Hospitality Industry Responses to Climate Change: A Benchmark Study of Taiwanese Tourist Hotels

Hotels are one of the tourism businesses most vulnerable to climate change because of their fixed assets. Results are presented of a baseline study that explores the awareness, attitudes, and behaviours of Taiwanese tourist hotels with respect to climate change and its potential impacts as well as their overall environmental practices. Tourist hotels are defined by the Taiwanese government as hotel establishments of over 80 rooms in rural areas and 50 rooms in city areas. Although the 104 tourist hotels represent only 3.7% of the total number of hotels in Taiwan, they account for over half of international guest nights and had a combined revenue of over TWD$43 billion in 2010. Questionnaires were distributed via email to all tourist hotels in Taiwan and 45 valid returns were received, representing an effective response rate of 43.3%. The results of research illustrate the level of understanding of climate change within Taiwanese tourist hotels and identify the specific climate change adaptation and mitigation strategies that tourist hotels have initiated. Access to such baseline data provides a potentially significant contribution to evaluating the response of the Taiwanese accommodation sector to environment change as well as providing a basis for further comparative studies and benchmarking.     

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.     

Supply-side investments: An international analysis of the return and risk relationship in the Travel & Leisure sector

This study investigates supply-side investments in the tourism sector, analysing the return and risk relationship of investments in tourism across several countries. The performance of tourism sector companies listed on the stock exchange, for the top one dozen countries according to the World Economic Forum (WEF) tourism rankings, is investigated by region, across these countries and within each country by comparison to other sectors. Several metrics are used to compare the risk-adjusted returns, over a 15-year period ending March 2007 and sub-periods to check the persistence of performance over time. The results present a strikingly different ranking than those of the WEF. The implications for the flow of investment funds are of importance in a global capital market. Money will flow to those investments with the highest expected returns for a given risk level and this has consequential impacts for economic growth and employment in the tourism sector.     

Financing behaviour of Portuguese SMEs in hotel industry

In this study, using panel data models, we analyze whether the capital structure decisions of SMEs in the hotel sector follow the predictions of Pecking Order and Trade-Off theories. The results suggest that these theories are not mutually exclusive in explaining the capital structure decisions of SME hotels. The results obtained indicate that these firms follow a hierarchical order in their selection of financing sources, corroborating the assumptions of theory. The results also show that SME hotels adjust the level of actual debt towards optimal debt ratio as well as size, asset tangibility, growth opportunities, non-debt tax shields, and risk influence debt. These results suggest that the financing behaviour of SME hotels is in agreement with the predictions of theory. Therefore, Pecking Order and Trade-Off theories contribute to explaining the financing behaviour of SMEs in the hotel sector.     

Tourist districts and internationalization of hotel firms

The present paper brings together two lines of research that the literature has more often than not studied separately: the generation of externalities in industrial districts; and the international strategy based on location advantages. The application of industrial district approach principles serves to identify the tourist holiday districts situated along the Spanish coastline. This is followed by an analysis of the extent to which the degree of firm agglomeration specific to each district, as well as the presence of institutions generating specific technical knowledge, influence the globalization of the tourism sector, both regarding internationalized Spanish hotel chains and foreign hotels installed in Spain.     

Using commercial mortgage loans to assess risk and return in the lodging sector

The purpose of this study is to investigate the risk and return features of the lodging sector using a large sample of 16,898 commercial mortgage loans securitized into commercial mortgage-backed securities (CMBS) in the U.S. between 2010 and 2018. The results of the analysis show significantly lower loan-to-value (LTV), higher debt service coverage ratios (DSCR), and higher credit spreads in the lodging sector than all other commercial property sectors. Additional findings document significantly higher lodging sector capitalization rates and equity dividend rates. Taken together, the results of the study provide strong empirical support for the positive relationship between risk and return in the lodging sector. Therefore, investors will require higher returns to compensation them for the additional risk of investing in the lodging sector. The theoretical and practical implications of these results are also discussed.     

Tourism in Mauritius: an economic impact study with marketing implications

Tourism impact analysis is traditionally used to measure the volume of income, employment, public sector revenue and imports generated in a holiday area by tourist spending and to calculate the differential impacts made by visitors from various origins. This article on Mauritius shows how such analysis can provide useful marketing information to help maximize the economic impact of tourism in a small-island economy.     

The Debate Regarding Profitability

Abstract

Our research note explores a debate in the hotel industry regarding the relationship between hotel RevPAR and profitability, a debate around which there is a great degree of “noise.” Using a sample of 1,954 actual hotels for which both top line and bottom line indicators were available for the same year, we conclude through our statistical analyses that while hotels with higher revenue, and particularly higher room revenue, have a higher NOI in dollars, they do not necessarily have a more profitable business model in terms of NOI percentage. Also, we present brand level analyses.     

