Journal of Hospitality Financial Management: Volume 26, Issue 1
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2017–2018 Restaurant Industry Performance and the JHFM Index
(2018-07-01) Sheel, Atul
Corporate Real Estate Holdings and Financial Performance of Restaurant Firms
(2018-07-01) Demirer, Ilhan; Madanoglu, Melih; Kizildag, Murat
Most restaurant firms, by their operational nature, own and operate a large amount of corporate real estate (CRE), even though real estate is not their primary business activity. This is not only common across restaurant firms of different sizes but also linked to their sales and profitability. Borrowing the arguments of resource-based theory and using financial data for the years between 1999 and 2014, this study investigated the relationship between CRE holdings and restaurant firm performance in the United States. Briefly, our findings demonstrate that the CRE ratio and the rent ratio, in particular, have different impacts on restaurant firms’ financial performance and market-driven risk structures when different forward lags are considered.
Multifactor Asset Pricing Model Evidence From Hotel Stocks and Lodging Real Estate Investment Trusts
(2018-07-01) Almudhaf, Fahad
The main objective of this study is to examine the performance of hotel stocks and lodging real estate investment trusts (REITs) by estimating the recent Fama-French five-factor model (including investment and profitability factors) with an additional momentum factor during the 2000–2015 period. Using multifactor models, results show that lodging REITs underperform hotel stocks in the United States, while the opposite is true in Japan. Our findings indicate that the momentum factor is significant in explaining variation of lodging returns in both the United States and Japan. Smaller lodging firms are generating higher returns than larger firms in the United States and Japan, on average. Operating profitability is strongly associated with average returns of hotel stocks and REITs in the United States. However, it seems that the investment factor plays an insignificant role in the asset pricing of lodging industry stocks and REITs. We find no evidence of the effectiveness of adding profitability and investment factors in Japan. Our results offer valuable investment insights that help lodging investors better understand the nature of their investments. Also, findings of the current study would benefit hotel owners who are considering both organizational structures (i.e., REITs vs. C-corps) and portfolio managers who are considering lodging for diversification purposes.
An Investigation of Factors Affecting Financial Performance of Taiwanese International Tourist Hotels
(2018-07-01) Shieh, Hwai-Shuh; Hu, Jin-Li; Chang, Yen-Chiao
This study adopts moving average regression and panel data regression to explore the factors affecting the financial performance of international tourist hotels in Taiwan. First, we use the unit root test to examine the data in moving average regression and in panel data regression and then use the Hausman test to examine whether the fixed-effects or random-effects model is suitable for panel data regression. Second, we employ the Lagrangian multiplier (LM) test to confirm that panel data regression is better. The findings show that domestic visitors, occupancy rate, operation year, and joining a chain system are the four key factors affecting financial performance.
Hotels and Oil/Gas Development Booms, Busts, and the Future of Hotels in Oil/Gas Development Areas
(2018-07-01) Mount, Daniel J; Kelsey, Timothy W; Brasier, Kathryn J
The development of new production methodologies for oil and gas wells has revolutionized energy production in the United States, shifting the country from a net importer to a net exporter of oil and natural gas (United States Energy Information Administration, 2015). The combination of horizontal drilling and hydraulic fracturing has allowed development of previously known but inaccessible energy reserves, spurring intensive energy development in varied locations across the country. With this new development has come a rapid expansion in housing needs for workers. Historically, developments such as this are prone to boom/bust cycles. This paper studies the effect of the housing needs in various drilling locations through a study of hotel performance over a 12-year period. This study finds that drilling activity has significantly increased hotel revenues in the drilling areas, but because of falling prices and oversupply, individual hotels are struggling to maintain break-even occupancies. Based on forecasts for oil and gas prices, with additional new supply, this bust cycle will continue through 2018.