Title of Paper

The erosive effects of promotions on travel firm performance

Author Bios (50 Words for each Author)

Abhinav Sharma, is an assistant professor at Dedman College of Hospitality in Florida State University.

María Jesús Santa-María is an associate professor in the Department of Applied Economics and Economic Policy, College of Business and Economics, University of Alicante.

Juan Luis Nicolau is the J. Willard and Alice S. Marriott Professor of Revenue Management in the Howard Feiertag Department of Hospitality and Tourism Management in the Virginia Tech Pamplin College of Business.

Abstract (150 Words)

Promotions are frequently deployed by firms in the tourism and hospitality industry as a way to boost occupancy in times when excess capacity may be anticipated. While promotions may indeed augment revenues and other accounting measures commonly used in by hotels to assess performance, the impact of these sales tools on finance-based indicators remains largely unexplored. Exploiting a rich dataset of consisting of over 300 corporate level promotions by the hotels spanning nearly two decades, this study shows that promotions can be detrimental to market value of hospitality and tourism firms. This erosion of the market value is even more acute for promotions with a tangible monetary component, such as price discounts. Moderating and mediating effects of other promotional actions are identified.

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The erosive effects of promotions on travel firm performance

Promotions are frequently deployed by firms in the tourism and hospitality industry as a way to boost occupancy in times when excess capacity may be anticipated. While promotions may indeed augment revenues and other accounting measures commonly used in by hotels to assess performance, the impact of these sales tools on finance-based indicators remains largely unexplored. Exploiting a rich dataset of consisting of over 300 corporate level promotions by the hotels spanning nearly two decades, this study shows that promotions can be detrimental to market value of hospitality and tourism firms. This erosion of the market value is even more acute for promotions with a tangible monetary component, such as price discounts. Moderating and mediating effects of other promotional actions are identified.