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Do Private Equity Investors Create Value? Evidence from the Hotel Industry

Author

Listed:
  • Spaenjers, Christophe

    (HEC Paris)

  • Steiner, Eva

    (Pennsylvania State University)

Abstract

Using granular data on U.S. hotel investments over the past two decades, we show that industry-specialist PE firms achieve higher net income from operations and higher capital gains from sale than generalist PE firms for comparable properties. Those results are driven by specialists implementing more and larger cost savings without compromising revenues. Fundamentally, specialists utilize their hotel-specific operating expertise to produce superior performance outcomes. We show that specialists across investment sectors possess deeper industry-specific operating expertise. Our results suggest that specialist PE firms can compete with their generalist rivals by leveraging such expertise in a chosen market niche.

Suggested Citation

  • Spaenjers, Christophe & Steiner, Eva, 2020. "Do Private Equity Investors Create Value? Evidence from the Hotel Industry," HEC Research Papers Series 1410, HEC Paris.
    • Handle: RePEc:ebg:heccah:1410
    DOI: 10.2139/ssrn.3738265
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    More about this item

    Keywords

    private equity; investment performance; firm ownership; real estate;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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