Product diversification and property performance in the urban lodging market: The relationship and its moderators |
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| Institution: | 1. School of Sport, Tourism and Hospitality Management, Temple University, Philadelphia, PA, USA;2. School of Hotel, Restaurant, and Tourism Management, University of South Carolina, Columbia, SC, USA;1. School of Hospitality Administration, Boston University, 928 Commonwealth Avenue, Boston 02215, USA;1. Department of Financial Economics and Accounting, University of Santiago de Compostela, Facultad de CCEE, C/ Burgos das Nacións s/n, Santiago de Compostela 15782, A Coruña, Galicia, Spain;2. Department of Business Economics, University of the Balearic Islands Palma de Majorca, C/ de Valldemosa Km 7,5, Campus UIB, 07122, Balearic Islands, Spain;1. School of Economics and Business Administration, University of Tartu, Tartu, Estonia;2. University Polytechnic of Valencia (UPV), Valencia, Spain;3. ESIC Business & Marketing School, Valencia, Spain |
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| Abstract: | In this study, we investigate the relationship between product diversification and hotel property performance as well as the moderators of this relationship in the urban lodging market. Using stochastic frontier analysis with panel data, we calibrate the efficiency scores of 377 urban hotels in Beijing from 1994 to 2005. We then investigate the impact of product diversification on performance as measured by efficiency score. Results from panel data models indicate that the degree of product diversification exhibits a positive relationship with hotel performance. Hotel location, diversification expansion rate, and foreign ownership/operation are found to be significant moderating factors determining the effect of product diversification. Specifically, hotels that (a) are located farther from the city center, (b) expand diversification more slowly, and (c) are domestically owned are more likely to leverage the benefits stemming from product diversification. We provide a series of practical evaluation modules to help hoteliers improve performance. |
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| Keywords: | Product diversification Hotel performance Stochastic frontier analysis Diversification expansion rate Hotel location |
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