Determinants of Hotel Property Prices

Determinants of Hotel Property Prices Pricing commercial real estate has its foundations in present value theory. Recent improvements for accessing transaction data have stimulated interest in commercial property hedonic pricing models, the structures of which follow traditions in single-family real estate in that the implicit prices of property characteristics and site-specific variables represent city and national market conditions. Adding present value variables has become increasingly common to account for general market conditions. We test two hedonic pricing models; one that follows the residential tradition and another that departs by incorporating city-specific net operating incomes and the discount rates. Modeling prices in these alternative ways allows for recognition of the relative contributions of property, city, and capital market determinants. Empirical testing relies on a sample of hotel transactions from 2005–2010. The responsiveness of hotel cash flows to market changes is an important consideration. We find that models with property characteristics perform about the same as models that also include present value variables. A plausible explanation for this phenomenon is that implicit prices corresponding to property characteristics and site-specific variables appear to reflect income streams associated with city and nationwide economic conditions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Real Estate Finance and Economics Springer Journals

Determinants of Hotel Property Prices

Loading next page...
 
/lp/springer_journal/determinants-of-hotel-property-prices-wQmeKHRdUT
Publisher
Springer US
Copyright
Copyright © 2015 by Springer Science+Business Media New York
Subject
Economics / Management Science; Regional/Spatial Science; Finance/Investment/Banking
ISSN
0895-5638
eISSN
1573-045X
D.O.I.
10.1007/s11146-015-9494-3
Publisher site
See Article on Publisher Site

Abstract

Pricing commercial real estate has its foundations in present value theory. Recent improvements for accessing transaction data have stimulated interest in commercial property hedonic pricing models, the structures of which follow traditions in single-family real estate in that the implicit prices of property characteristics and site-specific variables represent city and national market conditions. Adding present value variables has become increasingly common to account for general market conditions. We test two hedonic pricing models; one that follows the residential tradition and another that departs by incorporating city-specific net operating incomes and the discount rates. Modeling prices in these alternative ways allows for recognition of the relative contributions of property, city, and capital market determinants. Empirical testing relies on a sample of hotel transactions from 2005–2010. The responsiveness of hotel cash flows to market changes is an important consideration. We find that models with property characteristics perform about the same as models that also include present value variables. A plausible explanation for this phenomenon is that implicit prices corresponding to property characteristics and site-specific variables appear to reflect income streams associated with city and nationwide economic conditions.

Journal

The Journal of Real Estate Finance and EconomicsSpringer Journals

Published: Feb 4, 2015

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve Freelancer

DeepDyve Pro

Price
FREE
$49/month

$360/year
Save searches from
Google Scholar,
PubMed
Create lists to
organize your research
Export lists, citations
Read DeepDyve articles
Abstract access only
Unlimited access to over
18 million full-text articles
Print
20 pages/month
PDF Discount
20% off