Precursors to the financial and strategic orientation of hotel property capital budgeting

Abstract

The purpose of this study is to develop and test a set of hypotheses concerned with exploring for precursors to the degree of emphasis hotel property General Managers attach to a financial versus strategic orientation in capital budgeting. Results are based on 200 survey responses from the General Managers of Australian and New Zealand hotels. The findings indicate that capital budgeting is more financially orientated than strategically oriented in hotel properties that adopt a management contract and also where the owner gets more involved in the capital budgeting process. No support is found for the hypothesised role of ego-trip hotel ownership, the age of a hotel property, a General Manager's number of years of experience, or public versus private hotel ownership. As an over-reliance on financial capital budgeting information can bias decision-makers against longer-term investment projects, it is conjectured that hotel capital budgeting may be somewhat sub-optimal in those hotels that adopt a management contract and which have a greater level of hotel owner involvement in the capital budgeting process.

The Impact of Renovation Capital Expenditure on Hotel Property Performance

“…Nevertheless, challenges arise because in the real-world as capital expenditure decisions are complex (Bower, 1970;Bromiley, 1986;King, 1975;Marsh, Barwise, Thomas, & Wensley, 1988), messy, iterative and only partly rational (Braybrooke & Lindblom, 1963;Hickson, Butler, Cray, Mullory, & Wilson, 1986;King, 1975;Mintzberg, Raisinghani, & Thoeoret, 1976;Quinn, 1980). Within the context of hotel properties, several studies have also demonstrated considerable deficiencies in the capital expenditure decision-making process (e.g., Turner, 2017;Turner & Guilding, 2010a, 2010b, 2013.…”

“…For example, the three approaches to ownership and management are the owner-operator, franchise agreement and management contract (Gannon & Johnson, 1997). Owned-and-operated properties eliminate confounds due to agency problems that occur when contracting capital budgeting issues arise between owners and managers (Guilding, 2003; Turner, 2017; Turner & Guilding, 2010a, 2010b, 2012). In management contracted hotels, owners may involve themselves in the capital budgeting process, but their involvement is mitigated by the degree of power they hold in the owner-manager relationship (Turner & Guilding, 2013).…”

As Características Do Gestor Influenciam No Orçamento De Capital De Empresas Hoteleiras?

“…Pesquisas anteriores exploraram perfis e características gerais de gerentes de hotéis. Por exemplo, no Reino Unido Riley, 1996); nos EUA (Nebel;Ju-Soon;Vidakovic, 1995); na Grécia (Akrivos;Reklitis, 2007); na Croácia (Sehanovic et al, 2000); na Escócia (Harper;Brown;Wilson, 2005); na Coréia (Kim;Chun;Petrick, 2009); Austrália e Nova Ze-lândia (Turner, 2017). A presente pesquisa diferencia-se dos estudos anteriores ao explorar co-mo as características dos gestores de hotéis influenciam nas escolhas de práticas mais ou menos sofisticadas.…”

“…Particularmente, no setor hoteleiro as decisões envolvendo o orçamento de capital são importantes. Pois o crescimento e a manutenção dos valores das pro-priedades, bem como os níveis mais elevados de satisfação e ocupação dos hóspedes, dependem em parte dessas decisões de investimento (Turner, 2017). Turner e Guilding (2010) observam que a administração de hotéis tende a ser liderança no que diz respeito ao início das propostas orçamentárias de capital.…”

“…Turner e Guilding (2010) observam que a administração de hotéis tende a ser liderança no que diz respeito ao início das propostas orçamentárias de capital. Decisões de orçamento de capital provavelmente terão um impacto sig-nificativo e duradouro na direção, crescimento e desempenho final de um hotel (Turner, 2017).…”