Asset-light strategy and real estate risk of lodging C?corps and REITs |
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| Institution: | 1. Department of Tourism, Gachon University, 1342 Seongnam-Daero, Sujeong-Gu, Seongnam-Si, Gyeonggi-Do, Republic of Korea;2. Tourism Industry Data Analytics Lab (TIDAL), Sejong University, 521 Gwanggaeto-Gwan, 98 Gunja-Dong, Gwangjin-Gu, Seoul 143-747, Republic of Korea;3. Department of Hotel and Tourism Management and Tourism Industry Data Analytics Lab (TIDAL), Sejong University, 98 Gunja-Dong, Gwangjin-Gu, Seoul 143-747, Republic of Korea;1. Università IULM, Department of Business, Law, Economics, and Consumer Behaviour, Via Carlo Bo, 1, I-20143 Milan, Italy;2. Kent Business School, University of Kent Canterbury, Kent, CT2 7PE, UK;3. Bocconi University, Master in Economics and Tourism, Via Röntgen, 1, I-20136, Milan, Italy;4. National Research Tomsk Polytechnic University, 30 Lenin Avenue, Tomsk, 634050, Russian Federation;1. School of Hospitality and Tourism Management, Purdue University, Marriott Hall, 900 W. State Street, West Lafayette, IN 47907, United States;2. College of Hotel and Tourism Management, Kyung Hee University, Dongdaemun-gu, Seoul, 130-701, South Korea;1. Department of Hospitality & Tourism Management, Pamplin College of Business, Virginia Tech, 342 Wallace Hall, 295 West Campus Drive, Blacksburg, VA 24061-0429, United States;2. Department of Hospitality & Tourism Management, Pamplin College of Business, Virginia Tech, 363B Wallace Hall, 295 West Campus Drive, Blacksburg, VA 24061-0429, United States;1. National Kaohsiung University of Hospitality and Tourism, Taiwan;2. Auckland University of Technology, New Zealand |
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| Abstract: | The asset-light strategy has been gaining popularity among practitioners for its virtues in lowering capital investment burden and allowing efficient expansion. Meanwhile, arguably the greatest advantage of the strategy—a mitigating effect on the real estate risk exposure—has yet to be validated. To empirically test this effect, this study adopts a comparative approach, utilizing data on both lodging C-corporations and real estate investment trusts (REITs). Yearly firm-level real estate betas are estimated through an augmented Fama-French asset-pricing model for all lodging firms and REITs between the years 2002–2016, and further used for a second-stage analysis on their relationship with real estate ownership and liquidity. Findings reveal that 1) lodging firms are significantly less exposed to real estate risk than REITs, 2) lodging firms may still be conditionally exposed to real estate risk under liquidity constraints, and 3) certain unique characteristics of REITs render differences in the effects of liquidity. |
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| Keywords: | Lodging industry C-corporations Real estate investment trusts (REITs) Multifactor model Real estate risk Censored regression |
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