Atul Sheel

Determinants of Capital Structure Choice and Empirics on Leverage Behavior: a Comparative Analysis of Hotel and Manufacturing Firms:

The relationship between a firms capital structure, its cost of capital, and its stock value is an important financial and investment issue today. Using a cross- sectional regression analysis, the leverage behavior of 33 firms in 2 industry groups-the hotel industry and the manufacturing sector-was examined. Findings showed that all leverage determinants studied, excepting firm size, are significant in explaining leverage variations in debt behavior. In addition, although more industry- specific variables are needed, leverage behavior in hotel firms can be analyzed using traditionally theorized capital structure determinants. As such, the capital structure in the hotel industry is better understood, and some important distinctions between short-term and long-term debt behavior in hotel and manufacturing firms are revealed.

The Post-Merger Equity Value Performance of Acquiring Firms in the Hospitality Industry

ABSTRACT This paper investigates long run equity value performance of acquiring firms in the hospitality industry. The performance analysis has been done using the Jensen Measure Model and the Market Model. The study shows significantly negative equity value performance of the acquiring hospitality firms at least for the period 1980–2000. As such, the impact of mergers and acquisitions on equity value of acquiring firms in the hospitality industry is better understood.

Monte Carlo simulations and scenario analysis: decision-making tools for hoteliers.

Abstract Imagine having to predict the likely bottom-line result of changing several room-revenue factors at once—for example, total number of available rooms, room rates, and market mix. While not impossible, it can be a daunting task. Now imagine using your computer to calculate possible combinations of options to “see” what might happen. A Monte Carlo simulation is a way to perform hundreds or thousands of “what if” analyses that, when looked at together, point to trends that relate specifically to the decisions being considered.

The Relevance of Financial Leverage for Equity Returns of Restaurant Firms - An Empirical Examination

ABSTRACT Cross-sectional time series regressions were used to examine the relationship between the debt/equity ratios of 37 firms in the restaurant sector and their risk/size-adjusted common equity returns. Findings reveal a statistically significant relationship between a restaurant firms debt/equity ratio and its risk/size-adjusted common equity returns. The relationship holds true regardless of the January effect, and regardless of the use of real or nominal returns. As such, the findings support the issue of capital structure relevance in the restaurant industry, and are suggestive of a strategic relationship between a restaurant firms debt use and the growth in its market-to-book value.

Assessing the Relationship Between Waiting Services and Customer Satisfaction in Family Restaurants

Managing customers in long waiting lines and protecting against consequent lost revenue has been an important area of concern for many restaurants across the globe. Using surveys, factor analysis, and regressions, this study examined the relationship between the services offered to waiting customers and customer satisfaction in family restaurants. Analysis of the data using exploratory factor analysis indentified five key constructs that summarized important areas of waiting service: human service, visual media service, menu service, sitting service, and notice service. Multiple regression analysis indicated that all five factors influenced customer satisfaction. The results provide useful insight for owners and managers of family restaurants on important waiting management tools for improving the satisfaction of their customers. As such the importance of waiting service management in family restaurants is better understood.

Cash Dividend Announcements and Abnormal Returns in Lodging and Restaurant Sectors: An empirical examination

ABSTRACT Dividend relevance has been a subject of significant recent interest for academicians and researchers in the area of hospitality finance. The subject has attracted noticeable controversy, given the stringent or no-dividend payout policies observed in many hospitality firms. This study builds on existent dividend literature in hospitality finance by examining the relevance of cash dividends for public lodging and restaurant firms in U.S. equity markets. It uses the event study approach to investigate abnormal returns for lodging and restaurant firms caused by cash dividend announcements during the period 1994–2002. Results are suggestive of the fact that at least during the test period, cash dividend increases were positively received by equity holders in both lodging and restaurant sectors. Results also suggest that dividend effect and abnormal returns were significantly different for the two sectors. As such, the issue of dividend relevance in hospitality firms and the need for more prudent dividend policies in these firms is better understood.

Hotel Real Estate in a Property Investment Portfolio: An Examination of Results from 1992 to 2001

ABSTRACT This paper analyzes the performance of five real estate sub-sectors (office, retail, industrial, apartment, and hotel) over a 10-year (historical) period, 1992 to 2001, to assess the impact the hotel sub-sector would have on investment performance when constructing a multi-property investment portfolio. The research was built on the foundation of modern portfolio theory, and data were analyzed using correlation analysis, Sharpe ratio, and a portfolio simulation model. Research results suggest that, at least during the study period, the hotel sub-sector outperformed all other sub-sectors in terms of total returns and produced the second best risk-adjusted returns. The results also suggest that the inclusion of hotels in the real estate investment portfolio had a significant impact on the efficient frontier, offering several “higher risk–higher return” target options for an investor. As such, the significance of the hotel sub-sector within a multi-property real estate investment portfolio is better understood.

The Relationship Between Dividend Yields and Common Equity Returns for Hotel and Lodging Firms in the United Kingdom, the United States, and Japan: Some Empirical Evidence

Dividend policies of hotel and lodging firms are often constrained by various restrictive debt covenants. Such restrictions are imposed by institutional lenders as protective measures, especially when the financial and operating leverage trends in a specific industry group are very high. Given such restrictions and constrained dividend payouts, the question of “dividend relevance” has special importance for firms in the hotel and lodging industry. This research is a cross-sectional analysis of the dividend/return relationship for hotel and lodging firms in three major G7 markets, namely, the United Kingdom, the United States, and Japan. Although empirical findings suggest a positive nonlinear dividend/return relationship for hotel and lodging firms in these countries, they also reveal the presence of distinct country-specific effects in the above relationship. As such, the nature of the relationship between dividend yields and common equity returns for hotel and lodging firms is better understood from a global perspective.

An Examination of Commercial Mortgage-Backed Securities-Some Useful Insights for Borrowers

ABSTRACT Commercial mortgage-backed securities (CMBS) have emerged strong and have faced a generally positive credit environment since the last recession. As the market grew out of recession in the early 1990s, the primary focus remained on providing better and safer returns to investors. Tied in their lock box, a period that contractually prohibits the borrower from all prepayments, the borrowers kept holding tightly onto their loans. Currently, as the delinquency rate on loans has been on the rise, and as the mortgage market offers refinancing opportunities at lower interest rates, more and more borrowers are looking to transfer or to refinance their loans. This paper examines commercial mortgage-backed securities and provides useful insights for borrowers to find their way out of CMBS loans.

A Reexamination of Current Hotel Valuation Techniques – Which Approach is More Realistic?

This study revisits the issue of accuracy in contemporary hotel valuation. Along with the hotel valuation techniques used by Rushmore (1992) and Chen and Kim (2010), this study uses the cost approach and the automated valuation model (AVM) in its examination of contemporary hotel valuation techniques. Fourteen randomly selected hotel firms are analyzed using nine valuation approaches. The valuation results are then compared to the market values of these firms to assess which technique provides the most robust and supportable estimate. Research results reveal that, at least for the analyzed sample, the discounted cash flow (DCF) technique provides the most realistic estimate of a hotel firms value. Results also show that the valuation estimate of AVM is significantly different from both Band of Investment methods. As such, the process of valuing hotel properties is better understood.