The business case for diversity management in the hospitality industry

Societal and regulatory pressures increasingly encourage firms to invest in and manage workplace diversity. In service industries like hospitality and tourism (HT) where customer interface and service is salient, diversity management assumes even greater importance than compared to other industries. Yet the link between investment in diversity and its relationship with financial performance is not known. This study compares diversity management between HT and non-HT firms, and finds that HT firms manage diversity by taking more initiatives than other firms. More importantly, it finds that investment in diversity translates into superior financial performance when measured by Tobin's Q and firm credit rating.