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The rational behind investments in tourism ventures - lock in or deliberate economic decisions? Model and outline for a research agenda analysing business sustainability.

Thomas Bieger, Franz-Martin Riklin & Christian Laesser

abstract WTO figures may lead to the conclusion that tourism growth doesn’t lead to better occupancy rates and most probably better business profitability. Therefore questions about profitability and sustainability of tourism investments arise. Investments only are profitable if they create economic value. The discounted free cash flow has to outgrowth the capital invested. The investment has at least to sustain itself and to guarantee cash flow sufficient for depreciation or reinvestments. Key words related to this concept of business sustainability are interest rates, branch economics, revenues and costs. For example two of the key branches of alpine Tourism in Switzerland are hotels and cable cars. Only between 25 – 30% of all companies reach a sufficient ratio of cash flow to capital invested. Despite signs of a mature industry hardly any consolidation takes place. An analytical framework, based on allocation concepts, is being developed. There seems to exist quite important exit barriers, for example the unity of professional, societal and financial identity of the owners, the lock in situation to specific plans, and incentives to entry, for example emotional gains or macroeconomic returns. Different examples for Swiss tourism companies support a two dimensional conceptualisation framework. Further research has to tackle macroeconomic / societal desirability of this situation and managerial optimalization of investment decisions.
   
type working paper (Deutsch)
   
date of appearance 1-1-2001
citation Bieger, T., Riklin, F. M., & Laesser, C. (2001). The rational behind investments in tourism ventures - lock in or deliberate economic decisions? Model and outline for a research agenda analysing business sustainability..