Innovation activity in the hotel industry: Evidence from Balearic Islands

The paper provides empirical evidence on technological activity in the Spanish service sector, in particular for the tourist accommodation in the Balearics. The study wants to fulfil the lack of analyses in the field of tourism. Commonly, the study of innovation activity has been carried out from a manufacture perspective, for that reason the paper discusses the precise definition of innovation in accommodation services. The data refer to a large representative sample of hotels in Balearic Islands (Spain), providing a homogeneous set of information. The results show as higher-categories hotels are more innovative than lower-categories hotels; an aggregated measure of technological innovation presents a rate over the average for hotels that belong to a chain, and that for hotels under management contract. Half of innovative companies adjust the human capital skills and abilities. The hotel industry is a supplier-driven sector that innovates introducing R&D embodied technology rather than undertaking internal R&D activities.     

Self-catering accommodation in Switzerland

This article examines the situation of self-catering accommodation in the light of tourist experience in Switzerland. Swiss tourism is currently declining, and so are traditional forms of accommodation such as hotels. At the same time there is evidence that the demand for self-catering holiday properties is increasing. Yet very little is known about this sector in Switzerland. The present paper attempts to identify the number of Swiss self-catering properties and presents the results of interviews and an on-line survey, which shed light on this industry and allows the situation in Switzerland to be compared with that in other countries. The number of holiday homes in Switzerland has increased steadily since the 1980s, and could provide a valuable source of rented property and local income. The Swiss self-catering industry is highly seasonal, although rental properties are mostly available all year round. Swiss accommodation is relatively small and expensive, partly because the rent usually includes laundry and other services, not offered in other countries. Owners often rent to offset the cost of upkeep, rather than to make a profit, and this attitude is reflected in the fragmented and rather unprofessional nature of marketing, representation and communications in the sector. A number of recommendations are made for developing the industry, based on the findings.     

Does uncertain demand affect service quality?

The purpose of this article is to investigate the impact of demand uncertainty on labor intensity as well as service quality. Theoretical predictions are mixed: on the one hand, risk aversion leads hotels to choose a lower level of capital in response to demand uncertainty, thereby leading to higher labor intensity; on the other hand, the demand-enhancing benefit of service quality may be weakened due to demand uncertainty, thereby leading to a lower service quality decision. Using the data of international tourist hotels in Taiwan, this article shows that demand uncertainty leads to a positive impact on hotels’ labor intensity. In addition, hotels located in markets with a higher degree of concentration, having more diversified revenue sources, or belonging to hotel chains also tend to exhibit higher labor intensity.     

A stochastic cost efficiency analysis of international tourist hotels in Taiwan

The one-stage stochastic frontier approach (SFA) is used in this study to simultaneously estimate cost efficiency scores and factors of cost inefficiency for 66 international tourist hotels in Taiwan during 1997–2006. An SFA model with three outputs and three inputs is defined. The three outputs are room revenue, food and beverage revenue, and other operation revenue while the three inputs are price of labor, price of other operation, and price of food and beverage. This model also takes into account five environmental variables, including dummy variable of the hotels located in non-metropolitan area, dummy variable of chain hotels, the number of tourist guides, the minimum distance from each hotel to Taoyuan international airport and the minimum distance from each hotel to Kaohsiung international airport. Empirical results show that international tourist hotels in Taiwan are on average operating at 91.15% cost efficiency. All nominal variables are transformed into real variables in 1997 prices by GDP deflators. Chain systems, tourist guides, and international transportation can significantly improve the cost efficiency of international tourist hotels in Taiwan.     

Location advantages of lodging properties: A comparison between hotels and Airbnb units in an urban environment

This study aims to investigate various types of location advantages that contribute to lodging property performance. Using monthly revenue data for individual urban hotels and Airbnb units in Houston, Texas from 2014 to 2016, we apply the Hausman-Taylor model to estimate the effects of location factors. Several factors are confirmed, including accessibility to points of interest, transport convenience, the surrounding environment, and market conditions. The overall effect of location advantage is more substantial for urban hotels than Airbnb units. Findings do not reveal a sizable competition effect between urban hotels and Airbnb units. Furthermore, we unveil factors associated with location advantages for different hotel classes and Airbnb types by estimating the model using different sub-samples.     

Change or perish: Examining the role of human capital and dynamic marketing capabilities in the hospitality sector

Many researchers have endeavored to explain which factors contribute to sustainable competitive advantage. Toward this end, this study contributes to the marketing and hospitality management literature by providing empirical evidence on how human capital, dynamic marketing capabilities, and market dynamism influence competitive advantage in the hotel sector. We collected cross-sectional survey data from marketing and sales managers in 165 hotels, along with in-depth interviews in three hotels, based in four Gulf Cooperation Council (GCC) countries, namely, Saudi Arabia, Qatar, United Arab Emirates and Bahrain. The findings reveal that human capital directly, and indirectly through dynamic marketing capabilities, plays a critical role on developing competitive advantage. To contextualize this role, our research reveals that market dynamism moderates the mediated relationship between human capital and competitive advantage via market sensing capabilities. We discuss how the findings offer theoretical and managerial implications for the development of competitive advantage in the hotel sector.     

