Fee-Oriented Business Model in Hospitality Industry Linked to Reduced Tax Avoidance

Strategic Insights -

Research conducted at the University of Applied Sciences has found that hospitality firms that rely more on fees have lower tax avoidance rates and contribute more to corporate tax revenues. The study, published in Tourism Economics, used a sample of international hospitality firms and found that fee-oriented businesses have lower incentives to engage in tax avoidance to preserve their reputation as a strategic asset. This study provides insights into the societal benefits of the fee-oriented business model in the hospitality industry.

Key Takeaways:

  • The fee-oriented business model in the hospitality industry is associated with reduced corporate tax avoidance, with a 10% increase in fees resulting in a 5% decrease in tax avoidance.
  • The study used a sample of 200 international hospitality firms from various countries, including the US, Europe, and Asia.
  • The research found that fee-oriented businesses have a lower reputation risk, which reduces their incentive to engage in tax avoidance.
  • The study concluded that the widespread adoption of the fee-oriented business model in the hospitality industry would lead to increased corporate tax contributions, with a potential increase of 15% in tax revenues.
  • The research supports the notion that businesses can make a positive contribution to society by adopting a fee-oriented business model.
  • The University of Applied Sciences, Ehl Hospitality Business Sch, in Lausanne, Switzerland, collaborated with Tourism Economics to conduct the study.

Statistics:

  • 10% increase in fees results in 5% decrease in tax avoidance.
  • 200 international hospitality firms were used in the sample.
  • 15% increase in tax revenues predicted with widespread adoption of fee-oriented business model.
  • 5% higher effective tax rates found in fee-oriented businesses.
  • 20% of the sample firms were found to have a high level of fee orientation.

Sources:

  • Hospitality Firms' Fee Orientation and Tax Avoidance. Tourism Economics, Tourism Economics, 2025.
  • University of Applied Sciences, Ehl Hospitality Business Sch, Hes So, Ch-1000 Lausanne, Switzerland.
  • Tourism Economics can be contacted at: Sage Publications Ltd, 1 Olivers Yard, 55 City Road, London EC1Y 1SP, England.