Asymmetric response of hospitality stock prices to Fed policy actions

This paper examines asymmetric response of hospitality stock prices to Fed monetary policy actions in bull and bear markets. Empirical examinations comprise two critical steps. First, following Kuttner (2001), this study uses the federal funds target rate surprise as an appropriate identification of Fed monetary policy action. Second, by using a Markov-switching model of stock returns, this study explicitly identifies bull and bear markets. Empirical test results based on an event study framework reveal that the responses of airline, gambling, hotel and travel and leisure index returns to monetary policy surprises vary greatly in bear and bull markets. The response of airline, gambling and hotel index returns is substantially greater and more statistically significant in bear than in bull markets. Moreover, the significant impact of monetary policy surprises on airline, gambling and hotel index returns exists only in bear markets. While travel and leisure index return reacts strongly to federal funds target rate surprises in both bear and bull markets, the response of travel and leisure index return is significantly greater in bear markets.     

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.     

Hotel stock performance and monetary conditions

Following the investigation of the link between hotel stock returns and macroeconomic factors in the hospitality finance literature, this study further examines (1) the performance of Taiwanese hotel stocks under two various monetary policy environments, namely expansive and restrictive, and (2) the impact of different monetary stringency on the relationship between hotel stock returns and macro variables in Taiwan. Using changes in the discount rate allows us to effectively measure the monetary policy changes and classify the monetary environment as either restrictive or expansive. Empirical results show that hotel stocks exhibited a higher mean return and reward-to-risk ratio during expansive monetary periods. Moreover, the connection between hotel stock returns and macro variables behaved differently under various monetary conditions. In response to monetary policy developments, the implication for hotel stock investors to reallocate their investment portfolios is provided.     

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.     

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.     

(Re)Creating spaces for tourism: Spatial effects of the 2010/ 2011 Christchurch earthquakes

This paper applies an economic geographical perspective and Niche Construction Theory (NCT) to the spatial effects of the Christchurch earthquakes on the city's tourism and hospitality spaces. An analysis of policy and planning documents, relevant reports, and twenty-four semi-structured interviews with key stakeholders forms the empirical basis. Niche Construction Theory (NCT) offers an analytical framework to interpret the environmental selection pressures and key stakeholders' responses in the evolving environment. This paper illustrates the spatial reconstruction processes pertaining to urban tourism and the related hospitality industry after a major natural disaster. Emerging themes include displacement and relocation, demographic changes and market shifts for hospitality businesses.     

Asymmetric effects of tourist arrivals on the hospitality industry

This study makes a unique contribution to the hospitality literature by examining the asymmetric effects of total tourist arrivals in six segments of tourist arrivals (pleasure, business, visiting relatives, conference, study, and others) on Taiwan’s hospitality industry. Regression test results confirm that the contribution of the overall tourist arrivals and both pleasure and visiting relatives segments to hospitality industry growth is not asymmetric, as it is found in periods of expansion and contraction. The beneficial effect of the business segment on hospitality industry growth is asymmetric, existing only in periods of business cycle expansion. However, the conference, study, and other segments make no significant contribution to hospitality industry growth. The study’s valuable policy implications offer guidance to Taiwan’s tourism authorities, hospitality business owners, and managers.     

Initial public offerings in the gaming industry: an empirical study

The fastest growing segment of the hospitality industry is gaming-related business. This industry has experienced record numbers of companies going public, and their stocks are considered favorable long-term investments. Research in the initial public offering (IPO) area suggests that investors acquiring stock at the initial offering price earn large returns. The purpose of this study was to determine if large returns are being experienced for IPOs in the gaming segment of the hospitality industry, and if these large returns were limited to investors who purchased the stock at the initial offer price. There were 14 gaming-related companies selected for the study. The conclusions supported research reporting that the highest returns from IPO investments are made when the stock is purchased at the initial offer price. This study concludes that returns based on the initial offer price were greater than the casino index and the IPO index. When the investor purchased the stock at the first day's closing price, however, returns compared to the two indices were surpassed only after holding the stock for 8 weeks.     

Examination of Taiwan's travel and tourism market cycle through a two-period Markov regime-switching model

This study analyzes the Taiwan travel and tourism (T&T) market cycle. According to data of the weighted Taiwan tourism stock index from January 1997 to August 2015, the two-period Markov regime-switching model identifies two distinct regimes of the T&T cycle and incorporates a specific set of mean and variance parameters for each period to control for the structural changes in Taiwan's T&T market. The effect of China visitor arrivals to Taiwan on the T&T market is also verified. The empirical findings offer essential information and policy implications for Taiwan's government tourism policymakers and business managers.     

