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An Examination of US Hotel Segment Strategy: Diversified, Concentrated or Balanced?

Author

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  • Seoki Lee

    (School of Tourism and Hospitality Management, Temple University, 1810 North 18th St, 314 Speakman, Philadelphia, PA 19122, USA)

  • Qu Xiao

    (School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong)

  • Kyung Ho Kang

    (College of Hotel and Tourism Management, Kyung Hee University, 1 Hoegi-dong, Dongdaemun-gu, Seoul 130-701, South Korea)

Abstract

Segment diversification is a common strategy applied by hotel companies. According to previous research on the modern portfolio theory, a company can reduce risks and thus increase its value with more diversified operations. Such reasoning can certainly apply to the hotel industry in terms of its segment strategy. However, the findings are inconclusive. In particular, other literature argues for more concentrated rather than diversified operations. This study therefore examines the impacts of segment diversification on companies' risk-adjusted performances among publicly traded US hotels. The results suggest that a moderate segment diversification strategy maximizes a company's risk-adjusted performance.

Suggested Citation

  • Seoki Lee & Qu Xiao & Kyung Ho Kang, 2011. "An Examination of US Hotel Segment Strategy: Diversified, Concentrated or Balanced?," Tourism Economics, , vol. 17(6), pages 1257-1274, December.
    • Handle: RePEc:sae:toueco:v:17:y:2011:i:6:p:1257-1274
    DOI: 10.5367/te.2011.0086
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    References listed on IDEAS

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    1. Ambrose, Brent W. & Ehrlich, Steven R. & Hughes, William T. & Wachter, Susan M., 2000. "REIT Economies of Scale: Fact or Fiction?," The Journal of Real Estate Finance and Economics, Springer, vol. 20(2), pages 211-224, March.
    2. Charles W. L. Hill & Michael A. Hitt & Robert E. Hoskisson, 1992. "Cooperative Versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science, INFORMS, vol. 3(4), pages 501-521, November.
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    Cited by:

    1. Chen Zheng & Henry Tsai, 2019. "The moderating effect of board size on the relationship between diversification and tourism firm performance," Tourism Economics, , vol. 25(7), pages 1084-1104, November.
    2. Yang, Yang & Cao, Yang & Yang, Li-Ting (Grace), 2017. "Product diversification and property performance in the urban lodging market: The relationship and its moderators," Tourism Management, Elsevier, vol. 59(C), pages 363-375.

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