Break-even analysis — a useful management tool in the lodging industry

The break-even point is an important tool of financial management. In this article I will describe a concept and basis for analysis that is quite different from the usual technique. In order to determine the portion of each expense that is fixed and the portion that is variable, which is the basis for calculating the break-even point, we will use linear regression analysis, a technique based upon the relationship between two variables. Detailed monthly operating statements are required for a complete departmental analysis using this technique; however, for the purpose of this article I have taken a shortcut and used only monthly sales and operating expenses. The amounts are taken from the monthly operating statements of a 352-room suburban hotel.     

The use of lodging ratios in tourism

This paper presents an analysis of the lodging industry in Victoria, Canada, using standard accounting procedures. It provides detailed information on the supply side of the tourist industry. Meaningful categories were derived by categorizing the sample of hotels and motels into four groups according to their ratios of food and beverage sales to room sales rather the conventional aggregations used by the lodging industry. Cost-volume-profit (C-V-P) analysis was used to compare the break-even charts of the four groups. Information on risk was also obtained by an extension of the analysis using probabilistic C-V-P measures. It is concluded that information at this level of aggregation is important to decision-makers involved in overall tourism planning as well as to management of individual facilities.     

Board structure and CEO compensation: Evidence from U.S. lodging industry

Using a sample of U.S. lodging firms, this paper examines the relationship between board of director characteristics and chief executive officer (CEO) compensation. Previous research shows that larger boards are detrimental to the effectiveness of the board of directors and deteriorate the control imposed on CEO actions and pay. Board independence is also suggested as an important quality to emphasize the control on the CEO. We propose that U.S. lodging firms’ board of directors provide a nice setting to investigate the effects of size and independence on CEO compensation level. Our findings suggest that CEO compensation is not related to board size, and positively related to proportion of the outside board members. These findings are contrary to the findings of previous studies. Our findings may provide significant insights to lodging firms’ board of directors to structure efficient compensation packages.     

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.     

Determinants of using operating lease in the hotel industry

This study investigated the determinants of using operating lease in the hotel industry. The hotel industry has utilized operating lease not only for operating equipment but also as a financing instrument through ‘sales and lease back.’ This study found that hotel firms with less internal funds and/or with higher debt ratios are more likely to use operating lease. Contrary to the studies of other industries, hotel firms with less financially distressed are more likely to use operating lease. This study indicated that operating lease decrease as firm size increases, but only up to a certain level, after that level operating lease increase as firm size increases. Contrary to our expectations, the growth opportunity of hotel firms appeared to have no relationship to use of operating lease. These findings contribute to further understandings of hotel industry-specific information regarding what drives hotel firms to use operating lease.     

Diversification strategy and financial performance in the Taiwanese hotel industry

This study categorized 25 highly market-diversified international tourist hotels into two sub-groups, based on the highest proportion of hotel revenue generated either by (1) food and beverage (F&B) services; or by (2) room services. We investigated the differences in financial performance of these two sub-groups and concluded that hotels with a major proportion of the revenue from F&B services obtained higher growth but unstable profit margins, compared to another group of hotels with profit mainly from room service. Our study results can serve as a valuable reference for hospitality industries to evaluate the tradeoff between investing more resources in room or F& B service, especially at markets where F&B is highly valued.     

资本深化、全要素生产率与中国住宿餐饮业增长

本文在中国住宿餐饮业增长动力分解方程式的基础上,对中国住宿餐饮业发展过程中的资本深化、全要素生产率进行了实证研究,得出了3个结论:第一,资本深化是目前中国住宿餐饮业增长的主要动力,而劳动投入的下滑对住宿餐饮业增长产生了负面影响;第二,中国住宿餐饮业的生产率几乎不存在要素偏向,不是纯粹资本增强型的;第三,1991年以来中国住宿餐饮业的技术效率一直没有增进,全要素生产率增长得益于技术进步.基于以上结论,本文认为有效劳动投入的增长和技术效率的提高,是中国住宿餐饮业增长需要解决的两个主要问题.     

