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Estimating the land opportunism of hotel investment in generating real estate appreciation and firms’ market value

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  • Wang, Caiping
  • Dai, Shanshan
  • Xu, Honggang

Abstract

The scarcity of well-located land is becoming an important concern for business operations around the world. This study sheds lights on the mechanisms of land speculation by explaining how Chinese businesses’ investment in hotels leads to real estate appreciation and firms’ market value increase. This study proposes that hotel investment not only has the potential to increase firm value through the hotels’ operational revenues; land opportunism may also lead to real estate appreciation and associated increases in market value. The study investigates the effect of land opportunism in the Chinese hotel investment context. Publicly listed companies that invest into hotel businesses to diversify their business were selected as the main sample. The findings show that hotel investment improves Chinese firms’ value. Specifically, hotel investment increases these firms’ real estate value and the hotel real estate appreciation drives the increases in the companies’ value in the securities market. This mode of hotel investment is promoted by both local governments and hotel developers. It is possibly harmful to the hotel sector’s sustainable development; thus, strict regulations may be needed to manage the land use policies.

Suggested Citation

  • Wang, Caiping & Dai, Shanshan & Xu, Honggang, 2018. "Estimating the land opportunism of hotel investment in generating real estate appreciation and firms’ market value," Land Use Policy, Elsevier, vol. 77(C), pages 752-759.
    • Handle: RePEc:eee:lauspo:v:77:y:2018:i:c:p:752-759
    DOI: 10.1016/j.landusepol.2018.06.015
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    Cited by:

    1. Jaromir Vrbka & Tomas Krulicky & Tomas Brabenec & Jan Hejda, 2020. "Determining the Increase in a Building’s Appreciation Rate Due to a Reconstruction," Sustainability, MDPI, vol. 12(18), pages 1-13, September.
    2. Shanshan Dai & Honggang Xu & Fangfang Chen, 2019. "A Hierarchical Measurement Model of Perceived Resilience of Urban Tourism Destination," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(2), pages 777-804, September.
    3. Xiaojie Wang & Yi Duan & Pengcheng Liu & Guixin Han, 2020. "The Influence of Housing Investment on Urban Innovation: An Empirical Analysis Based on City-Level Panel Data in China," Sustainability, MDPI, vol. 12(7), pages 1-15, April.

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