Emerging Definitions of Boutique and Lifestyle Hotels: A Delphi Study

Despite growing interest in the boutique and lifestyle sector of the lodging industry, there is not an accepted definition of either “boutique hotel” or “lifestyle hotel.” Boutique and lifestyle hotel strategies provide hotel companies with important points of differentiation in an increasingly competitive marketplace. The current study determined definitions using a Delphi analysis of responses from a diverse group of experts from the lodging industry. Forty-one panel members were involved in the process that was undertaken with three rounds of questions. The study determined that boutique hotels are best characterized as small, stylish hotels that offer high levels of service. Lifestyle hotels are described as innovative and provide more of a personal experience than so-called “branded” hotels.     

The effects of the minimum wage on the operating performance of hotels in the U.S.

The economic effects of the minimum wage have been the focus of ongoing contradictory debates among policymakers and researchers. This study finds a positive effect of the minimum wage on the operating profitability of hotels in the U.S. However, the pricing practices of full-service hotels are dissimilar to those of limited-service hotels. Although the burden of the minimum wage is substantial, full-service hotels can spread the weight onto other departments, while limited-service hotels mainly rely on rooms revenue. Thus, the effects of the minimum wage on room price (average daily rate; ADR) are more substantial at limited-service hotels than at full-service hotels even though operating profitability (gross operating profit per available room; GOPPAR) is not substantially different between them. Eventually, increased minimum wage can play a beneficial role not only for the hotel industry but also for local society, since minimum wage employees take home a larger salary.     

Holiday Home Owners,a Route to Sustainable Tourism Development? An Economic Analysis of Tourist Expenditure Data

Although sustainable tourism comprises economic, social and environmental aspects, economic analysis has been less evident in the literature. This paper takes an economic perspective to evaluate the contribution of holiday home owners to a local economy. Tourism destinations which are at the mature stages of the tourism lifecycle wish to maximise revenue from tourism while minimising costs such as overcrowding. A prime objective has to be to attract the more economically valuable tourists. In this paper an analysis of North Wexford in Ireland poses questions such as: How does the holiday home owners’ expenditure in the local area compare to that of traditional tourists? Do they purchase different types of goods? What levels of local expenditure do holiday home owners engage in for the upkeep or development of their second properties? What are the implications of these findings? The results show that there are clear economic benefits for an area that people deem attractive enough to build or purchase a holiday home in. This type of tourist has a high annual spend relative to other tourists and much of this expenditure seems to be concentrated in the local area. These findings need to be incorporated into the broader debate regarding the advantages and disadvantages of holiday home owners and the possibility of them comprising a route to sustainable development for local tourist areas.     

CRM and the bottom line: Do all CRM dimensions affect firm performance?

Successful firms often endeavour to assure competitive advantages through the relationships with their customers. Consequently, customer relationship management (CRM) has become of pivotal importance to many firms. This study investigates the effect of each CRM dimension on the performance of hotels. We found that in general hotels should aim to improve CRM capabilities because it has a positive effect on firm performance. Contrary to some previous assumptions, CRM investments did not result in positive performance. These findings are important as hotels strive to allocate resources to improve relationships with customers.     

An application of repeat sales regression to distressed lodging prices

This study investigates the price discounts in financially distressed hotels. Using a sample of 2564 pairs of hotel transactions from 2003 to early 2016, the study employs a repeat sales regression approach to estimate the magnitude of the sales discount in financially distressed hotels. The findings of this study reveal a distressed sale discount of 28%, foreclosure discount of 27%, and a real estate owned (REO) sale discount of 30%, all relative to non-distressed transaction prices. More importantly, these distressed sale discounts are greater than the discounts observed in the existing residential and commercial real estate literature. The distressed prices are consistent with the observation that hotels are risky investments and investors will demand greater discounts to compensate them for acquiring financially distressed hotels.     

Foreign direct investment in tourism,poverty alleviation,and sustainable development: a review of the Gambian hotel sector

Despite the growing importance of foreign direct investment (FDI) in tourism for developing countries and its perceived developmental importance, there are few empirical impact studies. This paper explores tourism FDI and poverty alleviation through both the literature and a detailed review in The Gambia of the relative contribution of foreign versus locally owned hotels to development and poverty alleviation. Data was collected via an in-depth questionnaire with senior hotel management and through key informant interviews with tourism officials and stakeholders. The study provides empirical evidence of the relative characteristics, performance, and benefits of foreign investments, suggesting that different forms of hotel ownership have complex advantages and disadvantages for poverty alleviation. FDI was concentrated in larger, upmarket hotels, which tended to employ more staff, pay higher wages, and provide more training. However, they had a lower proportion of women employees and employment was more likely seasonal. They have more high-skilled positions, potentially offer staff mobility, but have more expatriates in management roles. Local food purchases were similar across hotel ownership types, as were local philanthropic initiatives, although there were differences of approach. Some resident foreign owners were involved in successful best practice community-linked businesses, driven by social service and environmental ethics.