While previous studies have documented that state ownership (SO) plays a significant role in China's hotel industry, no research has formally tested its influence on the hotel industry in China. This study examines the impact of SO on hotel firms' characteristics and financial performance based on panel data methodology. The characteristics of hotel firms are size, leverage, liquidity, operating efficiency and growth opportunity. Three financial performance measures are: return on assets (ROA), return on equity (ROE) and stock return. The test results reveal that hotels with high SO in China are small and have high debt leverage and low liquidity. However, SO does not have a strong influence on ROA, ROE and stock return. Finally, policy implications are offered to guide the Chinese government and hotel business owners and managers.
