Written by Marc Oliveras

Article 2, Volume 2 Issue 1:

Economic consequence of accounting standards in the hotel industry: lobbying arguments versus expected impact

Núria Arimany-Serrat, Àngels Fitó-Bertran and Neus Orgaz-Guerrero

DOI: 10.26595/eamr.2014.2.1.2

Abstract


Accounting standards generate economic consequences that can be either intended or unintended. European and US accounting regulators have proposed to capitalize operating leases so that future payments derived from lease contracts are accounted for as debt. As operating leases are an important source of funding for the hotel industry, the sector has lobbied against the proposal. This paper analyses the economic impact on the hotel business of operating lease capitalization, using both hotel operators’ perceptions and quantitative analyses of the expected consequences. Results show that the arguments presented in the hotels’ comment letters are confirmed by the impact predicted. While hotels do not believe that the new standard will improve financial information quality (the intended economic consequence), they expect an increase in debt and reduced profitability (the unintended economic consequences), which may affect their strategies. An early response to this new standard is proposed in order to avoid unintended effects.

Keywords


  • Operating leases
  • Hotels
  • Economic consequences
  • Business strategy
  • Lobby

Download Article

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close