Profitability studies in the service industry

Korte inhoud:This dissertation contains three profitability studies that focus on topical Belgian subjects in the service industry. The first study analyzes whether the nationwide smoking ban that was imposed at January 1st 2007 has affected the profitability of Belgian restaurants. The enactment of such a law has engendered a lot of opposition from the tobacco and the hospitality industry, since they feared harmful economic effects. Our results, however, show that the smoking ban did not have any adverse effect on the profitability of Belgian restaurants. The second study investigates whether agglomerations influence the profitability of Belgian single-establishment retail firms. Agglomerations are defined as the spatial concentration of economic activity and three different agglomeration characteristics can be distinguished: localization, urbanization and diversity. Localization relates to the concentration of firms active in the same industry, urbanization refers to the scale of the city and diversity relates to the variety of firms operating in a region. The findings reveal that urbanization has a negative impact on firm profitability, suggesting that higher land rents and wages, as well as congestion costs more than offset the supposed positive effect of heightened demand. Diversity, on the other hand, is found to positively affect firm profitability, indicating that diversified regions are more attractive to consumers, since they offer multi-purpose shopping opportunities. As for localization, the results show that single-establishment retail firms benefit from the presence of establishments belonging to multi-establishment firms, while they are hampered by the presence of other single-establishment firms. The third study focuses on how municipal fiscal policy impacts firm profitability in the Flemish hospitality industry. In Flanders, municipalities have far-ranging fiscal autonomy, which has lead to a proliferation of municipal taxes. Although there is a large variety in the type and amount of taxes, a lot of them are specific to the hospitality industry. On the one hand, these taxes can hamper firm profitability both in terms of the actual tax payment and in terms of tax compliance costs. On the other hand, these tax payments are used to finance public goods and services which may benefit firms. So, the aim of the third study is to analyze the effect of local taxes, local public spending and tax compliance costs on firm profitability. The results reveal that local taxes have a negative effect on the profitability of hospitality firms, which suggests that local taxes cannot be considered as an insignificant business cost. Municipal public spending, on the other hand, is found to positively affect firm profitability, although the effect is smaller than the tax effect. Finally, the results reveal that municipal tax compliance costs are negligible. Taken together, these results point out that the proliferation of local taxes in se has not hampered the hospitality industry, but that local governments should be careful in raising the total tax cost.

Jaar van publicatie:2013

Toegankelijkheid:Closed