Valuing growth strategy management by hotel chains based on the real options approach

Tourism Economics

Volumn 14, Issue 3, 2008, Pages 511-526

  Cunill, Onofre Martorell ^a   Forteza, Carles Mulet ^a   Miralles, Micaela Roselló ^a  

^a UNIVERSITAT DE LES ILLES BALEARS   (Spain)

Author keywords

Growth strategies; Hotel chains and uncertainty; Real options approach

Indexed keywords

INVESTMENT; STRATEGIC APPROACH; UNCERTAINTY ANALYSIS; VALUATION;

EID: 53749086626     PISSN: 13548166     EISSN: None     Source Type: Journal    
DOI: 10.5367/000000008785633640     Document Type: Article

References (43)

1. Amram, M., and Kulatilaka, N. (1999a), Real Options: Managing Strategic Investment in an Uncertain World, Harvard Business School Press, Boston, MA.
2. Amram, M., and Kulatilaka, N. (1999b), 'Uncertainty: the new rules for strategy', Journal of Business Strategies, Vol 20, No 3, pp 25-29.
3. Andreu, R. (2005), Factores Determinantes en la Diversificación de las Empresas Hoteleras Españolas, Ariel Turismo, Barcelona.
4. Barnett, M.L. (2005), 'Paying attention to real options', R&D Management, Vol 35, No 1, pp 61-72.
5. Benaroch, M. (2001), 'Option based management of technology investment risk', IEEE Transactions on Engineering Management, Vol 48, No 4, pp 428-444.
6. Black, F., and Scholes, M. (1973), 'The pricing of option and corporate liabilities', Journal of Political Economy, Vol 81, pp 637-654.
7. Bowman, E.H., and Hurry, D. (1987), 'Strategic options', Working Paper 87-20, Reginald Jones Center, The Wharton School, University of Pennsylvania, Philadelphia, PA.
8. Bowman, E.H., and Hurry, D. (1993), 'Strategy through the option lens: an integrated view of resource investments and the incremental-choice process', Academy of Management Review, Vol 18, No 4, pp 760-782.
9. Brealey, R.A., and Myers, S.C. (1991), Principles of Corporate Finance, McGraw-Hill, New York.
10. Brennan, M., and Schwartz, E. (1985), 'Evaluating natural resource investments', Journal of Business, Vol 58, No 2, pp 135-157.
11. Carlsson, C., and Fullér, R. (2003), 'A fuzzy approach to real option valuation', Fuzzy Sets and Systems, Vol 139, No 2, pp 297-312.
12. Carr, D.K., and Johansson, H.J. (1995), Best Practices in Re-Engineering, McGraw-Hill Inc, New York.
13. Cox, J., Ross, S., and Rubinstein, M. (1979), 'Option pricing: a simplified approach', Journal of Financial Economics, Vol 7, pp 229-263.
14. Dixit, A. (1993), The Art of Smooth Pasting, Harwood Academic Publishers, Switzerland.
15. Dunning, J., and Kundu, S. (1995), 'The internationalisation of the hotel industry - some new findings from a field study', Management International Review, Vol 35, No 2, pp 101-133.
16. Edelson, M.E. (1994), 'Real options: valuing managerial flexibility (A), Harvard Business School Case 9-294-109', Harvard Business School Publishing, Boston, MA.
17. Fuente, G. de la (1999), Las Opciones Reales en la Decisión de Inversión. Propuesta y Aplicación de un Modelo de Valoración al Caso de una Multinacional Española, doctoral thesis, Universidad de Valladolid, Valladolid.
18. Gautschi, T (2001), 'Invest in creativity', Design News, June 18, Vol 56, No 2, pp 551-559.
19. Go, F., Pyo, S., Uysal, M., and Mihalik, B. (1990), 'Decision criteria for transnational hotel expansion', Tourism Management, Vol 11, No 4, pp 297-304.
20. Gonzalez, M., and León, C.J. (2001), 'The adoption of environmental innovations in the hotel industry of Gran Canaria', Tourism Economics, Vol 7, No 2, pp 177-190.
