Assessment of the Lodging Industry Profitability Performance: Invest in Independent or Chain Ownership?

Abstract

The purpose of this article is to evaluate the economic results of the independent hotels in comparison with the chain hotels as well as to propose suggestions for the viability of the lodging industry.

The survey took place in Greece concerning the period 2008-2011 and it was conducted via on-line questionnaires among 165 hotel units. The average means of efficiency and profitability indicators of the sampled hotels are benchmarked and the data of 2009 are utilized to further compare their ratios by using ratio analysis. Furthermore, ANOVA test is used to conduct mean difference analysis in order to identify the differences among the means along with their associated variables between independent and chain hotels.

The main findings of the survey show that, generally, the independent hotels tend to be more profitable than chain hotels. The sector’s good practices that have been identified through this study are highlighted as suggestions for the viability of the lodging industry both in Greece and worldwide.

Based on the findings of the survey, investors and hotel operators may have a clearer picture of whether it is preferable to invest their funds in the development of an independent hotel or they should turn to chain ownership.

Keywords: profitability performance, lodging industry, independent hotels, chain ownership, good practices

JEL Classification: M1