Linda Canina

Caveat Compounder: A Warning about Using the Daily CRSP Equal-Weighted Index to Compute Long-Run Excess Returns

This paper issues a warning that compounding daily returns of the Center for Research in Security Prices (CRSP) equal-weighted index can lead to surprisingly large biases. The differences between the monthly returns compounded from the daily tapes and the monthly CRSP equal-weighted indices is almost 0.43 percent per month, or 6 percent per year. This difference amounts to one-third of the average monthly return, and is large enough to reverse the conclusions of a paper using the daily tape to compute the return on the benchmark portfolio. We also investigate the sources of these biases and suggest several alternative strategies to avoid them. Copyright The American Finance Association 1998.

The Impact of Strategic Orientation on Intellectual Capital Investments in Customer Service Firms

This study examines the influence of intellectual capital on performance in customer service firms pursuing different strategic orientations (e.g., low-cost leader, differentiation). Grounding these arguments in the resource-based view and using 538 hotels in the lodging industry, this article employs an economic-based production model to empirically explore the performance effects of investing in three different types of intellectual capital: systems capital (operational knowledge), customer capital (brand and marketing knowledge), and human capital (knowledge from both service and professional employees). In addition, the authors account for key controls, including the physical asset, cost of living, customer demand, market segment, and company affiliation. Results reveal that for firms pursuing a differentiation strategy only, investments in both service employees and professional employees enhance performance. However, investments in systems capital and customer capital enhance performance for all the firms studied. The authors discuss the implications of this study for research in the services arena.

Lodging Demand for Urban Hotels in Major Metropolitan Markets

Analyzing urban hotel properties located in major metropolitan markets during the 1989 to 2000 period, this study provides empirical evidence that various measures of current income, expectations of future income, the own price, and the price of substitutes, are statistically important factors influencing lodging demand at the property level. This study examines the relationship between lodging demand and these economic factors at the property level using a large cross section of properties and a long time horizon. The results show that income elasticities computed at the property level are significantly lower than those computed using aggregate lodging data. The results also show that the magnitude of the impact of GDP on lodging demand is similar to the magnitude of the sum of disposable personal income and corporate income. The relative magnitude of the impact of each of these economic factors on lodging demand varies across lodging market segments.

Hotel-industry Averages: An Inaccurate Tool for Measuring Performance

Abstract The commonly used average measures of ADR, RevPAR, and occupancy may be insufficient to see what the “typical” hotels performance is really like.

The Best of Times, the Worst of Times: Differences in Hotel Performance Following 9/11

Abstract Not all hotels participated equally in the recent industry plunge—brought on by both recession and terrorism—and not all are recovering at the same rate.

Competitive dynamics and pricing behavior in US hotels: the role of co-location.

Which hotels benefit from locating next to competitors? In this study of 14,995 hotels we provide evidence of both a price benefit and a detriment for specific hotels that co‐locate next to other hotels. Relying on the theoretical framework of agglomeration economics, the results reveal that hotels that co‐locate in the same geographic cluster with the highest quality segmented firms (luxury hotels) accrue a price premium compared to competitors in markets with larger proportions of lower‐segmented competitors. The strongest price premiums were obtained by midscale hotels without food and beverage in clusters with large proportions of luxury and upscale hotels. Similarly, high‐end hotels that pursue differentiation strategies experience price erosion when they are in the same geographic location as lower‐end hotels. Luxury hotels experienced the greatest price erosion when they operate in locations with large proportions of economy and midscale hotels. The paper concludes with a discussion of the implications of these findings for competitive dynamics and hotel location decisions.

What We Know about M&A Success: A Research Agenda for the Lodging Industry

The lodging industry is a fruitful area for merger and acquisition (M&A) research, although the empirical evidence is surprisingly sparse given the degree of industry consolidation. Although the M&As are motivated by the expected synergy between the target and the acquiring firms, some mergers are successful while others are not. Studies have found that, on average, lodging transactions are distinct from those in other industries because owners of both target and acquirer are better off after the merger. A thorough analysis of lodging M&A deals may enhance our knowledge of the factors related to successful deals not only in the lodging industry but also in other industries. This investigation of the current state of knowledge of M&A success suggests an agenda for further research on lodging industry transactions. In particular, identification of the best practices associated with each stage of the M&A process, especially about how lodging firms integrate, transfer, and manage the resources of the combined firm, is a ripe area for future research.

Good news for buyers and sellers: Acquisitions in the lodging industry

Abstract Takeovers in the lodging industry generally have resulted in gains for both the acquired and the acquirers—unlike many other industries.

Initial Public Offerings in the Hospitality Industry: Underpricing and Overperformance

Abstract Underwriters may view the primary issue of most hotel and casino stocks as more risky than stocks of new companies generally. Still, newly issued stocks of hospitality companies have generally outperformed the market in their first year.

Competitive Sets for Lodging Properties

This article illustrates the differences in the composition, characteristics, and performance evaluation of competitive sets of hotels determined using two methods—the common product type classification scheme and the less commonly used cluster analysis based on average daily rate (ADR) as the clustering variable. The analysis examined annual ADR, occupancy, and revenue per available room (RevPAR) for a group of hotels in a portion of a single U.S. metropolitan market. The comparison of the two methods shows the following: the average variability of ADR and RevPAR is less for the cluster-based competitors than it is for competitor groups determined using product type; most clusters contain a variety of product types (confirming that competition occurs across product types); most product types are categorized into different clusters; and the average RevPAR difference between the particular hotel and its reference competitive group is less for the ADR-cluster-based reference group than it is for the product type reference group, indicating that the performance of hotels within cluster competitive groups is more similar than in product type competitive groups. Comparing competing hotels based on the two methods can provide information regarding the extent of congruence between the hotel’s intended competitive position and its position as seen by customers.