When Economic Prowess Is a Liability—Unpredictable Black Swan Events Such as the Financial Crisis and COVID-19 Pandemic Disrupt Hotel Value Dynamics

Abstract

This study examines the relationship between operating efficiency and firm value in the hotel industry during the most recent economic crises: the 2008–2009 financial crisis and the COVID-19 pandemic. Both were Black Swan events that were difficult or impossible to predict in advance. Using a sample of 161,031 hotel firms from 1991 to 2023, we employ OLS and GLS regression models and seemingly unrelated regression analyses to perform the quantitative analysis. Our findings reveal that operating efficiency generally positively impacts firm value, but this relationship varies significantly depending on the nature of the crisis. During the financial crisis, the positive impact of efficiency on firm value was amplified, particularly for financially more robust hotels. Conversely, during the COVID-19 pandemic, the efficiency-value relationship remained stable, with financially more robust hotels experiencing a more pronounced negative impact. These results highlight the need for context-specific approaches to hotel financial management and valuation during Black Swan events, contributing to the literature on hospitality crisis management and financial performance.