Institutional investor preferences for lodging stocks

Although investments from institutions such as banks, insurance companies and pension funds in the lodging industry increased enormously in the 1990s, there has been no empirical research that has examined institutional preferences for lodging stocks. Understanding institutional investment patterns can help provide easier access to the capital markets for hoteliers who make large capital expenditures. This study identifies the characteristics preferred by institutional investors and also assesses whether the different institutions have heterogeneous preferences. Our results show that, in general, institutions prefer the stock of large lodging firms. They also prefer lodging firms with high capital expenditure-to-asset ratios and high debt ratios.