Trends in the Lodging Industry

 REFEREED ARTICLES

 Economies of Scale in the Gaming Industry: An Analysis of Casino Operations on the Las Vegas Strip and in Atlantic City

Zheng Gu

 This study investigates economies of scale in the gaming industry. Vertical analyses of aggregate income statements were performed for large casinos versus small casinos on the Las Vegas Strip and in Atlantic City. Furthermore, correlations between cost ratios and casino revenue of Atlantic City casinos were examined. The findings show that large casinos enjoy economies of scale in terms of cost of sales, payroll, and general and administrative, including marketing, expenses. The study suggests that consolidation via mergers and acquisitions to achieve economies of scale is a viable strategy for casinos to remain profitable in saturated gaming markets.

Moral hazard in the Oil Patch: The effect of the banking crisis on RTC hotel appraisals in the American Southwest

 Michael C. Dalbor

This paper is compares appraised hotel values of Resolution Trust Corporation (RTC) properties in the American Southwest (“Oil Patch” states) with their respective market values.  The RTC was given the task of having hotel properties appraised and subsequently auctioned for sale.  However, RTC officials were aware they had limited time and funding for their operations.  Consequently, RTC officials faced a significant amount of political pressure to sell non-performing assets quickly, particularly in the Oil Patch where banking problems were especially severe.  Given these circumstances, the RTC may have been motivated to influence appraised hotel values downward to sell more assets faster.  The results of this paper indicate appraised hotel values to be than their market values in the region.  Moreover, the differences between appraised values and market values were significantly more negative in the Oil Patch than other regions.  

Use of Ratios by Financial Executives in the U.S. Lodging Industry

      A.J.Singh and Raymond S.Schmidgall

The purpose of this study is to identify ratios that property level lodging financial executives consider important and the frequency with which each ratio is referenced. Taken together, these two measures show the usefulness of a ratio for evaluating financial performance. The results clearly emphasize the importance of operating, activity, and profitability ratios as key monitoring ratios and categorize ratios into ratios referenced frequently and those seldom used.

Minimum Length of Stay Requirements as Part of Hotel Revenue Management Systems:  Are They Legal?

      Robert H. Wilson

 Many hotels have instituted revenue management systems that incorporate minimum length of stay requirements. The hotel will refuse to book the room unless the traveler agrees to book for two, three, or more nights. The English common law, case law in the United States, and many state statutes provide that a hotel has an obligation to provide a room to an acceptable guest if the hotel has a room available.  This article attempts to answer the question: Are minimum length-of-stay controls legal or illegal? The author also provides a method for hotels to continue to use length-of-stay controls, maximize revenue, and comply with existing laws

INVITED ARTICLES

 AHFME Academic Member 1999 Total Annual Earnings Survey

        Raymond S. Schmidgall

 This study was conducted to determine the 1999 annual earnings of hospitality financial management educators.  Sixty percent of AHFME’s members affiliated with educational institutions responded.  Annual base salaries ranged from $12,000 to $114,000.  The lowest-paid member is an instructor (apparently part-time) while the highest-paid member is a full professor.  Most respondents supplement their base salaries by teaching during summer school and conducting consulting.  The total annual earnings of members ranged from $12,000 to $196,500.  Hospitality financial management educators appear to be more highly compensated than hospitality industry financial executives.

VIEWPOINT

 Lodging Industry in India - The Past and The Present

                Amitabh Devendra

Lodging operations in post - independence India has evolved steadily from simple mom and pop setups to a sophisticated and organized national industry. This paper examines the historical development of the Indian lodging industry, explains its current economic health and also addresses some of its recent strategies. 

Is Profit Enough?

                Paul Beals

 There are countless ways to introduce students to realistic measures of financial performance of firms when teaching in hospitality schools. This paper addresses some interesting and useful issues that directly relate to educators in the area of hospitality finance and hospitality accounting.

ABSTRACTS OF PRESENTATIONS AT THE 2000 ANNUAL AHFME RESEARCH SYMPOSIUM

Ratio Analysis Practices in the U.S. Lodging Industry

A.J. Singh

 An Investigation of Leasing Practices in the Hotel Industry

                Arun Upneja and Raymond S. Schmidgall

 The Choice of Long-Term Debt in the Hotel Industry

                Arun Upneja and Michael C. Dalbor

 Comparative Analysis of Nevada and Holland Casino Operations

                Zheng Gu

 Hotel Real Estate Investment Trusts (REITs): An Investigation of Market Performance, Risk Features and Risk Determinants

                Hyunjoon Kim

 An Analysis of Business Cycles and Restaurant Failure Rates