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Access Type

Open Access

Degree Program

Hotel & Tourism Management

Degree Type

Master of Science (M.S.)

Year Degree Awarded


Month Degree Awarded



Hospitality industry, Fama& French model, risk, return, diversification, labor


Calculating the expected return has been a longstanding issue in the finance. There is a positive correlation between the undertaken risk and excess return (or loss) but numerous variables need to be considered. This study builds on the Fama and French formula and adds factors unique to the hospitality industry such as labor cost and diversification in order to get results that are a tailored to the hospitality industry. Active hotel and restaurants companies (SIC 7011 and 5812 respectively) in the 2000-2009 period were analyzed in separate samples. The labor cost improves the explanatory on both samples and the diversification proxy was significant in the hotel sample. Based on the results suggestions for further research were made.

First Advisor

Atul Sheel