Research objectives The objectives of the research are i Identify non-financial factors affecting the financial performance of hospitality businesses; ii Inspect relationship and the in
Trang 1CHAPTER 1:
INTRODUCTION
1.1 Rationale of the study:
From the mid-1980s, there has been a revolution about the increase
in the use of non-financial factor to replace the measures based on
traditional accounting That comes from a number of reasons as follows
The non-financial factor is a better prediction of company failure
compared with financial measures; at the same time the non-financial
factors are motivation which leads to the financial performance ratios in
the future
The hospitality industry is one of the rapidly developed tertiary
industries in recent times Along with the international economic
integration and increasingly fierce domestic competition, hospitality
businesses have to confront a number of strong foreign opponents right
on their traditional territories The level of researchers’ interest in
assessing the effects of the non-financial factors on the financial
performance of the hospitality businesses has not solved adequately and
thoroughly Previous studies have examined the impact of non-financial
factors on financial performance, but they have been carried out in
different country contexts, industries, and methods Each study which is
just fragmented pictures of effects of some non-financial factors on the
performance of hospitality industry, has not considered the influence of
other various factors
According to reports of the World Tourism Organization, Vietnam
ranks sixth in the list of the world’s fastest-growing tourist destination
and the Asia’s fastest- growing one With the development of Vietnam
tourism over the past few years, the hospitality is an industry needed to
take into consideration for development in order to satisfy the needs of
both domestic and international tourists Thus, more theoretical and empirical research are necessary for managers of Vietnam hospitality businesses to improve their operating performance
The above reasons demonstrate a necessity of a study of the non-financial factors and their effects on the non-financial performance of Vietnam hospitality businesses A number of questions have been stated and needed answering Therefore, the author selected to conduct a study
of the effects of non-financial factors on the financial performance of Vietnam hospitality businesses with the aim of contributing a small puzzle piece in research gaps on this issue
1.2 Research objectives
The objectives of the research are (i) Identify non-financial factors affecting the financial performance of hospitality businesses; (ii) Inspect relationship and the influence level of non-financial factors on the financial performance of Vietnam hospitality businesses; (iii) Making recommendations to Vietnam hospitality enterprises thanks to the research results The thesis also states research questions to achieve the research objectives as well as methods for answer of these questions
1.3 Research subject and scope
1.3.1 Research subject:
The research subject of the thesis is the effects of the non-financial factors affecting the financial performance of Vietnam hospitality business
1.3.2 Research scope:
* Spatial scope:
The study is empirically conducted in three - to five - star Vietnam hospitality businesses which has been operated for more than 3 years (does not include the new businesses established since 2016; foreign
Trang 2enterprises in Vietnam and Vietnam enterprises in which
accommodation service is not the only type of business.)
* Temporal scope:
The research is carried out from May 2017 to April 2018
1.4 Research methodology
Qualitative and quantitative research are two primary methods
applied in the study Qualitative research method is conducted by gathering
documents and expert interview meanwhile quantitative research method
uses survey technique and quantitative data analysis with SPSS and AMOS
software
1.5 Thesis contributions
The thesis aims at the following theoretical contributions:
i) The thesis identifies, classifies and develops non-financial
factors in order to consider the impact of those factors on the financial
performance; determines how to measure the financial performance
under the traditional view in measuring business financial performance,
combines with performance measurement which is a typical character
of Vietnam hospitality enterprises, in particular, the author proposed
forty-five observable variables for six dimensions (five independent
variables and one dependent variable)
ii) Research provides the basis confirming the relationship and
impact direction of the non-financial factors on the financial
performance of the hospitality businesses Besides pointing out the
direct relationship, the thesis also demonstrates some indirect ones
which are meaningful in research model
iii) The study verifies the effects of factors on the financial
performance in terms of both aspects of profitability and special
financial ratios of hospitality industry
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Besides the theoretical contributions, the research also contributes practical values as follows:
i) Through the surveys and data analysis, the study provides significant and meaningful information relating to the non-financial factors and the financial performance of the hospitality businesses, which help describe and evaluate the current status of the financial performance and non-financial factors in Vietnam hospitality enterprises