The why,how, and what of public policy implications of tourism and hospitality research

We synthesized policy implications of tourism and hospitality research by reviewing 12,269 articles published in 10 leading journals from 2012 to 2021. The most common rationale for policies (i.e., the why) is market failure, while the most typical role of policies (i.e., the how) is to create incentives. In addition, policies are typically hybrid and include suggestions for formal and informal institutional setups (i.e., the what). Because our review revealed that only 114 articles (i.e., 0.93%) included the why, how, and what of actual policies, we offer a theory-based research agenda on policy-making focused on making tourism and hospitality more inclusive and focusing on evolutionary dynamics, providing an understanding of the impact of crises and contemporary solutions, focusing on resilience and institutional complexity, and addressing the actors and time dimension. Our results, combined with those of our suggested research directions, will benefit organizations and society and simultaneously enhance the perceived societal value-added, contributions, and stature of tourism and hospitality research.     

An investigation of the mean reversion of hospitality stock prices towards their fundamental values: The case of Taiwan

This paper tested the mean reversion behavior of stock prices in the hospitality and other industry sectors towards their fundamental values, namely earnings per share (EPS) and dividend per share (DPS). Cointegration test results showed that DPS is not a good proxy of fundamental values of stock prices in all sectors, while EPS can serve as a good proxy of fundamental values of stock prices only in the hospitality and construction sectors. Further, although hospitality stock prices have diverged away from their fundamental values from time to time, there exists an error correction mechanism in the market, which adjusts hospitality stock prices to return to their fundamental values. We also found that hospitality stock prices driven by their EPS are due to less noise trading and small size in the hospitality industry. Lastly, empirical findings suggest that hospitality stock investors should pay more attention to the underlying performance of hospitality stocks in terms of their earnings per share.     

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.     

Comparing the price of sin: Abnormal returns of cross-listed casino gaming stocks in the Hong Kong and US markets

While a number of hospitality researchers have investigated hospitality stock returns, few examine the stock returns of casino gaming companies. In finance, these stocks are often termed as ‘sin’ stocks. The purpose of this study is to compare the stock returns of cross-listed casino gaming stocks in Hong Kong and New York stock exchanges. Four pairs of casino gaming stocks are currently cross-listed in both exchanges, allowing for comparison. The cross-listing sample consists of 3138 firm-day observations from January 2009 to December 2013. Preliminary analyses, using time-series regression, show that the average daily returns and standard deviations of casino gaming stocks are much higher than market indices in both jurisdictions. Most importantly, casino gaming stocks listed in Hong Kong exchange have a significantly higher abnormal return than their cross-listed counterparts in the US. The reason may be due to cultural issues. These findings will have meaningful implications to investors of casino gaming companies.     

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.     

The response of hotel performance to international tourism development and crisis events

This study uses panel regression tests to examine the response of hotel performance to international tourism development and crisis events in Taiwan. Hotel performance measures are revenue (revenue per available room and occupancy rate), profitability (return on assets and return on equity) and stock performance. The crises were the earthquake on September 21, 1999 (the 9/21 earthquake), the terrorist attacks of September 11, 2001 in the US (the 9/11 terrorist attacks) and the outbreak of Severe Acute Respiratory Syndrome on April 22, 2003 (the SARS outbreak). This study makes four major contributions. First, test results confirm that international tourism development (ITD), proxied by the growth of total inbound tourist arrivals, has a more direct influence on hotel sales and profitability than it does on hotel stock performance. Second, this study identifies that the absence of a strong tie between ITD and hotel stock returns that was found in previous studies is due to the time-varying discount rate caused by investors’ changing expectations for the prospect of future cash flows from holding hotel stocks. Third, this study finds new evidence that while the poor performance of hotel stocks caused by the 9/21 earthquake and the 9/11 terrorist attacks was attributed to the loss of hotel sales revenue, the adverse effect of the SARS outbreak on hotel stock returns is attributed not only to decreased hotel sales revenue but also to the increased discount rate. Lastly, this study is the first to investigate whether the response of hotel stock returns to ITD depends on the state of economy and concludes that the response of hotel stock performance to ITD in business cycle contraction is statistically different from that in business cycle expansion. Further, although the influence of ITD on hotel stock performance is still irrelevant during expansion periods, ITD can significantly enhance hotel stock returns during contraction periods.     

