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Is timeshare good for firm value and profitability? Evidence from segment reporting

Daniela Cristina dos Anjos Penela (Department of Management, Universidade de Lisboa Instituto Superior de Economia e Gestao, Lisboa, Portugal)
Ana Isabel Morais (Department of Management, Universidade de Lisboa Instituto Superior de Economia e Gestao, Lisboa, Portugal)
Amy M. Gregory (Department of Foodservice and Lodging Management, University of Central Florida, Orlando, Florida, USA)

International Journal of Contemporary Hospitality Management

ISSN: 0959-6119

Article publication date: 26 June 2019

Issue publication date: 4 September 2019

Abstract

Purpose

This study aims to take advantage of segment reporting to provide empirical evidence on the impacts of increasing the share of revenue generated from the timeshare segment in companies’ portfolios for firm value and profitability.

Design/methodology/approach

This paper examines data from five publicity traded hospitality companies that have a timeshare component and carries out different regression analysis using 69 observations ranging from 1998 to 2016.

Findings

The findings support the idea of an inverted U-shaped relationship between the degree of timeshare business (DOT) and firm value and profitability. However, for positive values of DOT, an increase of DOT consistently has a negative impact on firm value and accounting profitability.

Research limitations/implications

This study adds to previous findings through the addition of new variables and contemporary accounting practices. Though sufficient for the analyses conducted, the limited number of observations raises generalizability issues. Further research with larger data sets is advised.

Practical implications

This study implies that timeshare may continue to grow, but not as a segment in the lodging sector; rather as an industry mainly composed of timeshare-dedicated companies. As firms consider diversification or consolidation, this study may inform decisions related to potential firm value.

Originality/value

This study provides evidence to support previous literature related to spin-off activity in the lodging sector. Perhaps more importantly, this study adds value to research on firm value and profitability by extending traditional models and by developing a new “degree of business” variable using segment reporting.

Keywords

Acknowledgements

Daniela Penela gratefully acknowledges financial support from FCT- Fundação para a Ciencia e Tecnologia (Portugal), national funding through research grant UID/SOC/04521/2019.

Citation

Penela, D.C.d.A., Morais, A.I. and Gregory, A.M. (2019), "Is timeshare good for firm value and profitability? Evidence from segment reporting", International Journal of Contemporary Hospitality Management, Vol. 31 No. 8, pp. 3231-3248. https://doi.org/10.1108/IJCHM-07-2018-0557

Publisher

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Emerald Publishing Limited

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