Type of Submission

Refereed Article


This study investigates the factors that affect Korean lodging firms’ performance measured in terms of return on assets (ROA). Using the 2005 financial data of a sample of 112 publicly traded Korean lodging firms and a stepwise regression procedure, the study identified the ratio of earnings before interests, taxes, depreciation, and amortization to total liabilities and debt ratio as significant determinants of ROA. The estimated regression model was able to explain 56 percent of variation in ROA across the sample lodging firms. The two variables retained by the model suggest that to improve ROA, the Korean hotel industry must exert tight control over operating costs to raise the operating profit margin. In the meantime, Korean lodging firms should adopt a more conservative debt-financing policy.