Effect of consumer sentiment on hospitality expenditures and stock returns

Given the importance of consumers to the U.S. economy and especially to the hospitality industry, we explore how consumer sentiment (i.e. confidence in the economy) affects consumption expenditures and stock returns in the hospitality industry.We find that not only does consumer sentiment partly predict changes in future consumption expenditures, but changes in consumer sentiment are contemporaneously related to hospitality industry stock returns. More importantly, our results indicate that changes in consumer sentiment can partly predict changes in stock prices of hospitality firms, an indicator of firm performance. The predictive ability of consumer sentiment can thus be useful to managers in business forecasting, planning, and strategizing for profit maximization.     

The reaction of U.S. hospitality stock prices to Fed policy announcements

This paper is an event study analysis of the reaction of daily U.S. hospitality stock prices to announcements of Federal Open Market Committee decisions concerning the federal funds target rate (FFTR). The study first identifies two components of changes in the FFTR (ΔFFTR), namely the expected and the unexpected (or surprise) components. The surprise component that is not yet priced into the market can be calculated from the change in the federal funds futures rate. According to the efficient market hypothesis that stock prices should have already reflected all information available in the market, it is hypothesized that hospitality stock prices should respond only to the surprise component. Test results support the hypothesis. Except for restaurant index, the responses of airline, gambling, hotel and travel and leisure stock indices to the surprise component of ΔFFTR are highly significant. The corresponding responses to the actual ΔFFTR and the expected component, in contrast, are statistically insignificant.     

The Determinant of the Hospitality Industry's Unsystematic Risk: A Comparison Between Hotel and Restaurant Firms

ABSTRACT

Unsystematic risk is accepted as an important factor in stock valuation. Despite the importance, little has been done to study the relationship of unsystematic risk to stock values in the hospitality industry. This study attempted to advance the understanding of financial variables that could be related to unsystematic risk of hospitality firms. Regression models were developed for hotel and restaurant firms, using unsystematic risk as the dependent variable and financial variables as independent variables. The major findings of this study indicate: 1) more profitable hospitality companies have less unsystematic risk, 2) reducing reliance on debt financing could reduce unsystematic risk, 3) the positive relationship between operating leverage and unsystematic risk, suggesting that decreasing operating leverage could mitigate the stock price volatility of hospitality firms, and 4) large hotel and restaurant firms have less unsystematic risk than small firms. This study should help management of hospitality firms incorporate effects of shareholder expectations into their operational decision making as an integral part of long-range financial planning.     

Are hospitality industry IPO stock returns predictable?

We examine the post-IPO excess stock returns of hospitality firms from 1996 to 2012 and find underperformance relative to the market on average. However, there are large differences in returns and some firms significantly outperform. We demonstrate that a substantial portion of this variation can be reliably predicted by utilising pre-IPO financial measures such as firm size, free cash flows, discretionary accruals, and Altman's Z. Our findings are potentially valuable to prospective hospitality IPO investors in selecting which stocks to buy and to hospitality firm managers in setting IPO issue prices.     

Using segmentation to compete in the age of the sharing economy: Testing a core-periphery framework

Airbnb has emerged as a credible competitive threat to the hotel industry. Consequently, hotel brands are having to rethink the experiences they provide to customer in an increasingly competitive environment. Despite these trends in the industry, experience-related research that examines and informs these developments remains under-represented in the hospitality and tourism literature. The present study offers a systematic approach to examine the potential differences in experiential consumption in the accommodations industry. Using a multiple-group analysis approach, it examines the moderating effects of individual characteristics and situational factors on the nature and dynamics of experiential consumption in the accommodations industry. The findings of the study culminate in the core-periphery framework of the hospitality consumption experience that can provide a relevant theoretical lens for future research into the different sectors and types of experiences within the hospitality and tourism industry. The study also outlines important implications for the hotel industry’s strategic experience design initiatives, from the standpoint of product development, the segmentation, targeting and positioning (STP) process, and marketing communications.     

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.     

The impact of changes in household vacation expenditures on the travel and hospitality industries

Two large tourism industries, travel and hospitality, are strongly affected by changes in household demand for vacations. In recent years, rising income and declining prices per unit of quality have led to changes in patterns of household vacation consumption. To understand the impact of these changes on the travel and hospitality industries, we develop a theoretical model distinguishing between travel and on-site expenditures and apply it to Israeli data. We find that under certain circumstances, the changes in income and prices are responsible for a shift toward multiple, short vacations. This trend can be a boon to the travel industry but a disadvantage for the hospitality industry. Both industries are expected to face a rise in the demand for high-quality products.     

