Journal of Hospitality Financial Management

The Value of Employee Satisfaction

Tang, Hugo — Fri, 09 Nov 2012 00:33:32 PST

Capital Intensity, Advertising Intensity and Unsystematic Risk of U.S. Restaurants

Madanoglu, Melih et al. — Fri, 09 Nov 2012 00:33:31 PST

The Impact of Franchising on Outperformance in the Restaurant Industry: A Long Term Perspective

Hua, Nan et al. — Fri, 09 Nov 2012 00:33:31 PST

The Relationship among Guestroom Renovation, Customer Satisfaction, and Profitability

Bloom, Barry A.N. — Fri, 09 Nov 2012 00:33:30 PST

AHFME Academic Member 2011 Total Annual Earnings Survey

Schmidgall, Raymond S. — Fri, 09 Nov 2012 00:33:29 PST

This study was conducted to determine the 2011 annual earnings of hospitality financial management educators. Forty percent of AHFME’s members affiliated with educational institutions responded. Annual base salaries ranged from $67,000 to $185,000. The lowest paid member is an assistant professor while the highest paid member is a full professor. Many respondents supplement their base salaries by both teaching during summer school and consulting. The total annual earnings of members ranged from $75,000 to $293,000. Hospitality financial management educators appear to be more highly compensated than the average college professor.

Hotel Industry Demand Curves

Corgel, Jack et al. — Fri, 09 Nov 2012 00:33:28 PST

This research extends previous work on understanding hotel demand by focusing on the demand curve. Specifically, attention is directed toward the slope of the curve indicating the relationship between average daily rate (ADR) and the number of rooms sold - the price elasticity. Also, we investigate shifts in the curve caused by demand determinants such as changes in income, the extent is represented by income elasticity. Our findings are consistent with estimates produced by others for short-run elasticity, but we report sometimes noticeable differences between long-run and short-run elasticity. Price and income elasticity are considerably larger for higher quality hotels as indicated by the chain scale in which they operate. Elasticity tends to increase with data dis-aggregation. Higher elasticity is generally found for individual chain scales and cities compared to the nation.

Does Cost Efficiency Lead to Better Financial Performance? A Study on Taiwan International Tourist Hotels

Shieh, Hwai-Shuh — Fri, 09 Nov 2012 00:33:27 PST

The purpose of this study is to conduct an investigation into the link between cost efficiency and financial performance as it pertains to the hotel industry. This study employs DEA approach to estimate cost efficiency and uses three traditional financial indicators, such as the ratio of net operating profit before taxes, the ratio of earnings before taxes, and return on assets before taxes, to measure financial performance. Data were generated from 68 hotels in the international tourist hotels in Taiwan from 1997 to 2006. The major finding indicates that cost efficiency is insignificantly associated with the financial performance, whatever three above financial performance variables. The implications of the findings are discussed and the limitations of the study as well as future research directions are addressed.

Estimating Cost of Equity in the Restaurant Industry: What is Your Required Rate of Return?

Madanoglu, Melih et al. — Fri, 09 Nov 2012 00:33:26 PST

Accurate estimation of cost of equity is critical when making capital investment decisions to allocate valuable corporate resources. While the importance of proper estimation of required rate of return of an investment project is well documented, challenges surrounding estimation of the cost of equity still abound. This paper empirically evaluates the viability of common cost of equity models to estimate required rate of return for the U.S. restaurant industry for the 1996-2010 period. The Full model which consists of five risk factors emerges as the soundest cost of equity model for the U.S. restaurant industry. We recommend that future studies assess the performance of cost of equity models in other countries and other segments of the hospitality industry.

Why Do Restaurant Firms Initiate Dividends?

Oak, Seonghee et al. — Fri, 09 Nov 2012 00:33:25 PST

The U.S .restaurant industry has experienced significant growth since 1970 (National Restaurant Association, 2011). Publicly traded restaurant firms tend to initiate dividends soon after they go public, quite often even in the same year. This study tests hypotheses based upon four dividend initiation theories: signaling, life-cycle, agency costs and catering. The results reveal that only the signaling theory is significant. Since most restaurant firms initiate dividends at the growth stage, they tend to have little free cash, flow, high investment opportunities, and low dividend premiums (which are less favorable to investors).