ii) Research identifies forty-five observable variables meeting the appropriateness and reliability to measure non-financial factors and financial performance Research results showed which of the non-financial factors has positive influence (directly or indirectly) on the financial performance, and the impact direction (positively or inversely)
of those factors From that, managers in the hospitality businesses have basis for considering, comparing within their businesses to take appropriate measures for improvement
iii) On the basis of determining the influence level of every non-financial factor on the non-financial performance, the study laid out the recommendations proposed for business executives (managers) to enhance the financial performance for Vietnam hospitality businesses
1.6 Thesis structure
The thesis is presented in six chapters:
Chapter 1: Introduction Chapter 2: Literature review
Chapter 3: Theoretical basis and research framework
Chapter 4: Research methodology Chapter 5: Research results Chapter 6: Discussions and recommendations
Trang 3CHAPTER 2:
LITERATURE REVIEW
2.1 Global literature review of the non-financial factors affecting
the financial performance of hospitality business
2.1.1 External non-financial factors
The line of research on the external factors among research of the
hospitality is relatively few The variables have been used namely
macro-economic forces (Barrows and Naka, 1994; Chen et al
2005; Chen, M.H., 2007; Tang and Jang, 2009); the shocks as the ninth
of November (Enz and Canina, 2002) or a serious plague of respiration
(Chen et al 2007); etc The studies of the external non-financial factors
influencing on the financial performance of hospitality businesses have
been limited because of the complexity of the external factors and at the
same time, it is difficult for enterprises to impact or adjust aiming to
improve their financial performance
2.1.2 Internal non-financial factors
A large number of contributions mainly focus on the internal
factors which are chosen due to the fact that it is simpler to directly
determine the relationship between the dependent and independent
variables Besides, the research conclusions brings greater significance
for managers Four main groups of the internal factors studied in
previous research are strategic factor; resource factor; service quality
factor; and market orientation/ marketing factor
2.2 Literature review of the financial performance of
hospitality business
2.2.1 The financial performance in the studies on operating performance evaluation model of hospitality business
The studies on the operating performance evaluation model of the hospitality businesses have been mainly empirical studies The theoretical foundation used in the majority of the studies is the balanced scorecard model (BSC) The main results of the research showed that managers of the hospitality businesses are interested in the non-financial factors rather than waiting for the impact of the financial ratios However, the studies which have been mostly into the analysis of the features of the performance evaluation system within a small sample of businesses, have not examined the influence of the non-financial factors on the financial performance of the businesses
2.2.2 Literature review of the scales of measurement of the financial performance in hospitality business
The studies have focused on the financial performance measurement basing on the financial ratios such as the scales of measurement of profit and profitability; the growth index (ROA, ROI, ROE, ROS); or the measurement under the special financial ratios of the hospitality (OCR, ADR, REVPAR, .); etc Through the literature review in the hospitality industry, the author found that the financial performance measurement is predominantly carried out under a single dimension There is not any study clarifying the different impact of those factors on the financial performance measured under profitability dimension and the financial performance under the specific financial ratios of the hospitality industry
2.3 Literature review in Vietnam
In Vietnam, quite a lot of research have examined the operating
performance evaluation of businesses, however, most of these research
Trang 4have focused on the criteria analysis of the operating performance
evaluation of each particular type of business
Hospitality businesses has been chosen as research scope of many
studies in Vietnam However, these research focus has been mainly on a
specific hotel or the subjects exploited under each particular dimension,
which predominantly service for management practices such as finding
solutions to grow the business of hospitality, improve service quality,
competitiveness or hospitality marketing management
2.4 Research gaps and orientations
2.4.1 Research gaps
Firstly, studies on the non-financial factors affecting the financial
performance are diverse and different results, which tend to show a
fragmented picture rather than overlapped results for being
generalized Each study focused primarily on one or some
determinants The non-financial factors (independent variables) which
have been studied in published literature are mostly different, the
financial performance are measured under various scales of
measurement
Secondly, the financial performance has been considered under
different dimensions in the studies on the factors affecting it There is
not any combined research clarifying differences of the impact of these
factors on the financial performance under profitability and specific
financial ratios of the hospitality businesses
Thirdly, the empirical research on the performance evaluation
