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Third Quarter: David vs. Goliath Hotels: Which Performed Better this Quarter?
No full textHotels in gateway cities continue to shine, rising 15.3 percent year over year compared to 2.2 percent for hotels in non-gateway cities. Hotel operating performance scaled by price is still in the black based on economic value analysis (EVA), with returns continuing to exceed borrowing costs (for debt), and with the spread widening. This suggests that deals will be easier to pencil going forward, provided the current trend continues. With the Fed expected to continue to raise interest rates, however, the implication is that the return on invested capital must continue to increase as well. Transaction volume fell on a quarter-over-quarter basis, but rose on a year-over-year basis. While our various pricing metrics point to continued positive price momentum for large and small hotels, we continue to be concerned whether rising interest rates will put a damper on this momentum. A reading of our tea leaves suggests prices will moderate for large hotels but continue to increase for smaller hotels. This is report number 28 of the index series.
Supplemental File: Hotel Valuation Model (HOTVAL) We provide this user friendly hotel valuation model in an excel spreadsheet entitled HOTVAL Toolkit as a complement to this report which is available for download from http://scholarship.sha.cornell.edu/creftools/1
Rental Housing in Bogota, Columbia: Challenges and Opportunities for Creating More Multifamily Properties
Full text linkThis article examines the rental housing market in Bogotá, Colombia and the challenges in developing multifamily rental properties. A description of the factors that affect the development of this asset class is followed by recommendations to overcome the existing problems. Even though more than half of the population live in rental housing, there is almost no supply of rental housing projects at a large scale in Bogotá. Four reasons explain why this type of property has not been developed: (1) lack of financing; (2) laws that protect the tenants, making eviction a long and complex process; (3) market rents do not cover the cost of development; and (4) lack of firms capable of designing and operating rental housing projects. On the other hand, for sale housing projects have easier access to financing, can justify the high value of land, and gain the advantage of the mortgage system with governmental subsidies for mid to low-income segments
Seoul Office Market: Occupancy Characteristics and Their Impact on Market Stability at a Global Level
Full text linkWhile other major cities in the global real estate market experienced a stiff downturn after the Global Financial Crisis in 2008, the Seoul office market remained very stable. Focusing on steady rent growth, this paper examines the characteristics of seventy-three office buildings in the city. The result shows three distinct features: (1) the office market, especially the manufacturing sector, is more diversified than that in other global cities, (2) the office space is chiefly occupied by local companies with a small number of foreign financial firms concentrated in the city center, and (3) Chaebols, the large family-based industrial conglomerates, constitute the most notable portion of major office buildings
Looking Beyond LEED: How the UN Sustainable Development Goals Can Provide an Alternative Framework for Sustainability in Hotels
No full textThe Leadership in Energy and Environmental Design (LEED) certification program of the United States Green Building Council (USGBC) has been the path of many hotel industry professionals, particularly owners and real estate developers, wishing to demonstrate a commitment to environmental sustainability. LEED certification offers a framework for hotel industry stakeholders to pursue structurally and mechanically efficient buildings with eco-friendly components and unlock the accompanying financial benefits (USGBC, 2018). New evidence suggests, however, that LEED certification’s structure-centric, prescriptive scorecard may be misaligned with the day-to-day operational complexity of hotels (Behnke, 2017). In the wake of the United Nations’ call for more ambitious international goals to reduce global carbon emissions in the UN Emissions Gap Report 2017, hotels may find new opportunities for commingled financial, environmental, and societal benefits by leveraging their unique position in the built environment, reframing their sustainability efforts, and aligning with the United Nations Sustainable Development Goals (UN, “Sustainable Development Goals,” 2018)
The Real Effects of Sharing Economy: Evidence from Airbnb
