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

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.

Convex-concave effect of financial flexibility on hospitality performance: quantile regression approach

“…3.1.1 Variables. Dependent variable: The dependent variables for EP proxies are Tobin's Q. Tobin's Q appears in many kinds of literature as a holistic measure of EP (Penela et al, 2019;Repetti, 2020;Yeon et al, 2021). Tobin's Q = (total assetbook value of equity þ market value of equity)/total asset, where total asset refers to the book value of total assets; book value of equity refers to a firm's common equity; the market value of equity refers to the product between firm's stock price and the number of common shares outstanding.…”

Examining the effects of sales and marketing on performance: An exploratory study of the timeshare industry

“…While limited research on timeshare is available, however, there is no scholastic literature discussing this important issue. Several studies that analyze timeshare performance are confined to lodging firms with a timeshare component and concentrate on the comprehensive assessment of firm value and profitability by extending traditional models that can be generally applied across industries (Nabawanuka and Lee, 2009; Penela et al, 2019a). In addition, research in marketing and management has primarily examined the impact of marketing on qualitative outputs such as brand equity and customer satisfaction, with the assumption that they are positively related financial performance (Aksoy et al, 2008; Bolton, 2004; Tuli and Bharadwaj, 2009).…”