An examination of US hotel firms' risk features and their determinants of systematic risk



This study examined risk features of hotel firms and the determinants of their systematic risk. After reviewing the financial data for 31 US hotel firms from 2004 through 2008, we found that 86% of the hotel firms' total risk could be characterized as unsystematic risk. The results showed that while debt leverage and growth are positively related to systematic risk, firm size is negatively associated with such risk. Our findings suggest that conservative growth via mergers and acquisitions, and less reliance on debt financing is advisable for hotel firms seeking to reduce systematic risk and enhance firm value. Copyright © 2010 John Wiley & Sons, Ltd.