No full textSharing economy has developed rapidly in recent years, but little is known regarding its real effects. This paper examines how a pioneer of sharing economy—Airbnb—affects local economy. Using venture capital infusions as plausibly exogenous shocks to Airbnb’s expansion into a new county, we find that Airbnb expansion leads to poorer hotel performance in the local county. Meanwhile, Airbnb expansion appears to reduce unemployment rate and increase household income. Further analysis suggests that increased employment is concentrated in industries that are complementary to Airbnb’s business and in employee groups with lower education levels. Our study sheds new light on the real effects of the sharing economy and provides important policy implications for policymakers
Living without OTAs–A Summary of the Performance Impacts Resulting from the OTA Delisting of Columbus, Georgia
Full text linkA four-year period during which hotels in Columbus, Georgia, were delisted by online travel agencies—and subsequently relisted—created a natural experiment that allows comparison of hotel performance before, during, and after the delisting period. This report summarizes two already published analyses of the hotels’ performance and then extends one of those analytical approaches to develop a more comprehensive picture of revenue outcomes. An initial study compared changes in room-nights sold by Columbus’s hotels with those in neighboring Phenix City, Alabama, which undoubtedly absorbed a substantial amount of Columbus’s lost OTA business. This study found that the loss of room-nights in Columbus was relatively small during the delisting, and it concluded that occupancy in the city’s hotel market roared back once its hotels were relisted. The later analyses present more nuanced picture using indices rather than absolute figures, as well as including the relative effects on revenue per available room (and thus both average daily rate and occupancy). This approach finds that while occupancy did, indeed, flourish, that came at a cost of diminished ADR during the delisting. Moreover, RevPAR did not entirely recover when the hotels were relisted
Steering Enterprise: How the Real Estate Community and Government Can Work Together to Modernize the Country\u27s Maritime Infrastructure
Full text linkIndustrial real estate in the U.S. is experiencing the one of the longest and strongest expansions on record. The expansion is being fueled by e-commerce companies such as Amazon, and the trend is likely to increase as retailers and logistics services focus on improving last mile delivery. Despite analysts’ optimistic forecasts for industrial real estate, however, U.S. state and federal policy makers have not adequately invested in the country’s maritime and intermodal infrastructure in preparation for either the increased traffic e-commerce has facilitated, or the expansion of the Panama Canal (Economist, 2013). Congress can aid the expansion by presenting a bill to the President that focuses on modernization and maintenance of maritime and intermodal infrastructure. The bill should modernize the country’s existing port facilities, invest in intermodal transportation, provide education for rural river ports to guide local harbor administrators to adopt economic development methods through promotion and advertisement of regional economic integration and competitiveness, and expand the number of ports that are capable to host “mega-ships.” This paper will outline why an initiative to modernize and maintain maritime and intermodal infrastructure is not only important to U.S. commerce and national security, but also essential to accommodating the needs of industrial real estate in the next decades
Leaving Talent on the Table? The Importance of Developing and Retaining Women Leaders
Full text link[Excerpt] While it’s been twenty years since McKinsey & Co. first coined the term ‘War for Talent’, many companies continue the fight to attract and retain the best and brightest. In an increasingly dynamic and competitive marketplace, retaining human capital can, literally, be the difference between life and death
Learning to Become a Taste Expert
Full text linkEvidence suggests that consumers seek to become more expert about hedonic products to enhance their enjoyment of future consumption occasions. Current approaches to becoming expert center on cultivating an analytic mindset. In the present research the authors explore the benefit to enthusiasts of moving beyond analytics to cultivate a holistic style of processing. In the taste context the authors define holistic processing as non-verbal, imagery-based, and involving narrative processing. The authors conduct qualitative interviews with taste experts (Master Sommeliers) to operationalize the holistic approach to hedonic learning, and then test it against traditional analytic methods in a series of experiments across a range of hedonic products. The results suggest that hedonic learning follows a sequence of stages whose order matters, and that the holistic stage is facilitated by attending to experience as a narrative event and by employing visual imagery. The results of this multi-method investigation have implications for both managers and academics interested in how consumers learn to become expert in hedonic product categories