What explains differing holding periods across hotel investments? A hazard rate framework

Poretti, Cédric; Das, Prashant

doi:10.1016/j.ijhm.2020.102564

Cited by 4 publications

(2 citation statements)

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“…The primary purpose of the subject research is to analyze hotel investment risk based on annual gross operating profit (GOP) of over 3,000 hotels during the course of six recent years, focusing on measuring hotel risk by using GOP profit margin, GOP per available room (GOPPAR), and relative standard deviation of GOP (GOP RSD). While previous research has acknowledged that having approximately 30 points of data regarding the holding period (HP) may be desired (Choi & Mukherji, 2010; Mukherji, 2003), recent research has shown a significant decrease in the HP (Poretti & Das, 2020). For example, Poretti and Das (2020) noted that the HP of hotels has been decreasing in recent years from approximately 15 years to approximately 5 to 8 years.…”

Section: Introductionmentioning

confidence: 99%

“…While previous research has acknowledged that having approximately 30 points of data regarding the holding period (HP) may be desired (Choi & Mukherji, 2010; Mukherji, 2003), recent research has shown a significant decrease in the HP (Poretti & Das, 2020). For example, Poretti and Das (2020) noted that the HP of hotels has been decreasing in recent years from approximately 15 years to approximately 5 to 8 years. Thus, we believe our timeframe of 6 years is appropriate given industry trends.…”

Section: Introductionmentioning

confidence: 99%

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Benchmarking Hotel Investment Risk: Differences Based on Types of Hotels

O’Neill

Liu

Caligiuri

2023

Cornell Hospitality Quarterly

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Commercial real estate (CRE) investment involves risk, and hotels are perceived as the riskiest CRE assets because of the high turnover of guest room occupants and are the most operation-intensive of all types of CRE properties. Furthermore, that risk may vary significantly across types of hotels based on different dimensions. The existing academic literature regarding CRE investment performance generally lacks such investigation of hotels at the establishment level. The purpose of the current study is to investigate the volatility of operating profit (risk) of different types of hotel assets. Using relative standard deviations of historical performance (gross operating profit [GOP]) to measure hotel risk, we examine various property characteristics and the extent to which they affect the volatility of GOP at the unit level from 2015 through 2020 of over 3,000 U.S. hotel properties. We find that different types of hotels have carried different levels of risk. Specifically, we find significant differences in risk based on hotel brand affiliation status, class, property type, location type, region in which the hotels are located, age of the hotels, size of the hotels, and their occupancy and average daily rate levels. This study provides practitioners and researchers with an understanding regarding the relationships between the risk of different types of hotels, and provides practitioners with information regarding risk and a benchmarking methodology that may be applied to evaluate risk to aid hotel investment decisions. Furthermore, we provide researchers with information regarding various hotel characteristics that may lead to relatively greater/lesser risk.

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Section: Introductionmentioning

confidence: 99%