CORPORATE GOVERNANCE, OWNERSHIP STRUCTURE, AND CREDIT RATINGS OF HOSPITALITY FIRMS

This study examines interrelated connections of corporate governance, ownership structure, and credit ratings. From the agency relationship perspective, the study analyzes this multiple association by accounting for firm-specific and ownership characteristics for the period between 1990 and 2007. In this context, logistic functions are used in regression models to predict the probable outcomes of these multiple relationships. Primary findings of this study revealed that hospitality firms with higher anti-takeover provisions (less shareholder power) enjoy higher credit ratings. Findings also revealed high coefficients of Gompers, Ishii, and Metrick (2003) index (the GIM index), suggesting that hospitality firms have strong governance provisions, reduced agency conflicts, and higher chances of getting better credit ratings

Rising from the Ashes of COVID-19 will Need a Sharp Focus on the Numbers

If there is one sector that cannot move \u27online\u27, it is accommodation, and SLEs (small lodging establishments) have taken a merciless beating from COVID-19. Typically family-owned and managed, they have relatively high capital costs and overheads which means that even when revenues stop coming in, those liabilities still have to be met. This study by Dr. Manuel Rivera, Dr. Murat Kizildag, and Dr. Robertico Croes, of the Rosen College of Hospitality Management, shows how a detailed break-even analysis can inform a business’s strategy for survival within the important SLE sector

Restaurants Post COVID-19

When you’re suddenly forced to close 1,800 restaurant dining rooms without any certainty of being able to reopen them any time soon, you need to act decisively and prioritize if you plan to be around for a grand reopening. For Darden Restaurants and their market-leading US brands, those priorities during lockdown were ‘look after the people – look after the cash!’ Dr. Elizabeth Yost, Dr. Murat Kizildag and Dr. Jorge Ridderstaat of UCF Rosen College of Hospitality Management investigate the company’s achievement

Corporate Real Estate Holdings and Financial Performance of Restaurant Firms

Most restaurant firms, by their operational nature, own and operate a large amount of corporate real estate (CRE), even though real estate is not their primary business activity. This is not only common across restaurant firms of different sizes but also linked to their sales and profitability. Borrowing the arguments of resource-based theory and using financial data for the years between 1999 and 2014, this study investigated the relationship between CRE holdings and restaurant firm performance in the United States. Briefly, our findings demonstrate that the CRE ratio and the rent ratio, in particular, have different impacts on restaurant firms’ financial performance and market-driven risk structures when different forward lags are considered

What if we could travel without passport? First sight to blockchain-based identity management in tourism

Blockchain technology, as a distributed digital ledger, enables users to control their credentials without being breached by third parties. From a tourism perspective, it allows tourists to pass through checkpoints and/or bookings without waiting and having to go through third-party transactions. Hence, this paper aims to discuss traditional identity management (IdM) system challenges and what blockchain might offer as a counterpoint to conventional travel experiences within th

How Is the Premium Calibrated for the Speculative Risk in Lodging Firms?

The overarching themes of our paper are to calibrate the risk premium relative to the speculative risk parameters in capital markets and to analyze the pre-and post-recession patterns in the U.S. lodging portfolios from 2000 to 2016. We decompose several risk parameters speculated by the markets and risk-adjusted proxies to make solid judgments about the anomalies in excess return patterns and risk-reward trade-off calibration in our annualized heterogeneous portfolio sorts. Our primary findings reveal that our portfolio sorts did not return the efficient premium to the investors, as they should have been based on the speculative risk levels before the recession. However, after the recession, there was a correction in this pattern. Lastly, speculative risk-adjusted proxies and risk parameters generally co-move with the value-weighted benchmark

Does the Fear Index Incessantly Affect Stock Performance in the Lodging Industry?

This study investigates the impact of fear on stock returns of the lodging companies for two specific periods (from January 1997 to December 2007 and January 2008 to June 2018). While the literature has adequately studied the relationship for general stock returns, it has underemphasized a sector- based approach, including the lodging industry, toward understanding the connection. The study contributes to the literature by focusing on the short-term dynamic connection for the lodging firms and by providing theoretical propositions that could advance the theory building process. The results show that the fear index has lost its forward-looking capacity on stock performance in the lodging industry after 2018

Financial leverage phenomenon in hospitality industry sub-sector portfolios

Purpose: This paper aims to seek answers to a primary question: “How much do divergent leverage factors account for fluctuations in time-varying financial leverage in leading hospitality sub-sectors decomposed by four exclusive sub-portfolios?” In the path of seeking answers, this paper investigated the effects of both firm-specific and macroeconomic indicators to firms’ varying financial leverage in those primary sub-sectors overtime. Design/methodology/approach: In each sub-sector portfolios, firms were sorted based on market-to-book values (Mktbkit) with median breakpoint percentiles. For hypothesis testing, this paper constructed panel regression models with firm fixed-effects to layout fluctuant financial leverage phenomenon engaged with a set of 11 leverage factors in each Mktbkit sorted sub-sector portfolios. Findings: Results exhibited assorted evidences. The bottom line was: firms with different market capitalization rates in each portfolio acted differently in regard to the magnitude of financial leverage across time. Research limitations/implications: The final sample of 415 firms in four sub-sector portfolios sufficiently embraced financial leverage composition in the hospitality industry across time. However, by reason of lack of data in the other intra-hospitality industries, such as gaming and/or cruise lines, findings did not represent the firms operated in those sub-industries. Originality/value: This paper departed from the established context of the previous literature in the manner that it expects to add to the literature by demonstrating the core drivers causing the deviations in financial structure in four exclusive, hospitality industry sub-sector portfolios with varying leverage proxies overtime

The Effects of Asset Growth to the Cross-Section of Hospitality Stock Returns

This study aims to estimate the effects of hospitality firm’s asset growth (year-on-year percentage change in total assets) to cross-section of stock returns by exploring the univariate relations between market value equity (ME), book-to-market equity (B/ME), and beta (β) over the period of 1999-2009. By utilizing the two-pass cross-sectional regression methodology, this paper uncovers the roles of ME, B/ME, β, and the effect of asset growth on returns in the analysis of the cross-sectional stock return behavior. The results of this study are expected to provide a broad outlook for the major segments of the hospitality industry (hotel, restaurant, and airline firms) for their strategic asset investment and disinvestment decisions. For instance, the findings of this study are believed to (1) establish fundamental grounds for asset expansion strategies (mergers & acquisitions, bank loan initiations, public equity offerings, etc.), asset contraction policies (share repurchases, spinoffs, stock splits, dividend initiations etc.), and optimal asset allocation in their portfolio management for their shareholders and (2) demonstrate any abnormal stock returns – high and low – followed by these corporate events. Furthermore, the effects of asset growth associated with ME, B/ME, and β in cross-section stock returns analysis are evidenced by many scholars as both economically and statistically significant predictor of the cross-section of U.S. stock returns since the early 1960s. Hence, we conjecture that the results of this study should help understand whether a firm’s asset growth is a robust predictor in the cross-section of stock returns for the major segments of the hospitality industry