This study evaluates the ability of cash flow and earnings-based measures of return in the hospitality industry to assess the differences between target companies and their industries and to explain target companies’ abnormal returns during takeover periods. Target company abnormal returns observed during takeover periods are significantly related to both the difference between target company and average industry earnings to total assets and the difference in cash flow to total assets. Abnormal returns are negatively related to the difference in earnings to total assets, suggesting that target company assets are underutilized. The difference between target company and target industry cash flow to total assets is positively related to target company abnormal returns, indicating that acquiring companies value the near-term cash flow of target companies.