model of the hospitality businesses have been carried out However,
the studies primarily focus on the factor analysis for assessing the
performance of a small sample of hospitality businesses using
available detailed figures (mostly secondary data) The main results
of the research have showed that the non-financial factors catch the
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managers’ attention However, they have not verified the impact direction and level of the non financial factors on the financial performance of the hospitality businesses
Fourthly, literature review in Vietnam indicated that the hospitality businesses have been chosen as the scope of several studies However, every topic exploits specific dimensions serving mainly for management practices such as finding solutions to the hospitality business development, enhancing service quality, competitiveness or hospitality marketing management The majority of empirical research have just focused on verifying the influence of financial criteria (factors) on the financial performance of the businesses but have not attached special importance to the non-financial factors The verification of the impact direction and level of the non financial factors on the financial performance of the hospitality businesses is a gap requiring much more research to be filled
2.4.2 Research orientations
The research gap gained from literature review helped the author determine research orientations as follows: The author studied the impact of the non financial factors on the financial performance of Vietnam hospitality businesses (based on some specific theory presented
in Chapter 3) This study chose the internal non-financial factors affecting the financial performance without referring and verifying the external factors To expand the sample range of the hospitality businesses, this research measures the financial performance under accounting value but the market value In particular, the study verifies the impact of the non-financial factors on financial performance under profitability and specific financial ratios of the hospitality industry
Trang 5CHAPTER 3:
THEORETICAL BASIS AND RESEARCH FRAMEWORK
3.1 Theoretical basis for the construction of research
framework
3.1.1 Matrix of results and determinants (Fitzgerald et al 1991)
The importance of service sector- a growing industry and the needs
to consider the performance measurement system for this sector were
recognized by Fitzgerald et al (1991) The authors built the performance
a measurement model for service enterprises - that's “the matrix of results
and determinants" Fitzgerald et al (1991) provides the building blocks
for the sizes, standards and rewards for the performance measurement
system in the service enterprises The sizes were divided into results
(competitive performance and financial performance) and factors
affecting these results (service quality, flexibility, resource utilization and
innovation) However, this matrix hasn’t tested specific effect of the
non-financial factors on the non-financial performance Therefore, the factors of
service quality, flexibility, resource utilization and innovation are chosen
for the inclusion in the research model
3.1.2 Market orientation theory of Narver and Slater (1990)
According to Narver and Slater (1990), market orientation is
necessary organizational culture to create outstanding value for buyers,
leading to remarkable performance (Narver and Slater, 1990) Narver and
Slater (1990) identified the orientation under three factors: customer
orientation, competitor orientation, interdisciplinary collaboration Market
orientation is to create intelligence throughout the organization relating to
the needs of current and future clients, disseminate the intelligence within
the organization and bring superior efficiency for enterprises (Narver and
Slater, 1990)
Thus, based on the theoretical basis of the matrix of results and
determinants (Fitzgerald et al 1991) and the theory of market orientation
of Narver and Slater (1990), the author studied and tested five non-financial factors which have effect on the non-financial performance, namely: service quality, flexibility, resource utilization, innovation and market orientation
3.2 Non-financial factor theory
In this section, the author presented the nature, concept and viewpoints of the non-financial factors including service quality, flexibility, resource utilization, innovation and market orientation At the same time, some perspectives and scales of measurement inherited from the factors are also stated in the thesis
3.3 Financial performance theory
In this section, the author presented the concept and differences among the measures of financial performance, as well as the viewpoint
of measuring the financial performance of Vietnam hospitality businesses
3.4 Research model and hypothesis
3.4.1 Research model
Based on the literature review and the theoretical basis of the financial performance and non-financial factors, five non-financial factors studied are "quality service, flexibility, resource utilization, innovation and market orientation " The research models of the impact
of the non-financial factors on the financial performance are as follows:
Model 1: Financial performance measurement under profitability Model 2: Financial performance measurement under specific financial ratios
Trang 6Figure 3.2: Proposed research model
3.4.2 Research hypothesis
The author’s research hypotheses are summarized in the following table:
Table 3.8: The hypotheses of the proposed research model
Model 1: Financial performance measurement under profitability
