hotel room rates and the number of international inbound tourists, this research note investigates the short-run and the long-run dynamic interactions between these two variables for Singapore. It tests for the existence of any cointegrating relationship between them using the bounds testing approach to cointegration. The causal effects between them are tested with Granger causality test. We find no evidence that Singapore's hotel room rates and international inbound tourists are cointegrated. The results also suggest that there is a bi-directional short-run causal relationship between these variables.     

The impacts of international tourism demand on economic growth of small economies dependent on tourism

This paper studies the impacts on economic growth of a small tourism-driven economy caused by an increase in the growth rate of international tourism demand. We present a formal model and empirical evidence. The ingredients of the dynamic model are a large population of intertemporally optimizing agents and an AK technology representing tourism production. The model shows that an increase in the growth of tourism demand leads to transitional dynamics with gradually increasing economic growth and increasing terms of trade. In our empirical application, an econometric methodology is applied to annual data of Antigua and Barbuda from 1970 to 2008. We perform a cointegration analysis to look for the existence of a long-run relationship among variables of economic growth, international tourism earnings and the real exchange rate. The exercise confirms the theoretical findings.     

The effects of customer voice on hotel performance

This paper investigates the effects of two critical customer voice variables on hotel performance. Specifically, the research provides a customer equity model in which the influences of both customer satisfaction and complaints are considered. The impact of the customer voice variables on hotel performance is investigated while considering the potential for moderating effects by hotel size and star rating. We use a more robust approach to measure firm performance than is traditionally used in satisfaction-performance studies. Finally the paper reports on the results of these investigations and outlines implications for both theory and practice.     

Aspects of service-dominant logic and its implications for tourism management: Examples from the hotel industry

This paper introduces the concept of service-dominant logic as a research paradigm in marketing management. It does so in the context of tourism management’s need to engage with wider debates within the mainstream management literature. Moreover it demonstrates the importance of service-dominant logic in uncovering the role played by co-production and co-creation in the tourism industry. These ideas are developed in detail through a case study of the UK hotel industry that draws on new empirical research undertaken by the authors.     

Globalization or localization of consumer preferences: The case of hotel room booking

The purpose of this study is to investigate potential differences in attitudes between Chinese and Western tourists towards various hotel room reservation policies. The study is meant to help the revenue managers of international hotel companies make informed choices on whether to pursue a globalized or a localized approach in the design of hotel room rates and rate restrictions. Three ranges of room prices and four types of rate restrictions are evaluated. The rate restriction policies considered are: a) rule type, b) advance requirement, c) refundability, and d) changes allowed. The results of customer surveys show that the Chinese and Western respondents do not express significantly different preferences concerning room rates, advance requirement, rule type, or refundability. They differ significantly only concerning the changes allowed policy. This result indicates that revenue managers of international hotel companies can take a globalized approach in designing rate restrictions. The identification of these customer preferences provides hotel revenue managers with empirical data on the attitudes of culturally diverse consumers, and this information can enable the design of hotel pricing policies that attract consumers in the global market.     

Ability and willingness to work during COVID-19 pandemic:Perspectives of front-line hotel employees

This research note reports the results of a qualitative study exploring front-line hotel employees’ views about working during the COVID-19 pandemic in order to identify factors that may influence their ability and willingness to report to work. Findings from online focus-groups reveal that front-line hotel employees generally felt a sense of duty to work during the pandemic. However, there were also a number of perceived barriers to working that impacted on this sense of duty. These emerged as barriers to ability and barriers to willingness, but the distinction is not clear-cut. Instead, most barriers seem to form a continuum ranging from negotiable barriers to insuperable barriers. Following this coneptualisation, the key to reducing absenteeism during the pandemic is likely to take remedial action so that barriers to willingness do not become perceived as barriers to ability to work. Practical implications towards this direction are offered.     

Temporary population estimates of mass tourism destinations: The case of Benidorm

Benidorm (Spain) is a large-scale tourism destination on the Mediterranean coast, and its temporary population can be divided into users of regulated tourist accommodation and unregistered visitors, as occurs in other destinations. The number of these different types of unregistered temporary inhabitants should be estimated separately to gauge more accurate population figures in tourist destinations which are subject to seasonality. Indicators such as drinking water consumption or solid waste generation are used to estimate the number of unregistered visitors. The results reveal that the average total population of Benidorm at least doubles the registered resident population. Additionally, a population density index has been calculated to assess urban sustainability. The methodology adopted can be applied to other case studies in order to estimate total populations, which is vital for the adequate provision of public services.     

The effects of cognitive,affective, and sensory attributes on hotel choice

Over the past decade, experiential marketing has been the focus of many hospitality and tourism studies. Yet the existing literature does not provide experimental evidence of the incremental effects of affective and sensory attributes on the choice of hospitality service and destinations. This study attempts to provide some such evidence by using discrete choice modeling to examine the differential effects of cognitive, affective, sensory attributes on hotel choice. Bayesian D-optimal design based on JMP 8.0 was used to create a discrete choice experiment. Consumer hotel choice was predicted using random parameter logit (RPL) models. These results demonstrate that when customers choose a hotel, they consider not only cognitive attributes (e.g., price, service and food quality, and national brand), but also affective (e.g., comfortable feeling and entertaining) and sensory (e.g., room quality, overall atmosphere) attributes. The results also demonstrate the incremental value of adding affective and sensory attributes to a choice model when compared to a model using only traditional cognitive attributes. The data suggest that hotel managers can effectively differentiate their properties by incorporating affective and sensory attributes in their promotions. Moreover, the findings provide hotel managers with important insights into new product development and marketing communications strategy.