Abstract
Using a sample of 50 London hotels over the period 2006-2015, the current paper significantly contributes to the empirical literature by comprehensively and systematically investigating the hotel-specific, industry-specific and macroeconomic determinants of profitability under a two-step Generalised Method of Moments (GMM) system estimator. The profitability is cross-checked by different indicators. This paper fills the gap in empirical literature to test the Structure-Conduct-Performance (SCP) hypothesis and Efficient-Structure (ES) hypothesis by including both a competition indicator and an efficiency indicator. The results show that London hotel profitability is significantly affected by liquidity, capitalization, gearing, cost of employees as well as development of London hotel industry. The results of the current paper provide important implications for London hotels to improve their profitability.
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