Gary R. Vieth

Hotel investment in open area

Abstract Environmental open space is difficult to define and value. This paper estimates the rate of return on hotels’ investment in open area for three locations in the State of Hawaii, United States. The marginal revenue for open area investment is estimated using a hedonic analysis of hotel room prices. The marginal cost of open area investment is adapted from secondary data. The study reports on estimated return rates, which in two locations are consistent with previous research and with the risk levels faced by hotels/resorts in Hawaii. The lower rate of the third location appears to be the result of inaccurate expectations about changing land values.