Market Orientation,Strategy and Revenue Growth in the Turkish Hotel Industry

This empirical analysis of hotel properties in south-western Turkey draws on the market orientation, strategy, and capabilities literature to highlight the benefits of a differentiation strategy and customer-value focus for competitors in this industry. Relationship management and organizational resource management are key drivers of sales growth in this industry, and hotel operators facing high competitive intensity are particularly encouraged to develop these capabilities and to adopt a differentiation strategy instead of resorting to price cutting and other pricing and promotional tactics to grow revenues. Notable opportunities for future research include examining relationships between market orientation, customer satisfaction, and employee satisfaction in the Turkish hotel industry.     

Impacts of positive and negative corporate social responsibility activities on company performance in the hospitality industry

In spite of growing concern for corporate social responsibility (CSR) in various industries including the hospitality industry, the relationship between CSR activities and financial performance is a rarely examined subject in the hospitality context. Especially, research measuring the separate impacts of positive and negative CSR activities on companies’ financial performances remains, as yet, unconsidered. Thus, this study examines different impacts of positive and negative CSR activities on financial performance of hotel, casino, restaurant and airline companies, theoretically based on positivity and negativity effects. Findings suggest mixed results across different industries and will contribute to companies’ appropriate strategic decision-making for CSR activities by providing more precise information regarding the impacts of each directional CSR activity on financial performance.     

Achieving task and extra-task-related behaviors: A case of gender and position differences in the perceived role of rewards in the hotel industry

The study drew on a sample (n=284) from the hotel industry in Hong Kong to advance our understanding about the perceived effectiveness of various reward instruments in achieving specific task and extra-task performance behaviors. We found that the perceived motivating value of a reward varied according to its type. Non-financial rewards, for example, were found to play a prominent role in achieving extra-task performance dimensions. Employee characteristics also affected the perceived performance implications of various rewards. Nevertheless, caution must be exercised when interpreting the results, as other factors may also influence reward–performance relationships, thus paving the way for future research.     

Does corporate growth really matter in the restaurant industry?

In this study, the authors hypothesize that growth strategies are not necessarily always performance-enhancing strategies that are sustainable. This is contrary to what industry managers tend to believe to be the outcome of growth strategies. Based on past research, a second hypothesis is developed that corporate liquidity impacts performance in a more positive way than growth strategies, and therefore, should be considered in the decision-making framework of firms before they launch into new products and/or markets. The interrelationship between corporate growth and liquidity is also tested, which further highlights the importance of pursuing corporate liquidity.     

Strategic groups in the hospitality industry: Intergroup and intragroup performance differences in Alicante, Spain

The hotel sector is currently immersed in a very uncertain, highly competitive environment, due to which it needs information for the correct management of its establishments. This information can be obtained from the classification of hotels in strategic groups. The present empirical research presents strategic groups in the hospitality industry as a useful tool for the planning and implementation of strategies by hotels that helps to determine their competitive strategies and advantages. This research paper additionally shows how the levels of performance between the hotels belonging to each group can be evaluated from strategic groups. In this study, the tool is applied to the hotel sector of the Spanish province of Alicante, a very important geographical area in the context of international tourism. The dimensions resource commitment and tourist activity scope have been used to define the strategic groups.     

Cost structure and productivity growth of the Taiwanese international tourist hotels

This study investigates the cost structure and economic implications of the Taiwanese international tourist hotel industry. A multi-product translog cost function with three inputs and three outputs is estimated using seemingly unrelated regression estimation and three-stage least squares. A balanced panel dataset consisting of 47 international tourist hotels in Taiwan over the period 1997–2001 was obtained from Taiwanese Tourism Bureau and used to estimate the cost function. The results show that both scale and scope economies exist in the Taiwanese international tourist hotel industry. In addition, productivity growth is positive over the study period. Managerial and policy implications for the Taiwanese international tourist hotel industry are also discussed.     

Some problems faced by managers in the hotel and catering industry

This second survey on the problems perceived by managers in the U.K. hospitality industry uses depth interviews to explore managers' perceptions of their problems. Price appears to be the main marketing tool used and there is a lack of emphasis on marketing as a tool to increase sales volume.     

