Type of Submission
Refereed Article
Abstract
This paper provides a simplified approach toward estimating the cost of capital for a small company of the tourism sector. This is accomplished by dividing the hurdle rate into the return of the specific industry in a specific country, and a specific risk premium dependent on the size and age of the company/projects. We illustrate our proposal with investment estimations in lodging accommodations along the northern coast of Chile where tourism represents an important source of income and jobs. The estimations were validated through a survey carried out among entrepreneurs of the sector. The results suggest that our method is realistic and practical, and could be adapted to economic sectors other than tourism and to other countries.
DOI
https://doi.org/10.7275/tt9e-kj06
Recommended Citation
Zuniga-Jara, Sergio and Soria-Barreto, Karla
(2021)
"Cost of Capital for Small Size Tourism Industry in Developing Countries: The Case of Lodging Sector in Chile,"
Journal of Hospitality Financial Management: Vol. 29:
Iss.
2, Article 2.
DOI: https://doi.org/10.7275/tt9e-kj06
Available at:
https://scholarworks.umass.edu/jhfm/vol29/iss2/2
Included in
Corporate Finance Commons, Finance and Financial Management Commons, Food and Beverage Management Commons, Gaming and Casino Operations Management Commons, Real Estate Commons, Tourism and Travel Commons