Signals and market valuation in tourism: Strategic conditions and communication pathways

Abstract

Tourism and hospitality operate in environments characterized by uncertainty, intangibility, and information asymmetry. In such settings, outside stakeholders often rely on visible cues to interpret future firm prospects and revise their expectations about value. This dissertation examines how such signals become economically meaningful through their connection to market valuation. Drawing on signaling theory and related perspectives on brand equity, strategic flexibility, and leadership, it investigates whether signals matter for valuation, when they matter more, and how firms can strengthen their valuation impact. By focusing on market valuation, this dissertation highlights how destinations and firms are evaluated not only through realized operating outcomes but also through the way external audiences interpret new information and translate it into expectations about future performance. Chapter 1 introduces the dissertation by outlining the role of signals in tourism and hospitality and presenting the broader theoretical and methodological framework. It explains why signals are especially important in industries where products and experiences cannot be fully assessed in advance and where destinations and firms operate under conditions of uncertainty. The chapter further develops the dissertation's central argument that signals may originate from outside the firm or from the firm itself, but their economic importance depends on whether they are noticed, interpreted favorably, and translated into value-relevant expectations. It also positions market valuation as the main outcome of interest and introduces the event study approach as a consistent methodological lens across the three studies. Chapter 2 examines whether destination-level popular culture functions as an external signal that enhances the market value of tourism-related firms through destination spillovers and the brand equity pathway. Drawing on customer-based brand equity and related perspectives on destination image and associations, this chapter argues that successful popular culture can strengthen destination visibility, enrich destination-related meanings, and increase the likelihood that the destination will be favorably considered by outside audiences. These effects may extend beyond tourism demand itself and influence investor expectations about firms operating within the destination. The findings suggest that popular culture can generate positive valuation effects by increasing destination visibility, strengthening destination-related associations, and shaping expectations about future tourism demand and firm prospects. Chapter 3 investigates when such external signals matter more by examining whether the valuation benefits of the same cultural signal vary across firms depending on organizational strategy. Although firms may be exposed to the same destination-level signal, they are not equally positioned to capture their benefits. This chapter focuses on international hotel firms and argues that operating arrangements differ in their ability to convert external signals into stronger market responses. Drawing on strategic flexibility and related perspectives on value capture, the chapter proposes that firms with more flexible structures are better able to respond to opportunities created by favorable destination-level attention. The findings show that franchised firms exhibit stronger abnormal returns than managed firms, suggesting that organizational strategy conditions the valuation effect of external cultural signals. Chapter 4 examines firm-initiated sustainability signals by focusing on environmental certification announcements in publicly traded U.S. hotel firms. While the earlier chapters focus on external signals, this chapter turns to signals generated by the firm itself and asks how such signals can become more effective in the eyes of outside stakeholders. The chapter argues that sustainability initiatives do not produce uniform valuation effects because market reactions depend on whether the signal is perceived as authentic and credible. Building on leadership-related perspectives, it proposes that the alignment between CEO political ideology and the firm's sustainability message strengthens the persuasiveness of the signal by reducing doubts about opportunism or greenwashing. The findings show that environmental certifications generate positive market reactions and that these effects are stronger when the CEO's political ideology is more closely aligned with the firm's sustainability message, highlighting the importance of perceived authenticity and credibility in shaping investor responses. The final chapter summarizes the main contributions of the dissertation and discusses implications, limitations, and directions for future research. Overall, this dissertation shows that signals do not affect valuation automatically. Their effects depend on whether they are recognized by outside audiences, whether firms are strategically positioned to benefit from them, and whether the signals appear credible and consistent with the broader context in which they are interpreted.