Model 2: Financial performance measurement under specific
financial ratios of the hospitality industry
H1.1; H1.2 Service quality possitively influences the financial
performance of Vietnam hospitality businesses
H2.1; H2.2 Flexibility possitively influences the financial performance
of Vietnam hospitality businesses
H3.1; H3.2 Resource utilization has a possitive influence on the financial
performance of Vietnam hospitality businesses
FINANCIAL PERFORMANCE
(1) Profitability (2) Specific financial ratios of hospitality
SERVICE QUALITY
INNOVATION
MARKET
RESOURCE UTILIZATION
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H4.1; H4.2 Innovation has a possitive influence on the financial
performance of Vietnam hospitality businesses
H5.1; H5.2 Market orientation has a possitive influence on the financial
performance of Vietnam hospitality businesses
CHAPTER 4:
RESEARCH METHODOLOGY 4.1 Overview of research methodology
To test the model and research hypotheses, the author used both qualitative and quantitative research methods
4.2 Qualitative research method
Interviewing experts is used in the qualitative research method with the objective of determining the suitability of the factors in the research model The method is implemented with the questionnaire consisting of three parts:
(1) Discussion of the impact level of five non-financial factors of the proposed research model (service quality, flexibility, resource utilization, innovation, market orientation) on the financial performance
of Vietnam hospitality businesses
(2) Discussion of the hypotheses of relationships of the proposed research model
(3) Discussion of the scales of measurement of factors in the proposed research model
Results:
Table 4.3: The summarized results of the expert interviews on the
research hypotheses
Trang 7Impact
Service
quality
H1.1: Service quality positively affects the
financial performance (profitability)
H1.2: Service quality positively affects the
financial performance (specific financial ratios
of hospitality industry)
Flexibility H2.1: Flexibility positively affects the financial
performance (profitability)
H2.2: Flexibility positively affects the financial
performance (specific financial ratios of
hospitality industry)
Resource
utilization
H3.1: Resource utilization positively affects the
financial performance (profitability)
H3.2: Resource utilization positively affects the
financial performance (specific financial ratios
of hospitality industry)
Innovation H4.1: Innovation positively affects the
financial performance (profitability)
H4.2: Innovation positively affects the financial
performance (specific financial ratios of
hospitality industry)
H6.1: Innovation affects the financial
performance indirectly (profitability) via
quality service (Innovation has positive effect
on the quality service)
H6.2: Innovation affects the financial
Additional hypothesis
Impact
performance indirectly (specific financial ratios
of hospitality industry) via quality service (Innovation has positive effect on the quality service)
Market orientation
H5.1: Market orientation positively affects the
financial performance (profitability)
H5.2: Market orientation positively affects the
financial performance (specific financial ratios
of hospitality industry)
H7.1: Market orientation affects the financial
performance indirectly (profitability) via quality service (Market orientation has positive effect on the quality service)
H7.2: Market orientation affects the financial
performance indirectly (specific financial ratios
of hospitality industry) via quality service (Market orientation has positive effect on the
quality service)
Additional hypothesis
H8.1: Market orientation affects the financial
performance indirectly (profitability) via innovation (Market orientation has positive effect on the innovation)
H8.2: Market orientation affects the financial
performance indirectly (specific financial ratios
of hospitality industry) via innovation (Market orientation has positive effect on the
Additional hypothesis
Trang 8Impact
innovation)
Model 1: Financial performance measurement under profitability
Model 2: Financial performance measurement under specific
financial ratios of hospitality industry
Figure 4.1: Research model 4.3 Quantitative research method
4.3.1 Preliminary quantitative research
Preliminary quantitative research was conducted after the survey
questionnaire was edited as a result of the qualitative research (expert
interview) Conducting preliminary quantitative research is to ensure
that the respondents understand the terminologies and the questions in
INNOVATION
MARKET
ORIENTATION
SERVICE QUALITY
FINANCIAL PERFORMANCE:
ratios of hospitality industry
RESOURCE
UTILIZATION
FLEXIBILITY
H1.1; H1.2
H2.1; H2.2 H3.1; H3.2
H7.1; H7.2
H4.1; H4.2
H5.1; H5.2
H6.1; H6.2 H8.1; H8.2
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the survey questionnaire, as well as do not misunderstand the meaning
of those questions through which the author may standardize the terms and better the questionnaire for the official survey
The selection of samples for preliminary quantitative research was carried out under the method of convenience sampling of geographic location, surveyed with small quantities of samples in the area of Hanoi city The author went to twenty hospitality businesses (three- to five- star) in Hanoi to conduct the survey questionnaire directly The result is that basically, the survey is understood and accepted by managers but needs editing several small errors in terms of vocabularies or semantics
to ensure that there is not any confusion or misinterpretation for respondents
