The discount effect of non-normative physical characteristics on the price of lodging properties

Blal, Inès; Graf, Nicolas S.

doi:10.1016/j.ijhm.2012.12.003

Cited by 19 publications

(15 citation statements)

References 24 publications

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“…The finding is consistent with Kallberg, Liu, and Greig (1996) and Ziering and McIntosh (1999) who argue from a portfolio standpoint: very large assets exhibit higher volatility and are more highly correlated with other asset classes, leading to value loss. Extremely large assets in the locality are too specific and thus prone to atypicality discount, as reported in Blal and Graf (2013). Being the locally largest does not offer a strong-enough statusenhancement unless also clubbed with the nationally largest status.…”

Section: Largestmentioning

confidence: 99%

“…This is reflected in the literature: much has been documented about consumers' desire to "stand out" (Bagwell and Bernheim, 1996;Corneo and Jeanne, 1997;Ellingsen and Johannesson, 2008) but our knowledge about the financial prudence of investing in conspicuous assets is fragmented despite substantial evidence on the demand for such assets (Ackert and Church 2006;Esrig, Hudgins and Carreta 2011). Some studies even stress negative outcomes of investing in conspicuous assets (Malmendier and Tate 2005;Barr 2010a;Barr 2010b;Bènabou and Tirole 2009;Capozza, Israelsen, and Thomson 2005;Blal and Graf 2013;Ziering and McIntosh 1999) primarily owing to their "atypical" attributes.…”

Section: Separating Equilibriummentioning

confidence: 99%

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Pricing Extreme Attributes in Commercial Real Estate: the Case of Hotel Transactions

Das

Smith

Gallimore

2017

J Real Estate Finan Econ

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We show that conventional hedonic models for commercial real estate prices ignore the utility investors derive from a building's extreme attributes. Analyzing geo-enriched data on nearly 4,800 hotel transactions in the United States, we find that the relative positioning of an asset's attributes-particularly at the extremes-has a significant impact on transaction prices. We also detect separating equilibria for extreme attributes across the premium and discount hotel segments. Extreme attributes "stand out" and are value enhancing in premium hotel segments. In contrast, extreme attributes are value diminishing in the discount hotel segment. The relative degree to which the asset's attributes are extreme is important. Being a locally largest asset has a negative effect on price, however the negative effect is more than offset if the hotel is among the largest hotels nationally. The results suggest that locally extreme assets, unless also nationally extreme, are considered atypical and trade at a discount.

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Section: Largestmentioning

confidence: 99%

Section: Separating Equilibriummentioning

confidence: 99%

Pricing Extreme Attributes in Commercial Real Estate: the Case of Hotel Transactions

Das

Smith

Gallimore

2017

J Real Estate Finan Econ

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“…Its application in the hotel industry is, however, very recent and its implementation has been largely limited to academia, primarily due to the scarcity of comparable transactions (Corgel et al, 2015). Using hedonic models, Corgel and deRoos (1994) tested the effect of buyer classification and seller classification; Corgel (1997) examined the shares of a Hotel REIT and Blal and Graf (2013) studied hotels with non-normative physical characteristics. Several previous studies used hedonic models to determine the factors which affect hotel sales prices (Corgel & deRoos, 1994; Roubi & Litteljohn, 2004).…”

