Faculty & Research
Assessing the Historical Performance of Hospitality Stocks: The Investor’s Perspective
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Vol 50 No 1
By: David Weinbaum
Executive Summary: An analysis of the investment returns of hospitality stocks shows first that investors have attempted to time the market for hospitality stocks and second that the timing of investment inflows has been inverse to stock performance. Hospitality firms have issued equity capital near market highs, and they have retired capital near market lows. The effect for hospitality investors of this inverse market timing is a shortfall of 1.5 percent per year in returns, compared to “perfect” timing from 1962 through 2006. This analysis is based on a value-weighted portfolio of both restaurant and hotel firms. Unexpectedly, due to the timing issue, the return of the combined portfolio of restaurant and hotel stocks earned a lower average return over this time period than did a similar portfolio of either hotel or restaurant stocks only.
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- Assessing the Historical Performance of Hospitality Stocks: The Investor’s Perspective By: David Weinbaum
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