Financial impact of partnerships on hospitality firms

In the United States, over 60% of publicly traded firms in the hospitality industry engage in a formal partnership such as a joint venture or a strategic alliance at one point in time. We study the impact of these formal partnerships on firm market return, performance, risk, and sales. Overall, the financial market reacts positively to these partnerships with positive initial market reactions upon announcement as well as higher valuation. Participating in a venture or alliance increases a firm's financial risk, as measured by cash flow, operating, and stock volatility. Further, while there is a negative impact to firm financial performance, there is an increase in sales, particularly for ventures.(c) 2022 Elsevier Ltd. All rights reserved.