Avner Arbel

Pay attention to neglected firms

T he intensity of the research performed by security analysts on listed companies varies widely. Some companies receive broad and continuous attention, while others get virtually no coverage at all. Examples of the latter can be found even among large corporations. In fact, at any given moment, between 100 to 150 companies included in the SP it

Generic stocks: An old product in a new package

with four astonishing and seemingly independent market phenomena, all related to unexplained, persistent, high abnormal return: 0 the superb investment return of stocks of small firms, 0 the outstanding performance of neglected companies, not widely followed by analysts and ignored by financial institutions, 0 the better performance of low-P/E stocks, and 0 the seasonality in overall market performance by which the market consistently performs extremely well during the turn-of-the-year period. Academicians first dismissed these ob,, CTervations as ’market folklore’ not worthy of their attention. Then, some of them bothered to step down from their ivory towers and rigorously checked the legends and frighteningly (but courageously) reported b x k to their colleagues via well-documented articles in top academic journals that this time the practitioners seem to be right: The myth is indeed a fact. They now labeled these newly proven findings: ’The Small-Firm Effect,’ ‘The Neglected-Firm Effect,’ ’The P/E Anomaly,’ and the ‘January Effect.’ Once published, debated, checked, and rechecked, these investigations created a lot of confusion in academic circles. How in the world could these abnormal returns persist? The magnitude of the abnormal return is not the only thing that puzzles the market efficiency breed: Mainly they are puzzled that it l las l prevailed even after the usual adjustments for risk, using the widely accepted Capital Asset Pricing h4odel. Above all, they are amazed that these significant excess returns have persisted consistently for many years almost without exception. Indeed, how could it be? How could the outstanding performance survive the unavoicla.ble, selfcorrecting process? If everybody knows about it, shouldn’t it disappear once exposed a i d followed? What about market efficiency? The whcde thing sounds like an everlasting free lunch getting something for nothing, which makes no sense! Consequently, the term ’market anomalies’ emerged, widely used in academia to describe these phenomena. The purpose of this article is to present results of an empirical evaluation of the relationship among these four anomalies. I show that they ar’e all related to a common informational variable that affects the investor’s perceived risk level. I will sholw that this variable, to be labeled information deficiency, is not

Optimal cruise-liner passenger cabin pricing policy

Abstract The first attempt, in any marketing environment, to consider the optimal number of market segments, as well as the corresponding prices, is performed here in conjunction with cruise liners. The optimal market segmentation pricing strategy for passenger cabins on cruise-liners is investigated under the assumption of an aggregate linear demand function, and for four different situations: (a) single price market, (b) optimal segmentation of the Unused capacity of a single-price-market, (c) optimal segmentation of all cabins, and (d) optimal segmentation allowing for infiltration from higher-priced to adjacent lower-priced segments. A numerical example is provided for each case.

Producing global managers: The need for a new academic paradigm

Always international, the hospitality industry needs managers who consider the long-range impact of their decisions on the global community. Unfortunately, it seems that hospitality schools cannot yet provide the necessary leadership in “going global.” To globalize the student body colleges should: accept more international students, develop international student-exchange programs, intensify support for international students, increase scholarship aid, and require foreign-language skills. To globalize their faculty, universities should require more international faculty exchanges and sabbatical leaves, recruit more international faculty members, and increase the use of industry professionals as guest lecturers and executives in residence.

Predicting merger targets of hospitality firms (a Logit model)

Abstract The study investigates differentiating characteristics of merger target firms in the hospitality industry. A Binomial Logit Analysis Model to predict merger targets is developed and empirically estimated. Among nine company attributes which are hypothesized to be important factors in predicting merger targets, four are found to be significant. Back-testing of the model’s ability to correctly predict merger targets shows a high success ratio with statistically significant results at the usually accepted level. This suggests that a formal model like this can be used by practitioners as a supplementary decision-supporting tool for identifying companies with a high likelihood of being merger targets.

Debt hitch-hiking: How hotels found low-cost capital

Heres how some hotel companies have been “paid” to borrow money and how to determine when your firm might achieve a net negative cost of capital

Inflation and hotels: The cost of following a faulty routine

The hotel industry, while perceived to be inflation proof because of its ability to raise room rates, really is quite vulnerable to inflation. In todays economy, the traditional pricing techniques and strategies used to set new rates may critically damage profitability

Shark Repellent Anti-Takeover Measures for the Hospitality Industry

The 1980s have become the decade of the corporate takeover—often under unfriendly circumstances. When hospitality turns into hostility, these practical strategies may help prevent your hotel or restaurant company from becoming shark bait

Higher energy cost and the demand for restaurant services — a time-series analysis

Abstract Energy cost impact on demand for the restaurant services is examined using a broad base multi-variable regression model with special attention given to the lag structure and timing of the effects. The results reveal no negative impact of higher energy costs on demand. On the contrary, a slight positive delayed impact is evident over the short-run suggesting that, on margin, eating out may have been used as a compensatory recreational activity as a temporary substitute to other, more energy intensive, recreational activities.

Foreign-exchange sensitivity: how a strong currency weakens hotel revenues.

When a nations currency is strong, foreign travelers are discouraged from visiting that country, and natives are enticed abroad. How much does the current strength of the dollar affect American hotels?