The economy, tourism growth and corporate performance in the Taiwanese hotel industry

• Published in: Tourism management (1982) Vol. 31; no. 5; pp. 665 - 675
• Main Author: Chen, Ming-Hsiang
• Format: Journal Article
• Language: English
• Published: England Elsevier Ltd 01.10.2010
• Subjects: Corporate performance; Economy; Factor analysis; Hotels; Panel regression; Tourism growth; Hotels; Economy; Factor analysis; Corporate performance; Panel regression; Tourism growth
• ISSN: 0261-5177; 1879-3193
• DOI: 10.1016/j.tourman.2009.07.011

This study investigates the impact of economy and tourism growth on the corporate performance of tourist hotels in Taiwan. The indicators of corporate performance under consideration are occupancy rate ( OPR), return on assets ( ROA), return on equity ( ROE), stock return, and the overall financial performance measured by a comprehensive score (a combined measure of asset management, profitability, short-term solvency or liquidity and long-term solvency based on factor analysis). The effects of changes in the state of economy (real GDP growth rate, Δ GDP ) and tourism growth (growth rate of total foreign tourist arrivals, Δ TA ) on the corporate performance of tourist hotels are then examined via panel regression tests. Test results show that both Δ GDP and Δ TA are significant explanatory factors of OPR, but only Δ TA can strongly explain ROA and ROE. However, neither Δ GDP nor Δ TA have a significant influence on hotel stock performance. Further, the economic factor ( Δ GDP ) is slightly more crucial than the industry factor ( Δ TA ) in describing the overall financial performance in the Taiwanese hotel industry. Empirical findings offer valuable information for government tourism policymakers and tourist hotel owners and managers.