The interest rate exposure of lodging firms

The purpose of this study is to investigate the interest rate exposure of lodging firms and to determine whether the use of interest rate derivatives reduces this exposure. Using a sample of 47 lodging firms from the period from 2000 to2004, the first stage regression results show that most lodging firms face exposure to interest rates. The key finding of this study is a significant decline in exposure even after controlling for interest and foreign exchange risk. Additional findings show firm size, floating rate debt, interest coverage ratio, and foreign sales ratio to be important determinants of interest rate exposure.