Abstract
The primary objective of this study was to investigate the effect of a diversification strategy by hotel companies on corporate financial performance and stability. Using 36 publicly traded hotel companies, this study analyzed the differences in financial performance and stability between market-diversified and undiversified hotel companies. Accounting measures, market measure, and risk-adjusted performance measure were employed to gauge financial performance. The results of this study indicated that diversification strategy does not provide profit growth, but diversification partly improves the stability of performance. This study supported the nature of the trade-off between financial performance and stability in the company diversification, and also implied that the market diversification strategy by hotel companies does not function as a means to improve financial performance.
Published Version
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