The economy,tourism growth and corporate performance in the Taiwanese hotel industry

This study investigates the impact of economy and tourism growth on the corporate performance of tourist hotels in Taiwan. The indicators of corporate performance under consideration are occupancy rate (OPR), return on assets (ROA), return on equity (ROE), stock return, and the overall financial performance measured by a comprehensive score (a combined measure of asset management, profitability, short-term solvency or liquidity and long-term solvency based on factor analysis). The effects of changes in the state of economy (real GDP   growth rate, ΔGDP$\Delta \mathit{GDP}$) and tourism growth (growth rate of total foreign tourist arrivals, ΔTA$\Delta \mathit{TA}$) on the corporate performance of tourist hotels are then examined via panel regression tests. Test results show that both ΔGDP$\Delta \mathit{GDP}$ and ΔTA$\Delta \mathit{TA}$ are significant explanatory factors of OPR  , but only ΔTA$\Delta \mathit{TA}$ can strongly explain ROA and ROE  . However, neither ΔGDP$\Delta \mathit{GDP}$ nor ΔTA$\Delta \mathit{TA}$ have a significant influence on hotel stock performance. Further, the economic factor (ΔGDP)$\left(\Delta \mathit{GDP}\right)$ is slightly more crucial than the industry factor (ΔTA)$\left(\Delta \mathit{TA}\right)$ in describing the overall financial performance in the Taiwanese hotel industry. Empirical findings offer valuable information for government tourism policymakers and tourist hotel owners and managers.     

The relationship between CRM, RM, and business performance: A study of the hotel industry in Taiwan

This study aims to investigate the implementation of customer relationship management (CRM) and its effect on relationship marketing (RM) and business performance, through an analysis of the hotel industry in Taiwan. A survey on hotels, including general and tourist hotels, and bed and breakfasts (B&Bs) was conducted, and a total of 560 questionnaires were returned. The results showed that implementing CRM has a significant and positive influence on the RM effect, positively affecting business performance for both hotels and B&Bs. However, a comparison of the influential paths of relationship models between hotels and B&Bs showed that, for hotels, the Internet service and customer support functions of the CRM strategy are the main sources of influence on the RM effect and business performance, whereas for B&Bs, the marketing support function of the CRM strategy alone influences the RM effect and business performance. To achieve higher performance, the different types of hotel enterprises should understand their main advantage before implementing key CRM strategies.     

Supply management practices and performance in the Canadian hospitality industry

As the competition to gain customers becomes more intense, the hospitality industry has faced increasing pressure to find new approaches to create and deliver value to customers through supply chain management (SCM) practices. Over the past decade there has been a growing realization of the important contribution that purchasing and supply management can have on an organization's performance. This paper addresses SCM practices, with an emphasis on strategic purchasing (SP), in one sector of the Canadian hospitality industry. Using data collected from 105 Canadian hotels, this study tested seven hypotheses of the impact of SP on SCM practices and verified the impact on the hotel's performance. All of the hypothesized relationships were supported. The results indicate that SP is positively related to the relationship with the supplier (SR), communication (COM), service quality (SQ), financial performance (FINP), and customer satisfaction performance (CUSP). The managerial and research implications of these findings are discussed in the paper.     

The use and acceptability of convenience and fast-foods in the food service industry in Scotland

A questionnaire was circulated at random to six sectors of the catering industry in Scotland. The types of convenience foods used, frequency of use, relative importance of several processing factors and customers' views of catering establishments were studied. Some fifteen ideas for ‘new’ products are listed, the main requirement being for higher quality products at lower cost. Most caterers feel that customers mainly look for value for money and good presentation.     

Inflation and its impact on investment decisions in the hospitality industry

The impact of inflation is more severe in the hospitality industry than in some others because of its high level of capital investment. Proper evaluation of investment returns can only be made if inflation is considered in the evaluation process. This article presents an approach based on the net present value method of investment evaluation which incorporates the anticipated level of inflation and provides for the uncertainties of future cash flows.