Journal of Hospitality Financial Management: Volume 21, Issue 1
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2013-07-10
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2013 – A Performance Review for Restaurant Firms
(2013-10-07) Sheel, Atul
LOCALIZED REVENUE IMPLICATIONS OF SEVERE TORNADO OUTBREAKS ON THE LODGING INDUSTRY
(2013-10-07) Hein, Stephanie G.
In 2011, significant tornado outbreaks occurred throughout the United States. The property damage from these tornadoes was record breaking at over $28 billion. The impact of these tornadic events on the lodging industry, however, was not as extreme and in some instances was financially beneficial. This study evaluated the revenue implications of severe tornado events on the lodging industry. Using data provided by the National Oceanic and Atmospheric Administration (NOAA) and Smith Travel Research (STR), the lodging industries of 17 counties impacted by either EF4 or EF5 (enhanced Fujita scale) tornadoes were analyzed. Results indicated that the lodging operations in all 17 counties experienced an occupancy percentage increase for multiple days after tornado events. Only five counties experienced significant increases in average daily rate (ADR) for seven days following tornado events. All but one county experienced increases in revenue per available room (RevPAR) following tornado events. This suggests that gains in RevPAR were influenced more by increased occupancy opposed to inflated room rates.
A REEXAMINATION OF CURRENT HOTEL VALUATION TECHNIQUES – WHICH APPROACH IS MORE REALISTIC?
(2013-10-07) Fu, Jing; Sheel, Atul; Lang, Jeff
This study revisits the issue of accuracy in contemporary hotel valuation. Along with the hotel valuation techniques used by Rushmore (1992) and Chen and Kim (2010), this study uses the cost approach and the automated valuation model (AVM) in its examination of contemporary hotel valuation techniques. Fourteen randomly selected hotel firms are analyzed using nine valuation approaches. The valuation results are then compared to the market values of these firms to assess which technique provides the most robust and supportable estimate.Research results reveal that, at least for the analyzedsample, thediscounted cash flow(DCF) technique provides themost realistic estimate of a hotel firm’s value. Results also show that the valuation estimate of AVM is significantly different from both Band of Investment methods. As such, the process of valuing hotel properties is better understood.
PLURAL FORM,RISK AND PERFORMANCE IN THE HOTEL INDUSTRY
(2013-09-29) chung, yeasun; Yoon, Nada
The plural form refers to the adoption of a multiple- distribution strategy: franchise, management, and full ownership. This study aims to help hotel owners, operators, and researchers to understand better the superiority of the plural form over a single form and the impacts of franchising and management on a firm’s overall risk and various performance variables. This study proves the plural form to be better than a single form at improving performance and lowering risk. The findings also suggest that a higher franchise percent within the mix of franchise, management, and ownership is likely to reduce further a firm’s risk. A higher management percent can increase some performance measures, but it does not reduce a firm’s risk. This study also suggests that the optimal proportion of franchising varies according to a firm’s emphasis on a particular performance. Lodging firms could utilize the findings of this study in making strategic choices about different business forms, before expanding their number of units in the market.
AN EVENT STUDY OF THE DELISTING OF HOSPITALITY STOCKS IN THE UNITED STATES
(2013-10-07) Leung, W. K.; Tse, Eliza Ching-Yick; Kwansa, Francis A.
Managers make important corporate strategic investment decisions such as mergers and acquisitions to improve the long-term competitiveness of their organizations; while at times they may be forced to manage for the short-term in order to satisfy the demands from the stock market.However, there is a lack of empirical research to examine the short- versus long-term view of management decision-making.This study analyses the mergers and acquisitions activities in the hospitality industry and particularly, investigates delisting behaviour of publicly traded hospitality firms and whether companies exhibit distinct patterns before delisting. Consolidation is prevalent in a maturing industry such as hospitality which currently faces a fiercely competitive global environment. The results of the study show that there is substantial difference between hospitality and non-hospitality stocks: not much information leakage in the delisting of hospitality stocks and a marked increase in institutional holdings with time but significant information leakage in non-hospitality stocks as reflected by positive and significant abnormal returns.