E-commerce Expenses and Financial Performance Of American Upper Midscale Hotels

Abstract

The US upper midscale hotels are increasingly dependent on information technologies and their corresponding business models to support their core business functions, especially their electronic commerce. Using data collected over 6 recent years from the same upper midscale US hotels that reported e-commerce expenses, and data from a matching sample of hotels that did not report e-commerce expenses, this study investigated the relationship between e-commerce expenses and financial performance with the aid of the resource-based theory, in order to illustrate how several types of marketing expenses such as e-commerce, loyalty, media/outdoor advertising, and total franchise expenses impact rooms revenues and gross operating profits. Among such antecedents, e-commerce expenses exhibit strong structural influences on the measures of financial performance. The results illustrate the fundamental role of e-commerce expenses in shaping the financial performance of upper midscale hotels. Several important theoretical contributions for scholars and actionable managerial suggestions for hotel decision makers are provided.