An examination of factors motivating hotel outsourcing

The broad range of activities undertaken in a hotel, combined with its high labour intensity and volatile demand, signify a predisposition particularly suited to outsourcing. In this paper, transaction cost economics (TCE) theory, agency theory and the broader outsourcing literature are drawn upon to inform the distillation of 20 outsourcing/insourcing motives. The relative significance of these motives is examined using interview and survey data. While broad support is provided for the TCE model, it is apparent that the model does not constitute a robust framework with the capacity to comprehensively account for outsourcing behaviour.     

Asset-light strategy and real estate risk of lodging C−corps and REITs

The asset-light strategy has been gaining popularity among practitioners for its virtues in lowering capital investment burden and allowing efficient expansion. Meanwhile, arguably the greatest advantage of the strategy—a mitigating effect on the real estate risk exposure—has yet to be validated. To empirically test this effect, this study adopts a comparative approach, utilizing data on both lodging C-corporations and real estate investment trusts (REITs). Yearly firm-level real estate betas are estimated through an augmented Fama-French asset-pricing model for all lodging firms and REITs between the years 2002–2016, and further used for a second-stage analysis on their relationship with real estate ownership and liquidity. Findings reveal that 1) lodging firms are significantly less exposed to real estate risk than REITs, 2) lodging firms may still be conditionally exposed to real estate risk under liquidity constraints, and 3) certain unique characteristics of REITs render differences in the effects of liquidity.     

The real estate risk of hospitality firms: Examining stock-return sensitivity to property values

The value of a hospitality firm is often believed to be dependent on the market price of the properties they own. However, the core business of a hospitality firm is the production of products and services. Since the real estate assets are depreciated throughout their useful life, short-term covariance of firm value with real estate prices seems implausible. Using a two-factor model, the current study examined the real estate exposure of US hospitality firms through daily stock return data from 2005 to 2009. Results indicate that the majority (88%) of the hospitality firms were exposed to real estate risk at some point during the sample period, while the second-stage analysis of real estate betas suggests that exposure is conditional on the financial status of the hospitality firm. Implications and suggestions for future research are presented with the findings of the study.     

What explains differing holding periods across hotel investments? A hazard rate framework

We explain the variation in hotel holding periods (HP) based on liquidity needs, owner type, acquisition conditions and timing of hotel renovation. Contrary to popular belief, properties owned by listed companies tend to have longer HPs due to lower liquidity constraints. REITs sell heterogeneous hotels sooner to strengthen their focus whereas REOCs keep such assets longer for diversification benefits. Moreover, we document that higher quality hotels tend to have longer HPs, and that capital expenditure employed in renovating an acquired asset prolongs the HP whereas assets renovated before acquisition experience shorter HPs. Finally, we show how our model can be used in practice to predict the median HP based on a given hotel characteristics, and present a method to adjust the DCF discount rate according to the selected holding period.     

Does gender diversity matter to hotel financial performance?

This study examines the effects of executive gender diversity (EGD) and board gender diversity (BGD) on hotel financial performance in China based on the framework of the gender role, agency, and resource dependence theories. This research documents a negative effect of EGD and no significant effect of BGD on hotel financial performance. Moreover, the effect of EGD on hotel financial performance captured by return on equity (ROE) exhibits a U-shaped curve, with the profitability measure bottoming out at 21%. Our analysis also shows that a critical mass of 40% of EGD serves as a positive moderator for the EGD-ROE relationship. Beyond this point, gender-balanced executive groups evade negatives rooted in the gender role theory, enjoy positives drawn in the agency and resource dependence theories, and generate superior financial performance compared to all-male executive groups. This research offers important implications for human resource management and policy and regulation formulation.     

Enhancing customers’ brand loyalty via branded hotel apps

Many hotels have launched their own branded mobile applications to develop relationships with customers. Yet, research examining the benefits of branded hotel apps on brand loyalty is scant. The current research investigates the role of branded hotel apps on brand loyalty through customer engagement and brand trust in the hotel industry, based on uses and gratifications theory. Results identified cognitive and social benefits of the branded hotel apps positively influenced customer engagement and brand trust. Hedonic benefits positively influenced customer engagement and they indirectly influenced brand trust through customer engagement. Both customer engagement and brand trust positively influenced brand loyalty. Moreover, mediation effects of customer engagement and brand trust were identified. Results highlight how branded hotel apps serve as a facilitator of brand loyalty, providing theoretical and managerial implications.     

