Abstract
Systematic risk, or the variance of asset returns that cannot be eliminated through diversification of a portfolio, has received limited attention from tourism researchers. This is problematic given the dramatic changes experienced by the industry in the last two decades and the fact that there are unique determinants of systematic risk owing to the tourism industry's idiosyncratic business environment. Therefore, the primary purpose of this study is to identify financial/operating determinants that influence systematic risk for online travel agencies (OTAs). Panel data from 10 US OTA companies listed on the New York Stock Exchange Index from 2001 through 2010 were analysed via a two-way, random-effects model using generalized least squares. The results indicate that advertising expenditures, liquidity and firm size are significant determinants of the systematic risk of OTAs. Appropriate financial/operating management for all three determinants are recommended to decrease that risk. This investigation of OTAs' systematic risk provides practical insights to the OTA industry.
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