Returns to Hospitality Acquisitions by Method of Payment

Chatfield, Hyun Kyung et al. — Fri, 09 Nov 2012 00:33:24 PST

This is the first study to consider the impact of payment method on announcement period returns in response to a merger and acquisition in the hospitality industry. Much research has been published on the returns to mergers and acquisitions generally and in the last ten years quite a bit has been published on this topic in hospitality journals. But very little has been published about the impact of payment method in hospitality mergers and acquisitions.

This paper uses standard event study methodology to determine abnormal returns for a sample of 282 bidding hospitality firms. The results are that an acquisition in the hospitality industry is more likely to be profitable if payment is made with cash. This provides empirical support for the asymmetric information and signaling theories premise that bidding firms will earn positive abnormal returns for cash offers, but returns are not significantly different than zero for stock offers.

2012 – A Performance Review for Restaurant Firms

Sheel, Atul — Fri, 09 Nov 2012 00:33:22 PST

2010 Financial Performance in the Club Industry

Schmidgall, Raymond et al. — Mon, 02 Jan 2012 00:03:11 PST

This article reveals the median financial results for the club industry for 2010 using 24 financial ratios. The results are based on the submission of balance sheet and selected income statement numbers from 108 clubs. The ratios are reported as median results for the entire ample of 108 clubs plus the median results for the top and lower performing clubs delineated on return on assets. The biggest differences between the two extreme groups of clubs are (1) average collection period, (2) operating cash flows to current liabilities and long-term debt, (3) TIE, (4) beverage inventory turnover, (5) profit margin, (6) return on assets, (7) ROA, (8) operating efficiency ratio, and (9) labor cost percentage.

AHFME Academic Member 2010 Total Annual Earnings Survey

Schmidgall, Raymond S. — Mon, 02 Jan 2012 00:03:11 PST

This study was conducted to determine the 2010 annual earnings of hospitality financial management educators. Forty-six percent of AHFME’s members affiliated with educational institutions responded. Annual base salaries ranged from $60,000 to $171,000. The lowest paid member is an assistant professor while the highest paid member is a full professor. Many respondents supplement their base salaries by both teaching during summer school and consulting. The total annual earnings of members ranged from $75,000 to $260,500. Hospitality financial management educators appear to be more highly compensated than the average college professor.

Revenue Management as a Multi-Disciplinary Business Process - Part Two

Buckhiester, Bonnie — Mon, 02 Jan 2012 00:03:10 PST

In today’s volatile markets, with consumer buying behavior evolving rapidly, rudimentary revenue management practices are no longer sufficient. Given the complexity of demand patterns in today’s markets, optimal demand management is achieved only with a totally holistic approach. This means that revenue management must be treated as a highly structured, multi-disciplinary business process, including a fully synergistic approach to the relationship between marketing, sales and operations. Key components of a comprehensive revenue management program include: 1) aligning product to customer demand, 2) taking a structured approach to competitive benchmarking, 3) creating a strategic pricing framework, 4) forecasting unconstrained demand, 5) using business mix as a primary strategy, and 6) managing distribution effectively and efficiently. In all of these areas existing best practices enable hotels to optimize demand and to approach markets in a balanced manner, securing higher room rates when possible and higher volume when needed. Part 1 of this series on revenue management addressed the elements of product alignment, competitive benchmarking and strategic pricing. This article explores the last three key revenue management components: Demand Forecasting, Business Mix Manipulation and Distribution Management.

A Longitudinal Study of Equipment Leasing in the U.S. Lodging Industry

Jiang, Lan et al. — Mon, 02 Jan 2012 00:03:09 PST

This paper examines the current equipment leasing practices in the U.S. lodging industry and compares tjhese practices to leasing practices in the U.S. lodging industry in 2000. It compares the differences of what features of leases make them attractive for today's hotel companies compared to those a decade ago.