4.3.2 Variables and scales of measurement for the official research
Through the literature review, the theoretical basis relating to the factors in the model and the qualitative and preliminary quantitative research, the author improved the variables and the scales of measurement for the official quantitative study
4.3.3 The official quantitative survey
4.3.3.1 Data collection tool
A survey tool used in the study is a questionnaire which was developed to measure the demographic characteristics, the hospitality characteristics and the main factors The author used a 5-point Likert scale as a survey tool The first part of the questionnaire includes the information specified in the model of the financial performance and the influential non-financial factors The second section consists of the questions of management demographic (gender, age, educational level, work experience) and questions of the hospitality characteristics (class, size, age, location)
4.3.3.2 Sampling method
Trang 9To ensure the research data, the author sent the survey
questionnaire to 820 hotels of three to five stars on the list of the General
Statistics Office of Vietnam The survey questionnaire was distributed
via a combination of three methods: mailing by post, mailing directly by
Google docs and providing printouts directly (hard copy)
4.3.3.3 Data collection and analysis
* Data collection
The survey questionnaire is mailed with the support of google docs
at zttps://goo.gl/forms/FHSc3lRuSIJcqUmw1 After a week of sending
mail without receiving a response, the author will call to find out the
reason and solve situations With the mailing form (sending hard copies)
via post, the author calls directly after 2 weeks With the geographical
convenient businesses visited directly by the author, the survey forms
distributed are not less than two After removing the businesses having
responded to the questionnaire, the author conducted a direct survey of
the hospitality businesses (mainly in Central and Southern Vietnam)
through the survey of businesses of the General Statistics Office in
October 04,2018 The timing of data collection was from October 2017
to April 2018 Total responses received after eliminating the invalid ones
(tick only one answer for all questions of the questionnaire) were
346 This sample size is satisfied for quantitative data analysis
* Data analysis:
Based on the answers of the survey forms satisfying the
conditions, the collected data was analysed, processed by SPSS, AMOS
software to implement descriptive statistics; test the reliability of scales
of measurement; analyse the exploratory and affirmative factors; verify
the structural model
CHAPTER 5:
RESEARCH RESULTS 5.1 Overview of business activities of the hospitality in Vietnam
The study generalizes features, data demonstrating the pace of development of business activities of the hospitality in Vietnam
5.2 Results of descriptive statistics
The study presents the results of the description of the survey sample and variables in the research model of frequencies average values, etc
5.3 Reliability test result of the scale of measurement
Reliability test result of the measurement scale of concepts eliminates eight observable variables and forty-five variables reaching the standard remaining
Table 5.11: Cronbach’ Alpha of the measurement scale after
removing unreliable observable variables
Alpha
3 Innovation:
- Innovation magnitude (IM)
- Innovation speed (IS)
0.899 0.932
6 Financial performance - Profitability (PROFIT)
0.869
7 Financial performance – specific financial ratios of the hospitality industry (HOTSPE)
0.789
Trang 105.4 Exploratory Factor Analysis (EFA)
Table 5.12: Results of KMO and Barlett’s Test
Total variance explained 67.308 66.845
* Principal components analysis withVarimax rotation:
The results showed that the remaining observable variables after
removing unreliable scales of measurement are grouped into 7
categories:
- Total variance explained is 67.308% (model 1) and 66.845%
(model 2) which are satisfactory> 50%; it could be said that these
factors explain 67 308% (model 1) and 66 845% (model 2) of the
variability of the data
- Eigenvalues coefficient of the factors are high (> 1), factors
including Eigenvalues (the lowest) are 1,554 (model 1) and 1,566 (model 2)
which are bothsatisfactory > 1
5.5 Confirmatory factor analysis (CFA)
* Relevant level: The result showed that:
With model 1: Chi-square/df = 1.545 (<2); TLI = 0.958 ;
CFI=0.961; RMSEA=0.040 (<0.08); with model 2: Chi-square/df =
1.562 (< 2); TLI = 0.957; CFI = 0.960; RMSEA = 0.040 (< 0.08), so it
could be said that both models match the market data
* Composite Reliability (CR) and Average Variance Extracted
(AVE)
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Table 5.15: CR and AVE
RU 0.933 0.735 PROFIT 0.873 0.633
IS 0.933 0.736 HOTSPE 0.791 0.558
It could be seen that the Composite Reliability is more than 0.7 and the Average Variance Extracted is more than 0.5, so measurement scales of observable variables meet the requirements
5.6 Structural equation model testing:
* Testing result of model 1:
Table 5.16: Testing result of model 1
Estimated S.E C.R P Value
IN < - MO 324 045 7.274 ***
SQ < - MO 145 073 1.996 046
SQ < - IN 311 156 1.997 046 PROFIT < - SQ 116 054 2.137 033 PROFIT < - FL 199 065 3.082 002 PROFIT < - MO 260 072 3.600 *** PROFIT < - IN 266 144 1.839 066 PROFIT < - RU 139 050 2.754 006
* Testing result of model 2:
Table 5.17: Testing result of model 2
Estimated S.E C.R P Value
IN < - MO ,322 ,045 7,224 ***
SQ < - MO ,146 ,073 2,008 ,045
SQ < - IN ,311 ,156 1,992 ,046