Examining the influencing factors of intention to share accommodations in online hospitality exchange networks

ABSTRACT

CouchSurfing is a free social-network-based online hospitality exchange network, aptly representing a new sharing economy phenomenon. Based on social capital theory and previous literature, this study attempts to answer why hosts help strangers without any expected economic benefit within online hospitality exchange networks. An empirical study based on a Web survey conducted with CouchSurfing hosts reveals that the most identified antecedents (enjoy helping, shared narratives, desire to make friends, and reciprocity) are significantly related to hosts’ intention to share accommodations. Interestingly, the overshadowing effect of trust in CouchSurfing on the intention to share accommodations is also found.     

Understanding corporate philanthropy in the hospitality industry

This study makes a unique contribution to the corporate social responsibility literature, both from a theoretical perspective and corporate philanthropy (CP) perspective that has been under-researched so far. Specifically, it extends the investigation of the motives of CP to the hospitality industry in the emerging country of Taiwan and is the first examination of the determinants of CP in the hospitality industry based on the value enhancement (VE) and agency cost (AC) theories. Previous studies found that either AC or VE determinants, not both, play a major role in making philanthropy decisions. This study reveal new and interesting findings using the data from 13 publicly traded hospitality companies in Taiwan collected between 1996 and 2011. Panel regression test results show that both VE determinants (labor intensity and profitability) and AC determinants (board size and the ratio of independent directors to total directors) were found to be significant factors in explaining the discretionary behavior of CP in the hospitality industry. Furthermore, the lagged philanthropy-to-sale ratio was also significantly related to CP decisions in the hospitality industry in Taiwan, suggesting that the behavior of CP in the Taiwanese hospitality industry is persistent. The possible explanation is that changing philanthropy pattern may lead to market-adverse expectations and reactions and damage the reputation of companies.     

Quality and Pricing in the Hotel Industry

Abstract

Quality is a price determinant in most products. However, establishment of a quality evaluation for the consumer is not an easy proposition. In the hospitality industry, fortunately, room quality evaluation and price information are readily available for consumers from published consumer guides. The Mobil Travel Guide is one of the more popular sources of hotel information available to consumers. The Mobil Travel Guide awards “stars” based on the level of quality their investigators deem appropriate. To investigate the relationship between quality and price in the hospitality industry, this study analyzes hotel managements' pricing behavior before and after a quality rating change by the Mobil Travel Guide. Data is gleaned from the Guide in several provinces and states in Canada and the United States from the relatively stable economic growth period of 1991 through 1999. The results reveal that hotel organizations raised prices before gaining a “star” and lowered prices before losing a “star.” The study concludes with a discussion of the implications of this pricing pattern.     

State dependence in the influence of monetary policy regime shifts on hospitality index returns

Previous research studies reveal that changes in monetary policy can significantly affect hospitality stock returns. This paper makes another contribution by showing that the impact of shifts in the Fed monetary policy regime on US hospitality index returns varies to a great extent in the different stages of business cycle and under different credit market conditions. Shifts in the Fed monetary policy regime are measured by directional changes in the discount rate (DR) and directional changes in the federal funds rate (FFR). In particular, the significant influence of monetary policy regime shifts on hospitality index returns depends on the state of economy. The significant influence of DR exists only during periods of business cycle contraction. In addition, although US hospitality index returns respond significantly to FFR under both business cycle expansion and contraction, the size of the response is substantially larger and more statistically significant during periods of business cycle contraction. Finally, the impact of both DR and FFR on hospitality index returns depends on the credit market conditions, especially when the credit market is tight.     

An Investigation of Professional Development Education for Tourism and Hospitality Employees Through University and Industry Cooperative Education Partnerships

ABSTRACT

Cooperative educational partnerships in Australia are innovative education partnerships where universities join with a business or industry association in a working relationship. The partners share resources to develop and provide undergraduate award-bearing professional development education courses for employees and association members. The aim of this research is to investigate the nature of outcomes that encourages tourism and hospitality organisations to encourage professional development education for their employees and members.

This research used a qualitative approach to understand and analyse five cooperative education partnerships operating in the School of Tourism and Hospitality Management, Southern Cross University, Lismore, Australia. The outcomes emerging for tourism and hospitality organisations include encouraging confidence and loyalty in employees and a strengthening industry commitment to further education. The university saw professional development education provided through cooperative education partnerships as becoming part of their core education activity. Communication difficulties between different organisation cultures appear to be a barrier to overcome.     

Transformative Service Research in Hospitality

The goal of the paper is to investigate how sustainable hospitality companies accomplish the transformative potential of their business for improving the individual and collective well-being in the tourism and hospitality industry. Hence, we took into consideration the case of the Albergo Diffuso (AD), an innovative Italian model of hospitality. We adopted a case study approach based on 17 semi-structured interviews with key informants and a netnographic study analysing 1302 comments of previous guests - 286 in English and 1016 in Italian - on the popular booking website Tripadvisor. From the data analysis, five recurring themes emerged: Sustainability Concerns, Reciprocal Exchange, Mutual Network, Cultural Views, and Authentic Experience. These represent the Transformative Factors that impact on the individual and collective well-being from a hedonic and eudaimonic perspective in hospitality organisations.     

