Cost of capital: a practical model incorporated with risk assessment for hotel investments in the middle-price and economy segments

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dc.contributor.authorZeng, Yeeen
dc.contributor.committeechairOlsen, Michael D.en
dc.contributor.committeememberHiginbotham, Randell W.en
dc.contributor.committeememberKwansa, Francis A.en
dc.contributor.departmentHotel, Restaurant, and Institutional Managementen
dc.date.accessioned2014-03-14T21:48:14Zen
dc.date.adate2009-10-24en
dc.date.available2014-03-14T21:48:14Zen
dc.date.issued1993en
dc.date.rdate2009-10-24en
dc.date.sdate2009-10-24en
dc.description.abstractHotel investments, which have far-reaching impact on hotel companies' long term financial health, will continue to be the primary mode for hotel companies' survival and growth. However, top management has been facing a changing industry and investment community to which they are required to adapt. Consequently, the old fashioned gut-feeling types of decision making are no longer appropriate for sound hotel investments. It is the primary objective of this study to develop a model for hotel investment risk assessment and appropriate cost of capital estimation in the middle-price and economy hotel segments for the investment's capital budgeting purposes. The hotel investment risk assessment and cost of capital estimation model research was conducted using the focus group interview, the Delphi Technique, and the case study. As exploratory research, the focus group interview was conducted with the participation of hotel executives and general managers, hotel owners, and bank lenders from the Virginia area. Key investment risk factors were identified from the opinions of this panel, which represented different perspectives and needs. The summary findings laid out the foundation of the Delphi Technique survey_ The Delphi survey was conducted among hotel general managers, hotel executives, and hotel owners within three hotel chains in Virginia, Maryland and Delaware. They consisted of a professional panel of 19 members. The first task accomplished by the panel was to further validate the key risk factor profile developed by the focus group interview. The second task was to rate the level of influence of the identified factors using a five point likert-type scale (5=very influential, 1 = little influential). Three rounds of the survey allowed the panel members to achieve a consensus on the issues. A total of 36 hotel key investment risk factors in the middle-priced and economy segments were agreed to be included in the investment risk assessment framework. In addition, a ranking of all factors was produced based on each factor's importance and influence level. All the factors received a higher than average (rank scale 3) ranking. The empirical finding provided a valuable framework for the subjective risk assessment in the cost of capital estimation model.en
dc.description.degreeMaster of Scienceen
dc.format.extentxiii, 252 leavesen
dc.format.mediumBTDen
dc.format.mimetypeapplication/pdfen
dc.identifier.otheretd-10242009-020356en
dc.identifier.sourceurlhttp://scholar.lib.vt.edu/theses/available/etd-10242009-020356/en
dc.identifier.urihttp://hdl.handle.net/10919/45320en
dc.language.isoenen
dc.publisherVirginia Techen
dc.relation.haspartLD5655.V855_1993.Z535.pdfen
dc.relation.isformatofOCLC# 28924518en
dc.rightsIn Copyrighten
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/en
dc.subject.lccLD5655.V855 1993.Z535en
dc.subject.lcshHotels -- Financeen
dc.subject.lcshHotels -- Risk managementen
dc.titleCost of capital: a practical model incorporated with risk assessment for hotel investments in the middle-price and economy segmentsen
dc.typeThesisen
dc.type.dcmitypeTexten
thesis.degree.disciplineHotel, Restaurant, and Institutional Managementen
thesis.degree.grantorVirginia Polytechnic Institute and State Universityen
thesis.degree.levelmastersen
thesis.degree.nameMaster of Scienceen

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