Philanthropic giving of China’s hotel firms: The roles of state ownership,corporate misconduct and executive remuneration

This study utilizes value enhancement theory, agency cost theory and crisis management theory to scrutinize the philanthropic giving (PG) of China’s listed hotel companies from 2003 to 2018. The results of dynamic panel regression tests reveal that state ownership (company character), corporate misconduct (crisis management determinant) and executive remuneration (agency cost determinant) are influential factors in hotel firms’ PG, but none of the value enhancement determinants can explain PG. Specifically, state ownership is negatively correlated with PG, reflecting low PG in government dominated hotel firms in China. PG is negatively associated with executive remuneration, indicating that hotel managers care more about self-interest than social responsibility. PG is also positively related to corporate misconduct, suggesting that hotel firms use philanthropy to manage a crisis. Finally, the lagged PG has a positive effect on PG, implying that PG is intended to avoid damage to social image and reputation of China’s hotel firms.     

A comparison of competing theoretical models for understanding acceptance behavior of information systems in upscale hotels

This study investigated which intention-based model, namely: (1) the technology acceptance model (TAM; Model 1); (2) the theory of planned behavior (TPB; Model 2); and (3) the decomposed TPB (DTPB; Model 3) is best for predicting and explaining employees’ behavioral intention to use hotel information system (HIS). Data were obtained from employees of 13 upscale hotels in Jeju, South Korea, and structural equation modeling (SEM) was employed to examine and compare the three competing theoretical models (CTMs) in terms of overall model fit, explanatory power, and paths significance. The findings of this study revealed that if the key objective is to predict behavioral intention to use HIS, the TAM is preferable. However, if the key objective is to explain behavioral intention to use HIS, the DTPB is preferable.     

The relationship between convention hosts and professional conference organizers

It is common for host organizations that operate conventions to employ professional conference organizers (PCOs) to perform a variety of professional services relating to the organization, management and operation of the event. As such, a productive relationship between the host and PCO is essential to the successful operation of the event. Yet, the relationship is often strained as the host organization may feel uncertain about the selection of the PCO or may have reservations about its performance. Such an arrangement represents a classic principle–agent relationship that can be examined through agency theory. This study examines this relationship from the perspective of the host organization. It found that hosts do express concerns about adverse selection and moral hazard, but that these concerns can be mitigated by a series of pre- and post-contract awarding control measures.     

The future of the State-owned hotels in China: Stay or go?

Hotel sector was the first one to employ joint venture in China after its ‘Open Door Policy’ in 1978. In transition from production unit to business unit, the operating system of China's State-owned hotels (SOHs) has changed greatly. Though its hotel industry has become more open, many of the tourist hotels are still State-owned enterprises (SOEs) today, and they account for over half of the loss of all hotels in the country. This study aims to find out: first, critical issues causing those problems facing the SOHs; second, factors affecting the development of SOHs, and third, their future. Government ownership and its related problems, such as complicated ownership, bureaucratic structure and control, add difficulty to restructure SOHs. The future of the SOHs in China regarding whether to stay or to go very much depends on government policy and commitment on restructuring the industry which is vital to success and sustainability of SOHs in the socialist market economy environment.     

Revisiting the hotel capitalization rate

Based on empirical analyses of US hotels, this study finds that hotel capitalization rate is a complex combination of macroeconomic and asset-class specific variables beyond the cost of capital, capital structure and growth rate. In particular, investors in hotel real estate base their cap rate measures on the performance of corresponding REITs. Incorporating asset specific trends improves the explanatory power of the capitalization rate model. A significantly persistent cap rate across consecutive-periods experiences an offsetting autoregressive effect in a year. Unusual increases in rents lead to investor scrutiny. Regulatory environment significantly impacts the capitalization rate after controlling for the overall economic activity in a market.