A previous study of leasing in the lodging industry was conducted by Schmidgall and Upneja ten years ago. Their research revealed the major reasons for leasing included (1) protection from obsolescene, (2) securing tax advantages, and (3) ensuring uniform cash outflows.

Ten years have passed and a similar questionnaires was sent to 500 members of HFTP associated with the lodging industry. This time researchers found that the major reasons for leasing are (1) keep upgrading equipment, (2) protection against obsolescene, and (3) lower down payments.

The Impact of Strategic Management Accounting and Cost Structure on ABC Systems in Hotels

Pavlatos, Odysseas — Mon, 02 Jan 2012 00:03:09 PST

The purpose of this paper is to examine the extent to which potential factors affect the adoption of ABC systems. An empirical survey was conducted on a sample of 85 leading hotels enterprises in Greece. Results show that the adoption of ABC systems is positively associated with the extent of use of strategic management accounting techniques and with cost structure. No association was found between the adoption of ABC systems and the importance of cost data, level of price competition and size.

Clubs' Adoption of Sarbanes-Oxley Measures

schmidgall, Raymond S. et al. — Mon, 02 Jan 2012 00:03:08 PST

This paper attempted to determine the extent to which clubs have adopted some of the various measures of the Sarbanes-Oxley Act. In order to make this determination, a study was conducted that involved 179 club executives. The club executives reported the extent that their clubs were in compliance with various aspects of SOX. In addition, the demographic data collected were analyzed in relation to the responses to the SOX provisions. This analysis determined whether the size of clubs in revenues and based on number of members and profitability impacted the adoption of various measures of SOX.

Hospitality Industry Professionals’ Perceptions of the Importance of Content Areas in the Finance and Accounting Curriculum

Hein, Stephanie G. et al. — Mon, 02 Jan 2012 00:03:07 PST

This study investigated the importance that professionals working in the hospitality industry attach to key areas taught in hospitality financial management and accounting as they relate to the success of hospitality graduates. It also sought to determine if significant differences existed between various demographic subgroups based on industry segment, position, time in the industry and educational attainment. A snowball sampling technique was employed and yielded 103 useable surveys. Analysis of the data indicated that practitioners did attach substantial importance to both financial management and accounting skills as being important to industry success. However, they viewed financial management skills as more critical. There was a clear demarcation between those accounting areas more closely associated with operations than those linked to financial accounting. Analysis of the demographic subgroups identified differences in perception but only a few of these rose to the level of significance.

2011 – A Year in Review for Hotel Firms

Sheel, Atul — Mon, 02 Jan 2012 00:03:05 PST

The Effects of Asset Growth to the Cross-Section of Hospitality Stock Returns

Kizildag, Murat et al. — Mon, 25 Jul 2011 15:22:57 PDT

This study aims to estimate the effects of hospitality firm’s asset growth (year-on-year percentage change in total assets) to cross-section of stock returns by exploring the univariate relations between market value equity (ME), book-to-market equity (B/ME), and beta (β) over the period of 1999-2009. By utilizing the two-pass cross-sectional regression methodology, this paper uncovers the roles of ME, B/ME, β, and the effect of asset growth on returns in the analysis of the cross-sectional stock return behavior. The results of this study are expected to provide a broad outlook for the major segments of the hospitality industry (hotel, restaurant, and airline firms) for their strategic asset investment and disinvestment decisions. For instance, the findings of this study are believed to (1) establish fundamental grounds for asset expansion strategies (mergers & acquisitions, bank loan initiations, public equity offerings, etc.), asset contraction policies (share repurchases, spinoffs, stock splits, dividend initiations etc.), and optimal asset allocation in their portfolio management for their shareholders and (2) demonstrate any abnormal stock returns – high and low – followed by these corporate events. Furthermore, the effects of asset growth associated with ME, B/ME, and β in cross-section stock returns analysis are evidenced by many scholars as both economically and statistically significant predictor of the cross-section of U.S. stock returns since the early 1960s. Hence, we conjecture that the results of this study should help understand whether a firm’s asset growth is a robust predictor in the cross-section of stock returns for the major segments of the hospitality industry.