Internationalization and Financial Health in the US Hotel Industry

Seoki Lee, Yoon Koh and Qu Xiao
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Seoki Lee: School of Hospitality Management, Pennsylvania State University, 217 Mateer Building, University Park, PA 16801, USA
Yoon Koh: Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, 229 C.N. Hilton and College, Suite 236, Houston, TX 77204, USA
Qu Xiao: School of Hotel and Tourism Management, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

Tourism Economics, 2014, vol. 20, issue 1, 87-105

Abstract: This study examines two main hypotheses regarding the internationalization and financial health of publicly traded US hotels from 1990 to 2010. First, the study hypothesizes that international US hotels are financially healthier than domestic US hotels. The findings support the hypothesis after controlling for other potential confounding factors: a firm's growth opportunity, profitability, size, leverage, capital intensity and economic conditions. Next, the study tests the second hypothesis, that international US hotels face a great challenge in terms of their financial health as they enter foreign markets due to the many unknown factors in such international settings. However, it is expected that the internationalization strategy will gradually provide more benefits as the firm increases its degree of internationalization, and thus that benefits will eventually outweigh costs, leading to a U-shaped relationship. The study's findings support this curvilinear U-shaped relationship within the dataset of internationally operating US hotels.

Keywords: internationalization; financial health; US hotel industry; franchising (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:20:y:2014:i:1:p:87-105

DOI: 10.5367/te.2013.0261

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