Section: Methodsmentioning

confidence: 99%

The Matter of Encumbrance: How Management Structure Affects Hotel Value

Hodari

Balla

Aroul

2017

Cornell Hospitality Quarterly

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Hotel owners have two fundamental concerns: the financial operating performance of their asset and its selling price. While they often contract a hotel management company to operate the hotel through a lease or management agreement, common industry perception holds that such encumbrance decreases the sales price of hotel real estate assets. This implies that owners who outsource the hotel’s management may be sacrificing a greater selling price in exchange for improved operating results. While this is a critical issue for investors given that a their returns are largely dependent on an asset’s appreciation, the impact of different management structures on the sales price of hotels has not previously been studied. A hedonic valuation model was constructed based on 442 past hotel transactions in the United Kingdom between 2000 and 2015. Hotels sold encumbered by hotel management agreements and lease agreements were found to sell at a premium compared with unencumbered properties. The impact across different geographic areas and different economic periods was also examined. Hotels under management agreement achieved the highest premiums during times of economic expansion while lease contracts did so in regional markets. The findings suggest that owners need not necessarily refrain from signing management agreements or leases out of concern for their detrimental effect on their hotel’s sales price. It also provides a strong additional selling point for management companies and should reassure lenders who prefer to underwrite loans for encumbered assets.

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“…However, there has not been much research on the relationship between prices and the online reputation of accommodations, measured in different ways (e.g., quality of service, value, and added value). The research on prices in tourism has focused on analyzing different aspects, such as price asymmetry (Lee and Jang 2013), the identification of factors influencing price evolution (Lee 2011), the effect of discounts (Croes and Semrad 2012;Blal and Graf 2013), dynamic pricing strategies (Abrate et al 2012), the impact of oil prices on tourism (Lennox 2012), the relationship between hotel room prices and location (Zhang et al 2011), the impact of advertising on pricing and profit in the tourism supply chain (Jena and Jog 2017), the relationships with the category of lodgings (Israeli 2012;Tanford et al 2012), price elasticity of the lodging demand depending on advertising , customers' price perceptions (Kleinsasser and Wagner 2011;Masiero and Nicolau 2012b), pricing determinants in hotels (Hung et al 2010;Espinet et al 2003), the competitive positioning of lodgings , the importance of price in hotel selection (Lockyer 2005), and the relationship between the room rate and lodging performance (Qu et al 2002;Enz et al 2009;Chen and Chang 2012;. Jena and Jog (2017) regard the seasonality of tourist markets as a decisive factor in the price variable.…”

Section: Literature Reviewmentioning

confidence: 99%

Tourism Destination Management

Rodríguez‐Díaz¹,

Espino‐Rodríguez²

2019

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In order to capture the value of cultural creativity, this study explored regional cultural creativities with different creative forms to understand how people interpret and interact with various regional cultural creative images. This was done by analyzing the abstract (performance) type of cultural creativity and the figurative (commodity) type of cultural creativity, in order to understand how existing regional cultural creativities operate information threads in social media, and how the different forms of content may lead to different levels of participation and feedback. The Cloud Gate Dance Theater can be taken as an example of an abstract cultural creation (performance type), and Green-in-hand as an example of a figurative cultural creativity (commodity type). In this study, all user page content for the period 1 January 2011, to 31 December 2018, and the number of user comments for each post were analyzed, for a total of 4784 posts. Computer science, data mining, big data, and social network analysis were combined to verify the findings of the analyses. Through an application programming interface (API), data and information in social media is extracted. Then data filtering, storage, and analysis is performed with meaningful information extracted for interpretation and for use in text mining to explore the relationship with the public based on content attributes. This study first verifies that the regional image is consistent with the social image location. Second, the information cues results found that information cues could be organized into region personality through any direct or indirect contact. Third, emotional clues can evoke emotions and self-expression, which is seen as an important clue to region emotions. In addition, this study also provides a conceptual framework for understanding how different forms of information, in regards to social management of existing regional cultural creativities, leads to varying levels of participation. Understanding the form of information is a key factor in the acceptance of information by the public. It is a reminder for cultural and creative institutions of the importance of text and images, and of figurative and abstract information planning in social content. In order to improve the competitiveness of the destination, using content interaction through social media to create and enhance a strong brand image is important.

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The discount effect of non-normative physical characteristics on the price of lodging properties

Cited by 19 publications

References 24 publications

Pricing Extreme Attributes in Commercial Real Estate: the Case of Hotel Transactions

Pricing Extreme Attributes in Commercial Real Estate: the Case of Hotel Transactions

The Matter of Encumbrance: How Management Structure Affects Hotel Value

Tourism Destination Management

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