The effects of industrial trends, diversification strategy and corporate policies on the operating performance of international tourist hotels

Abstract

This study uses scale (average number of rooms) and pricing (average room rate) as variables to separate sample hotels into four strategic groups. We use variables related to the business cycle and industrial trends and proxy variables for diversification strategy and corporate policies to perform a panel data regression that explores their effects on the operating performance (using occupancy rate as an indicator) of international tourist hotels in each strategic group. We find that the business cycle, industrial trends, marketing policy and diversification are important decision variables for CEOs of international tourist hotels in Taipei City. The study has two strategic implications for hotel management: first, international tourist hotels can use a differentiation strategy to avoid price competition and enhance their operating performance; second, such hotels should focus on their core business of room rentals and food and beverage service since a diversification strategy decreases the occupancy rate.