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Using Cash Flow Dynamics to Price Thinly Traded Assets
Get PDFAre cash flows informative and predictive in valuing thinly traded assets? We investigate the extent to which cash-flow and discount-factor information plays a role in pricing thinly traded assets. We focus on pricing the various traded tranches in commercial mortgage-backed securities (CMBS) by developing an adaptation of the Campbell-Shiller dynamic Gordon growth model, which we term a Self-Propagating Rolling-Window VAR. We apply this to cash flows and actual bond prices. In contrast to stocks, we find that cash flows are informative in valuing thinly traded assets. Our predicted cash flow yields closely resemble ex-post realized transaction yields, and these predicted yields even outperform yields based on matrix prices especially for subordinated tranches. We also find that discount-factor information, while important is not as informative as cash flows in this setting, except after the financial crisis where the impact of discount-factor information increases somewhat. Our results provide a good representation of CMBS yields; investors can readily apply this algorithm to infer values of other types of thinly traded assets where cash flows are observable
The New Science of Service Innovation: Part 1 Select Research on Data
No full textSelect Research on Data from the 2014 Cornell Hospitality Research Summit
Few businesses have the level of direct access to customer and employee data as that found in the hospitality and service industries. Fortunately, new analytical techniques and technology have improved the availability of those data. Unfortunately, the volume of data creates challenges of its own. The Cornell Hospitality Research Summit (CHRS) held in October 2014 was organized to examine service innovation in a new light, focusing on a scientific and disciplined approach to the topic. This report is the first of four that features expanded summaries of select research on service innovation. This first report focuses on innovative applications of data analysis that are occurring both in the industry and in academic research. Topics include search engine optimization, the use of analytics for energy efficiency, analysis of online reviews, and optimizing hotel group room rates, as well as how to promote organizational learning.
This report highlights seven data-based research presentation from the summit: • “Optimizing Hotel Booking Choices on OTA Websites,” by Jean-Pierre van der Rest. Paolo P. Cordella, Gerard Loosschilder, and Zvi Schwartz (page 4); • “Applied Analytics for Hospitality Energy Efficiency and Associated Core Operations Transformation,” by Har Amrit Pal Singh Dhillon, Saju Ramachandran, and Parminder Singh (page 8); • “How Recognizing Visitor Intent Fuels Customer- Focused Experiences,” by Matthew Butler and Lane Cochrane (page 14); • “Solving the Online Review Puzzle,” by HyunJeong Han, Srinagesh Gavirneni, Shawn Mankad, Joel Goh, and Rohit Verma (page 18);• “Data, Knowledge, and Intelligence in Hospitality Industries” by Scott Erickson and Helen Rothberg (page 22); • “Optimizing Hotel Group Room Rates,” by Jian Wang (page 24); • “How Hotels’ Organizational Learning Depends on Two Different Learning Curves,” by Jie Zhang, Nitin Joglekar, and Rohit Verma (page 28)
A Field Study of New Employee Training Programs: Industry Practices and Strategic Insights
No full textGiven the importance of well-designed and well-executed training programs, it is important to learn more about the content and design of effective training programs for new employees, particularly those that have been implemented in the hospitality industry. Through a field study assessment of pre-opening training programs that have been implemented by fifteen hotel firms and sixteen restaurant companies, we found that hotels and restaurants spend approximately the same time on pre-opening training for new staff, with the exception of restaurant managers, who receive significantly more days of training than do their hotel counterparts. In addition, there were substantive differences in the amount of pre-opening training based on firm size and whether the company was publicly traded or privately held. We also found that the majority of pre-opening training is designed and delivered by corporate staff, and a balance of active and passive training methods are used for facilitation. Finally, although our survey methodology did not allow us to determine the costs associated with pre-opening training (and therefore the return on these efforts), we noted that the firms used guest satisfaction measures and measured the employees’ content mastery, among other metrics
First Quarter 2015: March Madness: Hotels Remain Hot
Get PDFThe borrowing cost of debt financing continues to remain stable, while the cost of equity financing has declined relative to the previous period. Mixed signals exist as to the future direction in the price of large hotel properties near term but prices for small hotel properties should continue to rise in the next quarter. We continue to hope that operating performance as measured by EVA will finally become positive at best and or continue to remain at breakeven at worst. This is report number 14 of the index series
Understanding Students’ Intentions to Join the Hospitality Industry: The Role of Emotional Intelligence, Service Orientation, and Industry Satisfaction
Get PDFA study of 246 hospitality degree students in Hong Kong and the United States found that emotional intelligence has a strong effect on students’ intentions to pursue a career in the hospitality industry. The students’ service orientation has a similar but weaker effect. The study also found that this relationship is mediated by the degree to which these post-internship students were satisfied with working in the industry. Because emotional intelligence can be enhanced through education, hospitality educators can help develop their students’ emotional intelligence and service orientation and potentially increase their likelihood of developing successful careers within the industry
Second Quarter 2015: Hotel Deals Are Getting Harder to Pencil Out
No full textHotel Investment based on operating performance has turned red. Our Economic Value Added (EVA) indicator shown in Exhibit 1 has turned negative, declining from -.6% (near zero; breakeven) to -1.8% in 2014Q1. What is more alarming is that the hotel cap rate (5.7%) is approximately equal to the cost of debt financing (5.6%) for hotels financed by large life insurance companies, as shown in Exhibit 2. Intuitively, the cap rate represents the return on hotel properties assuming all-equity financing. The use of debt financing is used to magnify the return to hotel properties. For positive leverage (return magnification) to occur, the cap rate should exceed the cost of debt financing, meaning that your return should be greater than your borrowing cost. We will show that the current situation arises because of cap rate compression (a decline in the cap rate) due to a rise in hotel prices. In summary, what these two exhibits suggest is that financial feasibility is becoming more tenuous and investors are having a harder time getting a potential hotel investment to “pencil out.
