REIT Ownership and Property Performance: Evidence from the Lodging Industry

38 Pages Posted: 29 Jun 2012  

Shawn D. Howton

Villanova University - Department of Finance

Shelly Howton

Villanova University - School of Business

Johnny Lee

Drexel University

Mi (Meg) Luo

Villanova University

Date Written: June 1, 2012

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.

Suggested Citation

Howton, Shawn D. and Howton, Shelly and Lee, Johnny and Luo, Mi (Meg), REIT Ownership and Property Performance: Evidence from the Lodging Industry (June 1, 2012). Available at SSRN: https://ssrn.com/abstract=2096298 or http://dx.doi.org/10.2139/ssrn.2096298

Shawn D. Howton

Villanova University - Department of Finance ( email )

800 Lancaster Avenue
Villanova, PA 19085-1678
United States

Shelly W. Howton

Villanova University - School of Business ( email )

Dept. of Finance
Villanova, PA 19085
United States
610-519-6111 (Phone)
610-519-6881 (Fax)

Johnny Jiung-Yee Lee

Drexel University ( email )

3220 Market St.
Philadelphia, PA 19104
United States

HOME PAGE: http://www.lebow.drexel.edu/academics/departments/accounting/faculty/johnnylee

Mi Luo (Contact Author)

Villanova University ( email )

800 Lancaster Avenue
Villanova, PA 19085
United States

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