Managing the retail format portfolio: An application of modern portfolio theory |
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| Authors: | James R. Brown |
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| Affiliation: | 1. Division of Infectious Disease, Wadsworth Center, New York State Department of Health, Albany, NY, USA;2. Soligenix, Inc., Princeton, NJ, USA;3. Department of Biomedical Sciences, University at Albany, Albany, NY, USA;1. Universidade da Coruña, Faculty of Economics and Business, Department of Financial Economics and Accounting, Elviña Campus, Postal Code: 15071, A Coruña, Spain;2. University of Porto, Faculty of Economics and CEF.UP, Rua Dr. Roberto Frías, 4200-464, Porto, Portugal;1. Facultade de Tecnologia, Universidade de Brasília, CEP 70904-970 DF Brasília, Brazil;2. E.T.S. de Ingenieros Industriales, Universidad de Castilla-La Mancha, 13071 Ciudad Real, Spain;4. School of Engineering and Applied Science, George Washington University Science & Engineering Hall, 800 22nd St NW, Washington, DC 20052;1. College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China;2. Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China;3. Chinese Academy for Environmental Planning, Beijing 100012, PR China;1. Helsinki Institute of Sustainability Science, Faculty of Agriculture and Forestry, University of Helsinki, P.O. Box 27 (Latokartaanonkaari 7), 00014, Helsinki, Finland;2. Dasos Capital Oy, Itämerentori 2, 00180, Helsinki, Finland;3. Section for Environment and Natural Resources, Rolighedsvej 23, 1958 Frb. C, Old Building Living Room, Building: A107, Copenhagen, Denmark;4. Institute of Forest Management, Hans-Carl-von-Carlowitz-Platz 2, 85354, Freising, Germany;5. Department of Forest Economics and Forest Management, Georg-August-University Goettingen, Busway 3, 37077, Göttingen, Germany;6. Faculty of Agriculture and Forestry, University of Helsinki, P.O. Box 27 (Latokartaanonkaari 7), 00014, Helsinki, Finland;1. Key Laboratory for Atmospheric Chemistry, Chinese Academy of Meteorological Sciences, Beijing 100081, China;2. College of Atmospheric Science, Nanjing University of Information Science and Technology, Nanjing, China;3. Weather Modification Office, Tianjin Meteorological Bureau, Tianjin, China |
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| Abstract: | We apply modern financial portfolio theory (MPT) to managing portfolios of retail formats. The objective of MPT is to maximize overall portfolio return for a given level of portfolio risk. We applied MPT to three prominent hotel firms to determine the ideal mix of formats in their hotel brand portfolios, using revenue per available room (RevPAR) as a proxy for return on investment. We found that all three firms could improve their returns and reduce their risk by reallocating the number of hotel rooms (i.e., scarce resources) across their different retail formats. |
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