Values as determinants of motivation: Tourism and other career choices

Neuman, Yoram, Abraham Pizam and Arie Reichel, Values as Determinants of Motivation: Tourism and Other Career Choices. Annals of Tourism Research 1980, VII (3): 428–442. This study examined the predictive validity of work values in explaining motivational patterns of three groups of career preparation differing in their occupational specificity: Tourism/Hospitality, Management, and Liberal Arts. It was found that the higher the occupational specificity of a career preparation the higher is the predictive validity of work values in explaining work motivations. As predicted, the best relationships between values and motivation was found in the maximally specified occupation, namely: tourism/hospitality students, followed by management students with the liberal arts students — the most flexible occupational group — having the lowest relationship between values and motivation. The implications of the findings for employee selection and motivation prediction in the tourism/hospitality industry are discussed.     

An empirical analysis of the influence of macroeconomic determinants on World tourism demand

This paper considers three econometric models to determine the relationship between macroeconomic variables and tourism demand. Tourism demand is measured by the inbound visitor's population and also by on-the-ground expenditures. The database is an unbalanced panel of 218 countries over the period 1995–2012. There is evidence that an increase in the World's GDP per capita, a depreciation of the national currency, and a decline of relative domestic prices do help boost tourism demand. The World's GDP per capita is more important when explaining arrivals, but relative prices become more important when we use expenditures as the proxy for tourism demand. We cannot reject the hypothesis of a relative prices unitary elasticity of expenditures. Additionally, we have partitioned our data by income level and by Continent. Results are robust in the first partition, but less robust in the second, although the main conclusions still hold. Finally, we draw policy implications from our findings.     

The Effects of Music on Room Attendants' Work Performance — An Exploratory Study

Abstract

In recent years, the hospitality industry has become increasingly concerned with environmental sustainability. This trend has been apparent mainly in traditional areas of the industry such as hotels and restaurants. In universities, there have been moves to develop environmental policies, which have impacted on those sectors of the hospitality industry involved with foodservice and student residences. This study investigated the implementation of waste management policies and practices within twenty-seven university residences in Ontario and Quebec. Despite the small size of the sample, this study found a significant variance between the location of the university residence and the existence of a written waste management policy and waste management practices. University residences in Ontario were more likely to have a written policy, although the differences in the number of practices implemented by universities in Ontario and Quebec were not significantly different.

In this paper it is argued that universities are in a strong position to influence consumers of the future through their procedures and practices. This is supported by the findings of the research, which indicate that response to the needs of students is one of the main reasons given for developing waste management policies.     

Mapping the progress of social media research in hospitality and tourism management from 2004 to 2014

ABSTRACT

One hundred and five articles on social media in hospitality and tourism during 2004–2014 were identified from three databases and seven journals. Seven dimensions were used for analysis. Results indicated that social media research in hospitality and tourism is in its early stages with two turning points. The number of articles rose dramatically in 2010 and unexpectedly dropped in 2014. Research gaps are apparent in several industry sectors in topics beyond online reviews and in research methods, where literature reviews suffer from small numbers and few prominent researchers. Implications and future research directions are also discussed.     

Measuring the experience of hospitality: Scale development and validation

This paper identifies what customers experience as hospitality and subsequently presents a novel and compact assessment scale for measuring customers’ experience of hospitality at any kind of service organization. The Experience of Hospitality Scale (EH-Scale) takes a broader perspective compared to existing scales, which predominantly measure hospitable behavior of service employees and are specifically developed for organizations in the hospitality industry. A thorough approach containing two qualitative and two quantitative studies resulted in the thirteen-item EH-Scale. The scale measures three experiential factors of hospitality: the experience of inviting (open, inviting, freedom), the experience of care (servitude, empathy and acknowledgement), and the experience of comfort (feeling at ease, relaxed and comfortable).     

Intangible asset value of employee satisfaction in high-contact services

In this study, we utilize the employee online review data from Glassdoor to examine whether stock market capitalizes the intangible asset value of employee satisfaction for high-contact service firms. We hypothesize that in the hospitality and tourism industry, employee satisfaction can efficiently motivate employees to deliver high-quality service and improve the employee retention, thereby leading to greater shareholder value. Our finding is consistent with this prediction that stock market investors indeed incorporate the intangible value of employee satisfaction into the valuation models. In addition, we find that the value of such intangible asset manifests in firm’s subsequent profitability, resulting in improved return on asset (ROA). We further decompose ROA into profit margin and asset turnover to explore the pathways by which employee satisfaction affects shareholder value. We find that employee satisfaction can improve both profit margin and asset turnover for high-contact service firms. Overall, our study suggests that employee satisfaction can be an important intangible asset that contributes to the service firms’ long-term value.