a b s t r a c t
This study investigates the impact of economy and tourismgrowth on the corporate performance of tourist
hotels in Taiwan. The indicators of corporate performance under consideration are occupancy rate (OPR),
return on assets (ROA), return on equity (ROE), stock return, and the overall financial performance measured
by a comprehensive score (a combined measure of asset management, profitability, short-term solvency or
liquidity and long-term solvency based on factor analysis). The effects of changes in the state of economy
(real GDP growth rate, DGDP) and tourism growth (growth rate of total foreign tourist arrivals, DTA) on the
corporate performance of tourist hotels are then examined via panel regression tests. Test results showthat
both DGDP and DTA are significant explanatory factors of OPR, but only DTA can strongly explain ROA and
ROE. However, neither DGDP nor DTA have a significant influence on hotel stock performance. Further, the
economic factor ðDGDPÞ is slightly more crucial than the industry factor ðDTAÞ in describing the overall
financial performance in the Taiwanese hotel industry. Empirical findings offer valuable information for
government tourism policymakers and tourist hotel owners and managers.