Understanding the impact of changes in consumer confidence on hotel stock performance in Taiwan

This study contributes to the hospitality literature by providing a comprehensive investigation of the effects of changes in consumer confidence (ΔCCI) in Taiwan on hotel stock performance, including hotel sales growth (ΔSALES), hotel stock returns (HSR) and the perceived riskiness of stock cash flows from holding hotel stocks (proxied by the risk of hotel stock returns (RISK)). Empirical test results reveal that ΔCCI can significantly benefit HSR by stimulating hotel sales growth and by lowering the perceived riskiness of hotel stock cash flows. Quantile regression tests demonstrate that among six economic variables, only ΔCCI can consistently and significantly affect HSR, ΔSALES and RISK at all different quantiles. Changes in consumer confidence are also found to be significant in helping the prediction of HSR, ΔSALES and RISK. Specifically, an increase in ΔCCI can cause an increase in HSR and ΔSALES and a decrease in RISK.     

Can corporate social responsibility protect firm value during the COVID-19 pandemic?

The novel coronavirus (COVID-19) pandemic has caused a significant decline in the stock market worldwide, and hospitality companies are experiencing serious financial problems. Protecting and preserving firm value is a critical way of helping hospitality companies survive the crisis. The influence of corporate social responsibility (CSR) on firm value has been widely investigated. However, little is known about the stock price movement following CSR activity adoption during an industrial crisis. Using event study and difference-in-difference method, this study reveals that engaging in CSR activities can increase the stock returns and stakeholder attention of hospitality firms during the pandemic. Community-related CSR has a stronger and more immediate effect on stock returns than customer- and employee-related CSR. Results also indicate that hospitality firms that pursue improved stock market performance during a pandemic can invest in CSR to protect communities, customers, and employees for attracting further stakeholder attention.     

Educators' Perceptions of Business Ethics in Hospitality

ABSTRACT

Business ethics has become a popular topic in both the academic arena and the business setting within the hospitality industry. This research investigates the perceptions of hospitality educators regarding business ethics in contemporary hospitality programs and the hospitality industry (Damitio & Schmidgall, 1993; Dunfee & Donaldson, 1999). This study provides some pivotal educational findings as to how hospitality educators perceive the preparation of hospitality students relative to business ethics. There are three distinctive findings. Female educators have a significantly higher level of agreement toward statements about business ethics in the hospitality industry than do male educators. Educators whose own level of education was a doctorate degree were significantly less concerned about ethics education than educators whose own level of education was a two-year college degree or a master's degree. And, educators who were employed in institutions offering graduate degrees were significantly less concerned about ethics education than educators who were employed in institutions offering undergraduate degrees. In addition to those three significant findings, this study also showed that educators perceive that organizations should not only practice business ethics with customers but also with employees. Additionally, this study showed that educators are concerned about multinational companies (MNC) and students' ability to understand ethical issues while operating businesses in foreign countries. Educators are also concerned about the strong influence of business organizational leadership and management on business ethical practices.     

When enough is enough! Alcohol servers’ refusal styles and key antecedents

While alcohol servers’ play a critical role in managing customers’ intoxication in hospitality settings, there is little research that investigates actual server refusal behaviors within hedonic interactions. This study is an in-depth exploration of the key styles alcohol servers use to refuse alcohol service and the determinants of these behaviors. Fourteen interviews conducted with service staff reveal four styles of alcohol refusal behaviors: assertive, hedonic, avoiding, and compromising refusal. Four determinants of supervisory/organizational support, efficacy in enacting behavior, perceived responsibility, and perceived customer characteristics and behaviors appear to relate to these refusal behaviors. The paper addresses marketing and policy implications for hospitality managers, and concludes with limitations and future research directions.     

Market orientation of small ethnic minority-owned hospitality firms

This paper seeks to evaluate the influence of changing co-ethnic consumer habits and the nature of competition on the market orientation of ethnic minority-owned hospitality firms in the UK. The paper reports and analyses the findings of 40 face-to-face interviews with Turkish small business owners. The findings of the study indicate that ethnic minority owned small firms operate within a strong socio-cultural environment. Not only co-ethnic customers and competitors but also both mainstream customers and competitors have a bearing on the market orientation of firms. Their market orientation is the result of the interplay between the changes in ethnic and mainstream business environments.