REIT Ownership and Property Performance: Evidence from the Lodging Industry

Abstract:     
Prior research on the impact of REIT ownership on property performance is very limited and provides inconclusive empirical evidence. Whether REITs add value at the microlevel remains a puzzle. Utilizing a dataset of detailed accounting information for individual hotels across 5 US states, we re-examine the performance of REIT-owned properties. Unlike prior research that focuses on revenue-based performance measures, we examine both the top-line and bottom-line performance of hotel operations. We find that REIT ownership favorably impacts property performance in that REIT-owned hotels have higher profit margins than other lodging properties. The greater cost efficiency is likely attributable to savings in non-distributed operating expenses and fixed charges. We document no outperformance by REITs in revenue growth.

Number of Pages in PDF File: 38

working papers series