Team Member’s Centrality, Cohesion, Conflict, and Performance in Multi-University Geographically Distributed Project Teams
Get PDFThis study examined team processes and outcomes among 12 multi-university distributed project teams from 11 universities during its early and late development stages over a 14-month project period. A longitudinal model of team interaction is presented and tested at the individual level to consider the extent to which both formal and informal network connections—measured as degree centrality—relate to changes in team members’ individual perceptions of cohesion and conflict in their teams, and their individual performance as a team member over time. The study showed a negative network centrality-cohesion relationship with significant temporal patterns, indicating that as team members perceive less degree centrality in distributed project teams, they report more team cohesion during the last four months of the project. We also found that changes in team cohesion from the first three months (i.e., early development stage) to the last four months (i.e., late development stage) of the project relate positively to changes in team member performance. Although degree centrality did not relate significantly to changes in team conflict over time, a strong inverse relationship was found between changes in team conflict and cohesion, suggesting that team conflict emphasizes a different but related aspect of how individuals view their experience with the team process. Changes in team conflict, however, did not relate to changes in team member performance. Ultimately, we showed that individuals, who are less central in the network and report higher levels of team cohesion, performed better in distributed teams over time
The Interconnectedness Between Home Builders and the Asian American Community
Get PDFCalifornia’s ethnic and cultural diversity has always influenced its housing market, lifestyle, and business investments. A great example of this is the increasing Asian-American demand for new housing in the Los Angeles Basin. Using The Olson Company as an example, this article investigates the interconnectedness and mutual influence between home builders and the Asian-American community. We will present demographic trends showing how the tenfold increase of Asian-Americans in California since 1960 has dynamically influenced Southern California’s inner and outer suburbs. Combined with an analysis of the Asian-American buyer profile from The Olson Company‘s home sales in Southern California, we find that demand for “smart growth” urban product is strong within this population segment. A psychographic analysis of these buyers draws conclusions for basic site and product design and marketing approaches. Several recent examples of projects in the West San Gabriel Valley highlight how the challenges of limited supply conditions in an essentially built-out urban landscape can be overcome via the interconnectedness of builders and homebuyers
Hotel Sustainability Benchmarking Tool 2015: Energy, Water, and Carbon
Get PDFThis tool—a result of the Cornell Hotel Sustainability Benchmarking (CHSB) study—grows out of a series of meetings and roundtables in which lodging industry representatives expressed the need to develop operating benchmarks for energy use, water consumption, and carbon emissions. As explained here, developing such benchmarks is challenging, due to the wide variety of hotel operations worldwide.1 Now in its second year, the CHSB is undertaken annually for the following purposes:
• Provide credible benchmarks according to industry-specific segmentation and metrics globally;
• Provide industry data analysis, using a confidential data set maintained by an academic center that will not be shared with third parties or used commercially; and
• Work toward establishing a commonly defined, transparent, and rigorous method for modeling energy and water usage based on hotel-specific attributes and data that are applicable and current
Racial and Ethnic Differences in Tipping: The Role of Perceived Descriptive and Injunctive Tipping Norms
No full textIn U.S. restaurants, racial and ethnic minorities often tip less than whites. These differences in tipping create numerous problems ranging from discriminatory service to restaurant executives’ reluctance to open restaurants in minority communities. Thus, racial differences in tipping need to be sizably reduced, which requires an understanding of their underlying causes. In this paper, we ask a racially and ethnically diverse sample of respondents in an online survey about how much they would tip in a hypothetical dining scenario, how much their best friend would tip, and how much the average person in their area would tip, as well as what the smallest tip a server in their area would consider satisfactory. Analyses of these data indicate that perceived injunctive and descriptive tipping norms independently mediate racial and ethnic differences in tipping. This finding suggests that racial differences in tipping can be reduced with marketing campaigns that promote the dominant 15 to 20 percent injunctive tipping norm and that inform consumers about widespread compliance with that norm