Analysis of Return on Hotel Investment: A Comparison of Commercial Hotel Companies and Casino Hotel Companies

Abstract

This study examines the performance of commercial hotels and casino hotels in the United States from 1994 to 1998. It analyzes the relationship between hotel performance and type of hotel company. Using financial data from the hotel and casino section of the Value Line Data File, independent sample t tests and ANCOVAs were used for analysis. The performance of commercial hotel companies and casino hotel companies, including operational and capital return components, is examined and analyzed. The findings reveal that type of hotel company has no relationship with performance and that casino hotel companies show higher effectiveness in using assets to generate revenue. It is also evidenced that debt ratio has a close relationship with the return from operations, particularly from commercial hotel operations.

Keywords

hotel performance hotel development type of hotel commercial hotel companies casino hotel companies hotel investment

Get full access to this article

View all access options for this article.

References

Brueggeman, W. B. , & Fisher, J. D. (1997). Real estate finance and investments (10th ed.). Boston: Irwin McGraw-Hill.

deRoos, J. A. , & Corgel, J. B. (1996). Measuring lodging-property performance. Cornell Hotel and Restaurant Administration Quarterly, 37(4), 20-27.

Modigliani, F. , & Miller, M. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53, 433-443.

Norman, E. D. , & Mayer, K. J. (1997). Yield management in Las Vegas casino hotels. Cornell Hotel and Restaurant Administration Quarterly, 38(5), 28-33.

Ruggless, R. (1998). Hotel leaders reap rewards of booming economy, more business- pleasure travel. Nation's Restaurant News, 32(25), 162-169.

Rushmore, S. (1992). Hotels and motels: A guide to market analysis, investment analysis, and valuations. Chicago: Appraisal Institute.

Rushmore, S. , & Goldhoff, G. (1997). Hotel value trends. Cornell Hotel and Restaurant Administration Quarterly, 38(6), 18-29.

Sheridan, M. (1996). The predictions are in: 1997 will be a pivotal year. National Real Estate Investor, 38(12), 60-72.

Trowbridge, E. (1996). Casino management. In H. B. Van Hoof , G. Vallen , & M. McDonald (Eds.), A host of opportunities: An introduction to hospitality management (pp. 29-41). Chicago: Irwin.

10.

U.S. lodging industry. (1998). Philadelphia: Laventhol & Horwath.

11.

Wheaton, W. , & Rossoff, L. (1998). The cyclic behavior of the U.S. lodging industry. Real Estate Economics, 26(1), 67-82.