Toward a resolution of the cost of equity conundrum in the lodging industry: a conceptual framework

The firm value estimate is derived from accounting and finance practices that focus on physical assets as opposed to intangible assets (Arthur Andersen Hospitality Leisure Executive Rep. 5 (1998) 2). The cost of equity estimation models used in firm valuation and capital investment decisions fall short of tapping important constructs to firm value, especially the intangible ones. The purpose of this study is to assess the present cost of equity capital determination models and provide a view of their relevancy for the lodging industry while simultaneously attempting to propose new options to meet the valuation and capital budgeting needs of the lodging industry.     

Dimensions and correlates of consumer value: An application to the timeshare industry

The concept of consumer value has been hailed as the “very underpinning” of marketing, yet the concept has been subjected to limited empirical research, particularly in the hospitality industry. This study investigates the value that consumers derive from ownership of timeshare holiday products. A total of 785 people answered questions regarding their background, timeshare ownership, valuing of timeshare, and satisfaction with timeshare. Confirmatory factor analyses showed consumer value to be a multi-dimensional construct comprising opportunities for relaxation, gift-giving, status, quality, flexibility, fun, new experiences, and financial benefits. These value dimensions varied with other factors such as type of timeshare ownership (e.g., weeks, points).     

Consumer value and self-image congruency at different stages of timeshare ownership

An understanding of customers’ perceptions of value is fundamental to the competitive nature of all industries. Using the timeshare resort sector as a context for our studies, we explore the ways in which consumers, grouped according to their timeshare ownership stage, perceive value. Data were collected from three samples: non-owners of timeshare, recent purchasers of timeshare, and longer-term timeshare owners. Value was shown to be multi-dimensional, with a stable pattern of eleven correlated value factors evident in all three samples. The groups differed in their assessments of the different dimensions of value. In all groups, however, value was positively correlated with attitudes and future intentions regarding timeshare. Self-image congruency explained additional criterion variance. The findings demonstrate that, even among consumers who have never used timeshare, value and self-image congruency are substantial and unique predictors of attitudes and intentions regarding this tourism product.     

The impact of IT news on hospitality firm value using cumulative abnormal returns (CARs)

The impact of information technology (IT) news on firm value have been investigated and discussed in various industry settings. Some reports indicate positive impacts while others find negative or no significant impact at all. The purpose of this event study is to examine how financial markets perceive various types of IT news regarding hospitality companies. Nine categories of IT news are created for investigation and the study estimates cumulative abnormal returns (CARs) to determine the impacts of such news on stock price movements. The findings suggest no significant impact from IT news on firm value, supporting the IT paradox theory.     

Perceptions of Job Satisfaction and Job Performance in the Timeshare Industry

ABSTRACT

This study examines timeshare sales representatives' perceptions with respect to demographic and job related factors. Three leading U.S. timeshare companies were solicited to participate in this research. They were asked to distribute surveys to their sales representatives. The data were analyzed through the use of analysis of variance and a post hocmultiple comparison procedure to understand the timeshare sales representative perceptions of job satisfaction and job performance. The results show that there are demographic influences on the perceptions of job satisfaction and job performance.     

Do socially responsible activities help hotels and casinos achieve their financial goals?

While the concept of corporate social responsibility (CSR) has gained much attention and is currently practiced by many companies, it has yet to be empirically examined in the context of hotels and casinos, especially in regard to the potential effects of CSR on firm value and performance. As the findings on the relationship between CSR and financial performance have been inconclusive and this relationship has been found to differ among industries, this study examines the relationship between CSR and firm value and profitability for hotels and casinos. Results of the Durbin–Wu–Hausman (DWH) test and a subsequent two-stage least square (2SLS) method show that hotel companies’ CSR has a simultaneous and positive relationship with financial performance. For casino companies, however, results show that CSR has no simultaneous or particular effect on financial performance. Findings suggest that hotel companies can confidently and strategically increase CSR investment to enhance both short-term (profitability) and long-term performance (firm value). Casino companies need to carefully examine the effects of CSR on financial performance, when making CSR-related decisions.     

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.     

Re-examining the overcapacity of the US lodging industry

Although the deteriorating profitability of the US lodging industry has been repeatedly attributed to overcapacity, there has been little research on the causes of overcapacity. The authors suspect that this issue stems from the lack of a working definition of optimal capacity level. This study evaluates the optimum capacity of the US lodging industry based on the fundamental price theory, which posits that prices are determined through equilibrium. Results of the simultaneous equations model show that the industry has an incentive to maintain overcapacity because the outcomes of under-capacity are even less desirable. The uncertainty of demand further encourages overcapacity to some extent. Historical overcapacity cycles in the US lodging industry suggest that overcapacity seems to be an outcome of unexpected demand shocks, rather than the consequence of irrational overbuilding. Implications for the industry and suggestions for future research are presented along with the study findings.