21. Grenadier, S.R., and Weiss, A.M. (1997), 'Investment in technological innovations: an option pricing approach', Journal of Financial Economics, Vol 44, pp 397-416.
22. Herath, H.S.B., and Park, C.S. (1999), 'Real options valuation and its relationship to Bayesian decision-making methods', The Engineering Economist, Vol 46, No 1, pp 1-32.
23. Herath, H.S.B., Jahera, J., and Park, C.S. (2001), 'Deciding which R&D project to fund', Corporate Finance, Vol 5, No 5, pp 33-45.
24. Kensinger, J.W. (1987), 'Adding the value of active management into the capital budgeting equation', Midland Corporate Finance Journal, Vol 5, No 1, pp 31-42.
25. Kort, P.M., Murto, P., and Pawlina, G. (2004), 'The value of flexibility in sequencing growth investment in real options, theory meets practice', 8th Annual International Conference, Montréal, Canada, June.
26. Luehrman, T.A. (1998), 'Strategy as a portfolio of real options', Harvard Business Review, Vol 76, No 5, pp 89-99.
27. Majd, S., and Pindyck, R. (1987), 'Time to build, option value, and investment decisions', Journal of Financial Economics, Vol 18, No 1, pp 7-27.
28. Martorell, O. (2002), Las Cadenas Hoteleras. Análisis del TOP 10, Ariel Turismo, Barcelona.
29. Martorell, O., and Mulet, C. (2003), Estrategias de Crecimiento de las Cadenas Hoteleras, Fitur, Madrid.
30. Mascareñas, J., Lamothe, P., López, F.J., and Luna, W. (2004), Opciones Reales y Valoración de Activos, Pearson Educación, Madrid.
31. McGrath, R.G. (1997), 'A real option logic for initiating technology positioning investment', Academy of Management Review, Vol 22, No 4, pp 974-996.
32. Meier, H., Christofides, N., and Salkin, G. (2001), 'Capital budgeting under uncertainty - an integrated approach using contingent claims analysis and interger programming', Operations Research, Vol 49, No 2, pp 196-206.
33. Miller, L.T., and Park, C.S. (2002), 'Decision making under uncertainty - real options to the rescue?', The Engineering Economist, Vol 47, No 2, pp 105-150.
34. Myers, S.C. (1977), 'Determinants of corporate borrowing', Journal of Financial Economics, Vol 5, No 2, pp 147-175.
35. Myers, S.C., and Majd, S. (1990), 'Abandonment value and project life', Advances in Futures and Options Research, Vol 4, pp 1-21.
36. Okumus, E (2004), 'Implementation of yield management practices in service organization: empirical findings from a major hotel group', The Service Industries Journal, Vol 24, No 6, pp 65-89.
37. Rendelman, R., and Bartter, B. (1979), 'Two - state option pricing', The Journal of Finance, Vol 34, No 5, pp 1093-1110.
38. Son, L., and Trigeorgis, L. (1995), 'The strategic capital budgeting process: a review of theories and practice', in Trigeorgis, L., ed, Real Options in Capital Investment: Models, Strategies, and Applications, Praeger, Westport, CT, pp 69-88.
39. Trigeorgis, L. (1991), 'A log-transformed binomial numerical analysis method for valuing complex multi-option investments', Journal of Financial and Quantitative Analysis, Vol 26, No 3, pp 309-326.
40. Trigeorgis, L. (1993), 'The nature of option interactions and the valuation of investments with multiple real options', Journal of Financial and Quantitative Analysis, Vol 28, No 1, pp 1-20.
41. Trigeorgis, L. (1996), Real Options: Managerial Flexibility and Strategy in Resource Allocation, MIT Press, Cambridge, MA.
42. Trigeorgis, L., and Mason, S.P. (1987), 'Valuing managerial flexibility', Midland Corporate Financial Journal, Vol 5, No 1, pp 14-21.
43. Wong, S., and Pang, L. (2003), 'Motivators to creativity in the hotel industry - perspectives of managers and supervisors', Tourism Management, Vol 24, No 5, pp 551-559.