Journal Issue: Journal of Hospitality Financial Management: Volume 25, Issue 2
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2017-15-12
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Hotel Industry Performance in 2016–2017 and the JHFM Index
(2017-12-15) Sheel, Atul
CEO Attributes and Firm Performance in the Hospitality Industry
(2017-12-15) Li, Yuan; Singal, Manisha
Drawing on upper echelons theory, we explore demographic and other attributes of CEOs in the hospitality industry and their impact on firm performance. Our results, based on a sample of 1,427 CEO firm-years of publicly traded companies over a period of 24 years, show that a typical CEO in the hospitality industry is male, in his mid-50s, with no graduate degree and no prior CEO experience, but has worked in operations and has an average tenure of approximately 9 years. Our analyses show that while there is some relationship between CEO attributes and firm performance, the sign and significance of this relationship depends on the specific firm performance measure used. Our study contributes to the literature in corporate governance and hospitality by systematically examining the effect of CEO demographics and other attributes on firm performance in the hospitality industry. We draw implications for CEO search committees of hospitality firms and outline avenues for future research.
Factors Impacting Capital Expenditures in the Quick Service Restaurant Industry
(2017-12-15) Jiang, Lan; Dalbor, Michael
The purpose of this article is to study the factors that impact capital expenditures in the quickservice restaurant industry. The authors hypothesize that growth opportunities, free cash flow, size, corporate earnings, economic conditions, and franchising status will have impact on the capital expenditures of quick-service restaurants. This study analyzed capital expenditure and other financial data on quick service restaurants for the period 2006–2016. Results suggest that corporate earnings, size, cash flow, economic conditions, and franchising have a significant relationship with capital expenditures, while growth opportunities are not associated with capital expenditures. Specifically, a high degree of corporate earnings, large size, and a high degree of cash flow tend to be associated with a high degree of capital expenditures; while favorable economic conditions and franchising tend to be associated with a low level of capital expenditures.
Is the Hospitality Industry Ready for the New Lease Accounting Standards?
(2017-12-15) Chatfield, Hyun Kyung; Chatfield, Robert E.; Poon, Percy
The days where companies can use off-balance sheet leases are coming to an end. The new lease accounting standards, ASU 842 and IFRS 16, released in early 2016, will be effective, respectively, on December 15, 2018, and January 1, 2019. Under the new standards, virtually all leases will be recognized on a lessee’s balance sheet. Hence, financial statements and ratios of companies that heavily use off-balance sheet leases will be considerably impacted. Our analysis of the off-balance sheet leases by the hospitality industry indicates that hospitality companies do extensively use these operating leases, which amounted to 51% of their assets in 2015. The expected widespread unfavorable impact on a lessee’s debt ratios and interest coverages could also affect a hospitality company’s borrowing rates and debt covenants. Given that the implementation is most likely time consuming, not just costly, the earlier the hospitality companies are prepared for the new standards the better.
Cash Budgets, Controls, and Management in Clubs
(2017-12-15) DeFranco, Agnes L.; Schmidgall, Raymond S.
Cash is important, because it pays for all expenses and obligations. On an annual basis, designated individuals will compile a cash budget for the coming year, which club management will use as a blueprint to operate their clubs and ascertain the timing of the cash inflows and outflows. This study, therefore, explored the extent to which cash budgeting is used in clubs, the various cash budget practices, and whether such practices differ by the demographic characteristics of the clubs. The results showed that cash management in clubs rested largely in the hands of the chief financial officers and the general managers (GM). While 17.5% of the clubs had their GMs as the responsible person preparing the cash budget, this dropped to only 7.7% when it came to daily monitoring of the amount of cash in the clubs. The cash amount in the bank account of the respondents’ club ranged from less than $100,000 to more than half a million dollars. Subgroup analyses by demographic characteristics also showed statistically significant differences in the: (1) person responsible for daily cash monitoring, (2) person responsible for preparation of the cash, and (3) the targeted amount of cash in the club’s checking accounting.